Answers · Topic 4 of 10
Bookkeeping and Deductions answers.
Records, receipts and software for a small business, plus the personal deductions people ask us about most. 20 questions, each answered in the first paragraph.
By the AnalytIQ Accounting team · Last reviewed: September 6, 2026
Are funeral expenses tax deductible in Canada?No.Are investment advisor fees tax deductible in Canada?Fees you pay separately for investment advice or for managing a non-registered investment account are deductible on line 22100 of your personal return, as long as the fee is charged and paid on its own rather than embedded in the investment itself.Can house cleaning be claimed on taxes in Canada?For most people, the cost of cleaning your own home is a personal expense and cannot be claimed on your tax return, no matter how the cleaning is billed.Can physiotherapy and massage be claimed as medical expenses in Canada?Physiotherapy always qualifies as an eligible medical expense because physiotherapists are authorized medical practitioners in every province.How do I catch up on years of unfiled bookkeeping?Start by gathering every bank and credit card statement for the missing years; most banks can produce up to seven years of statements on request, which is usually enough to rebuild a full history.How do I record owner draws and contributions?A sole proprietor records money taken out of the business as an owner draw and money put in as an owner contribution, both equity entries rather than expenses or income, since the owner and the business are the same taxpayer.How do I record USD transactions in Canadian books?Canadian businesses report their income tax return in Canadian dollars, so every USD transaction needs to be converted to CAD, generally using the exchange rate in effect on the date of that transaction.How do I separate business and personal expenses?Open a business-only bank account and card and run every business purchase through them, never a personal one.How do I track vehicle mileage for the CRA?Keep a logbook recording the date, destination, purpose, and kilometres driven for every business trip, for a full 12 months in the first year of claiming vehicle expenses.How long do I need to keep business records for the CRA?As a general rule, the CRA requires you to keep business records for six years from the end of the last tax year they relate to.How much does a bookkeeper cost in Canada?There is no single flat rate; a bookkeeper's fee mainly reflects how many transactions move through your accounts each month, whether you run payroll, whether you are registered for GST/HST, and how clean your books already are.How often should a small business update its books?A small business should capture transactions weekly, close the books monthly with a full reconciliation and review, check in quarterly on tax obligations, and treat year-end as a formality rather than the first look at the numbers.QuickBooks Online or Xero: which is better for a Canadian small business?For most Canadian small businesses we default to QuickBooks Online, mainly because of how well it handles GST/HST coding, its integration with payroll tools like Wagepoint, and how widely Canadian accountants and bookkeepers already know it.Should my small business use cash or accrual accounting?The CRA requires accrual accounting for most Canadian small businesses, meaning you record revenue when it is earned and expenses when they are incurred, not when cash changes hands.What financial statements does a small business need?Every small business needs three core financial statements: a balance sheet, an income statement, and a cash flow statement.What is a bank reconciliation and how often should I do one?A bank reconciliation matches every transaction in your books to the corresponding line on your bank or credit card statement, confirming nothing was missed, duplicated, or entered incorrectly.What is a chart of accounts and how should a small business set one up?A chart of accounts is the full list of accounts your bookkeeping software uses to categorize every transaction, organized into five groups: assets, liabilities, equity, revenue, and expenses, with cost of goods sold usually broken out on its own.What is Dext and do I need it for my bookkeeping?Dext is a receipt and invoice capture tool that reads a photo or forwarded email of a document, extracts the vendor, amount, date, and HST, and publishes the transaction directly into QuickBooks or Xero.What is the difference between a bookkeeper and an accountant?A bookkeeper handles the day-to-day work of recording transactions, categorizing them, and reconciling bank accounts so your books stay accurate month to month.What receipts do I need to keep for my business taxes?You need a receipt or invoice for every expense you claim, showing the vendor, the date, the amount, and enough detail to show what was purchased, not just a line on a credit card or bank statement.
Where we do the work
Rules at a glance · Bookkeeping and Deductions
Not sure which applies to you? Get a free proposal or book 15 minutes.
ReportingAccrual requiredCRA requires accrual accounting; cash basis is limited to farmers, fishers and some agents.
Key formT2125 / GIFI codesA lean chart of accounts should map cleanly onto the T2125 or GIFI codes used at tax time.
DeductionMeals: 50% limitOnly 50% of the GST/HST and cost of meals and entertainment is recoverable, with narrow exceptions.
Watch forRecords: 6 yearsKeep business records six years from the end of the last tax year they relate to.
What we take off your plate
Bookkeeping for small business owners, handled.
- A monthly close and real reconciliation, not just a bank feed sync
- Chart of accounts and receipts coded straight to T2125 and GIFI codes
- Monthly reconciliations in QuickBooks Online or Xero
- Receipts captured through Dext, nothing typed twice
- GST/HST filed from clean books, on time
- Year-end financials ready for the T2 without a clean-up
Mistakes we fix
Three things that go wrong for small business owners.
- Mixing personal and business expenses through one account, which costs input tax credits
- Estimating vehicle use instead of keeping the CRA’s required mileage logbook
- Skipping monthly bank reconciliations until the surprises pile up at year-end
Recognise one? Book a call and we will tell you what it is costing you.
How we can help · Bookkeeping and Deductions
Where we do the work.
Fixed fees, quoted after a short discovery call. Canadian and US filings under one roof.
BookkeepingBooks closed monthly and reconciled, with the chart of accounts mapped to T2125 from day one.Bookkeeping →Tax servicesDeductions like vehicle use and meals claimed at the rate the CRA actually allows.Tax services →Advisory & CFOClean monthly numbers turned into the reports you need for a loan or a real decision.Advisory & CFO →
Free proposal
A fixed fee for your bookkeeping, in writing.
- Tell us about your business. The form takes about a minute.
- A short discovery call. Fifteen minutes to confirm what you need.
- A fixed fee in writing. We reply within one business day. No hourly surprises.
- Canadian and US filings under one roof
- Cloud-first: QuickBooks Online, Dext, Wagepoint
- Brampton, Ontario, with clients across Canada and the US
Answers
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