Bookkeeping
Bookkeeping Checklist for Canadian Contractors
A practical contractor bookkeeping checklist for tracking income, expenses, mileage, GST/HST records and supporting documents before tax reporting.
If you work as a self-employed contractor in Canada, a useful bookkeeping routine starts with recording every payment, organizing business expenses, separating personal transactions, tracking business driving and keeping documents that support your records. This contractor bookkeeping checklist for Canada is designed to help you prepare organized information for tax reporting. Whether an amount is reportable, deductible or relevant to GST/HST depends on your business structure, activities, registration status and the records you keep.
What bookkeeping should a Canadian contractor track?
Your bookkeeping system should give you a clear record of the money your business earned, the costs connected with earning that income and the documents supporting each transaction. CRA describes business records as organized financial documents and supporting materials such as invoices, receipts, contracts, bank statements, cancelled cheques, credit card records, work orders, delivery slips, emails and logbooks. See the CRA overview of records and why they matter.
For many contractors, the simplest approach is to record transactions throughout the year instead of trying to reconstruct the business after year-end. A consistent process can also help you identify unpaid invoices, missing receipts, personal expenses accidentally charged to the business and GST/HST information that may need attention.
Contractor bookkeeping checklist
1. Record every source of business income
Keep a sales or income record for each client, project or contract. Include the invoice date, client or payer, description of the work, amount billed, taxes charged where applicable, payment date and payment method. Keep copies of invoices, contracts, statements of work, timesheets and other documents that explain what you were paid for.
Do not rely only on deposits appearing in your bank account. A deposit may combine several invoices, reimbursements or other amounts. Matching payments to invoices helps you understand what remains outstanding and gives you a clearer audit trail.
CRA says business income includes income from an activity carried on for profit, including income from a service business. Review CRA information about business income and self-employed activities. The way income is recorded can also depend on the accounting method that applies to you. Check CRA guidance on accounting methods rather than choosing a method based only on convenience.
2. Capture business expenses when they happen
For each business purchase, save the receipt or other supporting document and record:
- the date of the purchase
- the supplier or vendor
- what you bought
- the amount paid
- any GST/HST shown
- the business purpose
- the payment method
- the business percentage, where the item is used partly for personal purposes
CRA states that business expense claims should be supported by an invoice, purchase agreement, receipt or another voucher. Receipts should show the vendor and date. See CRA guidance on supporting business expenses.
Common contractor categories may include supplies, software, professional services, insurance, advertising, office costs, communication costs, travel and vehicle costs. Categorizing expenses consistently makes it easier to review your records. However, not every cost is treated the same way for tax purposes. CRA distinguishes between current expenses and capital expenses, and personal expenses are not business expenses. An expense must be considered in the context of your facts and records before you treat it as deductible.
3. Separate business and personal transactions
Use a separate bank account or payment method for business activity where practical. This does not decide whether an expense qualifies, but it can make your records easier to understand and reconcile.
If you pay a business expense personally, record the transaction and keep the receipt. If you use a business account for a personal purchase, identify it clearly instead of leaving it in a business expense category. Mixed transactions should be allocated based on the business portion supported by your records.
At least once a month, compare your bookkeeping records with bank and credit card statements. Investigate differences such as duplicate entries, bank fees, client deposits without invoices, refunds and purchases that were recorded in the wrong category.
4. Track GST/HST information separately
If you are registered for GST/HST, your bookkeeping should identify taxable sales, GST/HST charged, GST/HST paid on eligible purchases and the records supporting your calculations. Keep sales and purchase invoices, other records related to your business operations and working copies of electronically filed returns. Review CRA’s list of GST/HST records to keep.
Supplier invoices may need specific information to support an input tax credit claim. CRA provides detailed requirements for invoices, receipts, contracts and other business papers used to support GST/HST claims. Check CRA’s input tax credit information requirements.
Do not assume that every purchase with GST/HST automatically supports a claim. Eligibility can depend on your registration, the type of supply, the use of the purchase in your commercial activities and the information on the supporting document.
5. Keep a reliable mileage and vehicle record
If you use a vehicle for contracting work, record business trips separately from personal driving. CRA says an accurate logbook should identify the date, destination, purpose and kilometres for each business trip. You should also record the vehicle’s odometer reading at the beginning and end of the fiscal period. Read CRA’s motor vehicle records guidance.
Keep receipts for costs such as fuel, insurance, repairs, maintenance, parking and other vehicle-related amounts that may be relevant to your records. A mileage app can help you capture trip details promptly, but review the entries regularly and retain the underlying information required to support your calculations.
6. Track equipment and larger purchases
Do not automatically record every purchase as an ordinary expense. Equipment, computers, tools and other property may need to be considered separately from routine supplies. Keep the invoice, purchase date, description, cost, financing details and business-use information.
CRA’s business expense guidance explains that the treatment of a cost can depend on whether it is a current expense or a capital expense. Review CRA’s business expenses page for current and capital expense information.
A practical monthly bookkeeping routine
Set aside a regular time each month to complete the following steps:
- Import or enter all business income and expenses.
- Match client payments to invoices.
- Reconcile bank and credit card activity.
- Attach receipts, invoices and contracts to transactions.
- Review uncategorized, duplicate and personal transactions.
- Update outstanding invoices and amounts owed to suppliers.
- Review GST/HST amounts separately if registered.
- Update your mileage or vehicle log.
- Back up your bookkeeping data and scanned documents.
This routine is not a substitute for deciding how a particular item should be reported. It is a way to keep the information available for that decision.
Practical example: organizing one contractor project
Suppose a freelance designer completes a project for a client. The designer issues an invoice, receives payment by electronic transfer, buys project-specific software, travels to a client meeting and pays a bookkeeping fee.
A useful record for the project would connect the client contract, invoice, payment confirmation, software receipt, travel details and professional-fee invoice. The designer would also identify whether the software is used only for business or partly for personal purposes, keep any applicable GST/HST information and record the client-meeting kilometres separately from personal driving.
This example does not establish that every amount is deductible or that a GST/HST claim is available. Those outcomes depend on the facts, the contractor’s status, the nature and use of each purchase and the quality of the supporting records.
Record-keeping checklist for Canadian contractors
Use this checklist before closing each month and again before preparing tax information:
- Client invoices and contracts are saved.
- All payments are matched to invoices or another source.
- Cash, electronic transfers, card payments and platform payments are recorded.
- Receipts show the supplier, date and purchase details where available.
- Business purpose notes are added for less obvious expenses.
- Personal and business portions are identified for mixed-use costs.
- Bank and credit card accounts are reconciled.
- Vehicle trips include the date, destination, purpose and kilometres.
- Equipment and larger purchases are listed separately for review.
- GST/HST charged and paid are tracked separately if registered.
- Supplier invoices contain the information needed to review GST/HST treatment.
- Contracts, work orders, emails and payment confirmations are retained.
- Digital files are backed up and can be retrieved.
- Records are kept for the required period.
CRA states that business records generally need to be kept for six years from the end of the last tax year they relate to, unless an exception or permission to destroy them earlier applies. Read CRA’s record-retention guidance.
When should you ask for professional help?
Consider asking a qualified tax professional to review your bookkeeping if you incorporated, have business partners, use significant personal assets for business, hold inventory, have complicated GST/HST activity, bought or sold equipment, received government assistance or are unsure how to classify a transaction.
Even when someone else maintains your records, you remain responsible for ensuring that adequate records are kept and available. CRA explains that records held by a bookkeeper, accountant or software provider may still need to be made available if requested.
Your next step
Start with the current month: connect each payment to an invoice, scan every business receipt, classify mixed-use purchases, update your mileage log and reconcile your accounts. Then create a recurring monthly review so missing information is identified while the transaction is still fresh.
TiKi Tax can help you organize receipts, expenses, mileage and tax-report information in one place. Use receipt scanning, review your expense records, track trips with mileage tools and prepare organized information through reports. For additional preparation, follow the tax checklist.
Educational information only. This article is not tax, accounting or legal advice, and CRA treatment depends on your individual facts, business structure and supporting records.