What Records Do You have to Keep and Who Has to Keep them?

By Randall Orser | Small Business

 

Bookkeeping word cloud with data sheet background TNAs a business owner, records are your accounting and other financial information documents kept in an organized way. How you keep those records organized is up to you, however, you must keep them in such a way that when asked by Canada Revenue Agency to see them, they can access the records.

The information that your records must contain depends on your situation and on factors such as:

  • your business type
  • the format you keep your records in (paper, electronic or a combination of the two)
  • if you have converted any paper records or supporting documents into an electronic version
  • if you are involved in e-commerce
  • if you are a GST/HST registrant
  • if you are an employer

What are records?

Records are organized accounting and financial documents that summarize your transactions and include the documents to support these transactions. These documents include:

  • ledgers
  • journals
  • books
  • charts
  • tables
  • financial statements
  • statements of accounts
  • income tax returns
  • goods and services tax/harmonized sales tax (GST/HST) returns
  • excise tax returns
  • sales invoices
  • purchase receipts
  • vouchers
  • contracts
  • guarantees
  • bank deposit slips
  • bank statements
  • cancelled cheques
  • cash register slips
  • credit card receipts
  • work orders
  • delivery slips
  • working papers
  • logbooks
  • emails
  • all correspondence that support your transactions

You are allowed to keep the above in electronic format, such as accounting software, PDF, JPEG, or other format. For electronic records, also make sure:

  • they are supported and maintained by a system capable of producing records that are accessible to CRA officials and readable by CRA software;
  • they are kept in an electronic format accessible to CRA officials and readable by CRA software, even if you have paper copies of them or if you transferred them to another medium, such as microfilm or scanned image;
  • you always store proper backup copies, preferably at a site in Canada other than your business location;
  • they remain accessible to CRA officials and readable by CRA software after any changes to your operating or electronic business systems;
  • they are ready, no matter where they are kept, to be inspected by the CRA;
  • if any get lost, destroyed, or damaged, to tell the CRA by calling 1-800-959-5525. You must also recreate the files within a reasonable time frame;
  • if they are encrypted, they can be decrypted and produced in an electronic format accessible to CRA officials and readable by CRA software.

Who has to keep records?

Here is the list of those who by law have to keep records:

  • persons who have to file a tax return
  • persons carrying on a business or engaged in commercial activity
  • persons who have to pay or collect taxes or other amounts such as payroll deductions and softwood lumber products export charge
  • persons who have to file a goods and services tax/harmonized sales tax (GST/HST) return
  • persons who apply for GST/HST refunds or rebates
  • payroll service providers
  • third-party record keepers
  • trusts
  • non-profit organizations
  • registered agents of registered political parties
  • official agents for candidates in a federal election
  • universities
  • colleges
  • municipal corporations
  • hospitals
  • school authorities
  • qualified donees such as:
    • registered charities
    • registered Canadian amateur athletic associations
    • registered housing corporations resident in Canada that are exempt from tax under Part 1 of the Income Tax Actbecause of paragraph 149(1)(i)
    • registered municipalities in Canada
    • registered municipal or public bodies performing a function of government of Canada
    • registered university outside Canada that is prescribed to be a university, the student body of which ordinarily includes students from Canada
    • registered charitable organizations outside Canada to which Her Majesty in right of Canada has made a gift

As you can see there are many records to keep for your business enterprise, and you must keep the above even once the company ceases operations or is sold. You must also keep records for each business enterprise separate from each other. And, don’t mix business and personal records together. For your paper records, a good idea is to scan all your paper documents, and keep electronic backup. And, do not store your paper documents in those cardboard banker boxes, use plastic; nor store them in the damp/wet basement either. One final word is ‘backup’. Always have backup to everything you keep electronically.

About the Author

Bookkeeper Extraordinaire
Number Crunchers® Financial Services

Learn how to just say stuff it to this bookkeeping thing with our ‘Just Say: “Stuff It” To Bookkeeping program.