What to take away
- Decide what the software must do for your business before comparing brands or screenshots.
- Check GST/HST, payroll, record storage and export options against the CRA’s record-keeping rules, not just the sales page.
- Test with real transactions and ask your accountant or bookkeeper what they can work with before you commit.
Start with the jobs the software must do
BDC describes accounting software as a tool that records transactions, prepares invoices, tracks bills, calculates sales taxes, posts to the general ledger and shows cash flow, revenue and expenses. More advanced versions add modules such as payroll, inventory control and enhanced reporting. Few small businesses need all of that on day one.
Write a short list of the jobs you actually have. A consultant who invoices ten clients a month has a different list from a retailer with stock, a contractor with employees or an online seller with several payment processors. Separate the must-haves from the nice-to-haves. That list becomes the test you apply to every option, and it keeps a polished demo from setting the agenda.
Questions that matter more than the brand name
Ask who will use the system and how often. If you enter everything yourself, simplicity matters most. If a bookkeeper works in it weekly and your accountant reviews it at year-end, you also need multiple user logins, sensible permissions and a clear history of changes.
Think about the next two or three years as well. BDC notes that many small businesses start with basic off-the-shelf software and outgrow it after a few years, and it suggests looking for a vendor that lets you move up to more advanced tools. Hiring, adding a second revenue stream, holding inventory or incorporating can all change what you need. You do not have to buy for a business you do not have yet, but you should know what a later upgrade or move would involve.
Check how it handles GST/HST and payroll
If you are registered for GST/HST, the software should let you apply the correct rate and track tax collected and tax paid separately from revenue and expenses. Your records must allow you to calculate the GST/HST you collect or owe and any input tax credits you claim. To support an input tax credit, the CRA expects purchase documents to carry specific details, and those details increase as the purchase amount rises. Check that you can attach the original invoice or receipt to each entry.
Payroll is a separate question. The CRA expects employer records to show hours worked, amounts withheld for income tax, CPP and EI, and to include each employee’s TD1 form and the slips and returns you have filed. Some accounting packages include payroll, some connect to a separate payroll product, and some leave it out. Decide early which approach you want, because payroll errors are costly to unwind. Sora’s payroll service page and first payroll checklist explain what the process involves.
Know where your records are kept and how you get them out
The CRA generally expects you to keep records for six years from the end of the last tax year they relate to, and to keep them at your place of business or residence in Canada unless it gives written permission otherwise. It also says that electronic records stored on servers outside Canada do not count as kept in Canada just because you can open them from here. If you rely on a cloud product, ask the vendor where data is stored and discuss the answer with your accountant. BDC’s list of low-cost accounting products includes a column showing whether data is stored in Canada, which suggests the question is a normal one to ask.
Your records must also stay available to the CRA when it asks. If you contract an outside party to hold electronic records, they still have to be accessible, and any backup should be restorable in a format the CRA can use. Before choosing, find out what you can export, in what format, and whether attachments come with the data. A subscription you cancel should not take your history with it.
Treat bank feeds and automation as helpers, not decision makers
A bank feed saves typing, and automatic categorization can speed up routine entries. Neither knows the business purpose of a payment. A card charge may be office supplies, equipment or a personal purchase, and a processor deposit may combine sales, fees and refunds. Someone still has to review each entry.
When you compare products, look at how easily you can correct a category, split a transaction, match a deposit to the invoices it paid and reconcile the account to the bank statement. Our article on what bank statements do not tell your accountant explains why the explanation matters as much as the amount.
Test it with real transactions
Free trials and demo files are more useful when you use them on your own records. Enter one month of real activity, including a sale with GST/HST, a refund, a purchase paid by credit card, a payment to yourself and a transfer between accounts. Then run the reports you would need: a profit and loss statement, a balance sheet, a list of unpaid invoices and a GST/HST summary.
Pay attention to what is awkward. If a simple task takes many steps during a trial, it will probably stay awkward. Also check whether the reports match what you would give a lender, because a bank may ask for financial statements when you apply for credit.
Ask your accountant or bookkeeper before you commit
The person who prepares your financial statements and tax filings will have to work with whatever you choose. Ask which products they already support, what access they need and whether a different setup would reduce their cleanup time. A tool that suits you but cannot produce the reports your accountant needs can end up costing more than it saves.
If you are moving from spreadsheets or another system, plan the changeover date, the opening balances and how you will keep the old records. A clean cut at the start of a month or fiscal year usually causes the fewest problems. Sora’s bookkeeping service can discuss how your records are set up, and the year-end accounting checklist lists the information to have ready.
Keep the paper trail whatever you choose
Software does not remove the need for original documents. The CRA accepts records kept on paper, on paper later converted to an electronic form, or in an accessible and readable electronic form. Documents that were originally electronic must be kept in electronic form even if you also print them. If you scan paper receipts, the images must accurately reproduce the original and must not lose significant detail, and the CRA points to a national standard that you should meet before destroying the paper.
Do not destroy records early without the CRA’s permission. Our article on how long to keep business records in Canada covers the retention rules and the exceptions. A software choice is a good time to write down where each type of record lives, who can reach it and how it will be backed up.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Free and low-cost accounting and invoicing software for your businessBDC
- Business recordsCanada Revenue Agency
- Where and how long to keep recordsCanada Revenue Agency
- Acceptable format, imaging paper documents and backing up electronic filesCanada Revenue Agency
- GST/HST and payroll recordsCanada Revenue Agency
- Input tax creditsCanada Revenue Agency
- How a bank looks at your businessBDC
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.