Bookkeeping Requirements for Small Businesses in BC
Proper bookkeeping is essential for small businesses in British Columbia. Not only does it help you understand your financial position, but it’s also a legal requirement. The Canada Revenue Agency (CRA) requires all businesses to maintain accurate records, and failure to do so can result in penalties, audits, and compliance issues. This guide covers everything BC small business owners need to know about bookkeeping requirements and best practices.
Why Bookkeeping Matters
Accurate bookkeeping provides the foundation for financial decision-making, tax compliance, and business growth. For BC small businesses, maintaining proper records is not optional—it’s a legal obligation that protects your business and ensures you can claim all eligible deductions and credits.
Legal Bookkeeping Requirements in BC
Maintain Complete Records
CRA requires all businesses to keep books and records that provide a complete picture of financial transactions. This includes income, expenses, assets, liabilities, and equity.
6-Year Retention Period
All business records must be kept for at least 6 years from the end of the last tax year they relate to. This includes receipts, invoices, bank statements, and financial statements.
Accurate & Accessible
Records must be accurate, complete, and readily accessible. CRA can request records at any time, and you must be able to provide them within a reasonable timeframe.
Support All Claims
Every expense deduction must be supported by documentation. Without proper receipts and invoices, CRA may disallow deductions, resulting in additional taxes and penalties.
English or French
Records must be kept in English or French, or be readily translatable. Electronic records are acceptable as long as they’re readable and can be printed if requested.
GST/PST Records
If registered for GST or PST, you must maintain detailed records of all sales, purchases, and tax collected/paid. These records are essential for filing returns and claiming input tax credits.
Essential Records to Keep
Bookkeeping Best Practices for BC Small Businesses
Separate Business & Personal
Open a dedicated business bank account and credit card. Never mix personal and business transactions—this simplifies bookkeeping and protects your personal assets.
Record Transactions Daily
Enter transactions into your accounting system daily or weekly. Don’t let receipts pile up—regular entry prevents errors and saves time during year-end.
Reconcile Bank Accounts Monthly
Match your bank statements with your accounting records every month. This catches errors early, identifies missing transactions, and ensures accuracy.
Use Cloud-Based Software
Modern accounting software (like QuickBooks, Xero, or FreshBooks) automates many tasks, provides real-time insights, and ensures your records are secure and accessible.
Keep Digital Copies
Scan or photograph all receipts and invoices. Store them digitally with clear file names and dates. This ensures you have backups and can find documents quickly.
Categorize Expenses Properly
Use consistent expense categories that align with CRA requirements. This makes tax preparation easier and ensures you claim all eligible deductions.
Common Bookkeeping Mistakes to Avoid
Mixing Personal & Business
Using personal accounts for business transactions creates confusion, complicates bookkeeping, and can jeopardize limited liability protection.
Not Saving Receipts
Without receipts, you can’t prove expenses to CRA. Even small purchases add up—keep all receipts, especially for business meals, travel, and supplies.
Infrequent Reconciliation
Waiting months to reconcile accounts makes errors harder to find and fix. Monthly reconciliation is essential for accurate financial records.
Poor Categorization
Incorrectly categorizing expenses can lead to missed deductions or CRA disallowances. Use proper CRA expense categories consistently.
No Backup System
Relying on a single copy of records is risky. Use cloud storage, external drives, or both to ensure you never lose important financial documents.
DIY When Overwhelmed
If bookkeeping is taking too much time or you’re making errors, hire a professional. A bookkeeper or accountant can save you time and ensure compliance.
When to Hire Professional Bookkeeping Services in Vancouver
Signs You Need Professional Help
Benefits of Professional Bookkeeping Services
Professional Bookkeeping Services in Vancouver
J. Wang Chartered Professional Accountant provides comprehensive bookkeeping services for small businesses throughout Vancouver and British Columbia. We help BC businesses maintain accurate records, stay compliant, and make informed financial decisions.
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Don’t let bookkeeping requirements overwhelm you—partner with professional bookkeeping services in Vancouver that understand BC business needs.