IT consultant bookkeeping: minimal-touch books that hold up if CRA calls

Your books are your PSB paper trail

The personal services business rules are the largest tax risk an incorporated consultant carries: if CRA decides you would reasonably be an employee of your client without the corporation, the corp loses the small business deduction, pays an additional federal tax, and keeps almost no deductions beyond the salary it pays you. The test is about control, tools, and integration — but it is argued with records.

Books help when they show business-like facts: revenue by client where more than one exists, your own equipment on the asset ledger, business insurance, marketing, training, and subcontractors you paid. Books hurt when they show one identical invoice a month and nothing a real business would buy. We structure the ledger so the good facts are visible instead of buried in a single expense line.

Invoice hygiene when one client pays most of the bills

A single-client year is common and survivable — sloppy invoicing layered on top of it is what stings. Every invoice that leaves your corporation should carry:

• Deliverable-based descriptions — the sprint, module, or milestone completed, not a line that reads like a pay stub.
• Corporate identity throughout — the corporation's legal name, business number, and GST/HST registration, paid into the corporate account.
• Contract alignment — rates and terms that match the MSA and statement of work on file, with change orders documented.
• Sequential numbering and dated payment terms — small details that get spot-checked first in a review.

We review invoice mechanics when we onboard a consultant, because fixing the pattern early is cheap and reconstructing it during an audit is not.

USD clients: invoicing, FX, and zero-rated HST

Most Canadian IT consultants bill US clients in USD, and two things must be true in the books: revenue recorded in CAD at the rate on the invoice date, and the exchange gain or loss recognized when payment actually lands. A USD account — Wise or a bank USD account — avoids forced conversion on every receipt and lets you choose when to convert.

Services exported to non-resident clients are generally zero-rated for GST/HST: you charge 0%, but those sales still count toward the $30,000 small-supplier threshold, so registration is usually mandatory anyway — and worthwhile, because it unlocks ITCs on your Canadian costs. W-8BEN-E requests, treaty positions, and the US side of the relationship are covered in our cross-border tax guide for IT consultants.

Home office and equipment in a one-person corp

The corporation should own the tools and bear the costs — that is both correct and useful to the PSB story. Here is how the common items run through the books:

A monthly system you barely touch

A one-person corporation does not need heavy process — it needs a small, reliable one. Ours is QuickBooks Online or Xero on bank feeds, Dext capturing receipts from your phone, and a chart of accounts short enough to read in one screen. Each month we reconcile the CAD and USD accounts, book the FX, confirm the HST balance, and watch the shareholder loan account so year-end holds no surprises.

You get a one-page monthly picture: revenue by client, spend by category, and cash after the tax set-asides. That rhythm feeds cleanly into instalments, the T2, and any planning conversation about salary versus dividends — see our bookkeeping services page for how the close works across all our engagements.