Choose the cut-over date before you choose the plan
The cleanest moves start on a natural boundary: the first day of a month, a GST/HST reporting period or, ideally, a new fiscal year. Starting mid-month means you must split a period between two systems, and that is where totals stop agreeing. If a year-end is close, it is often easier to finish the year in the old software and open the new one with finalized closing balances.
Decide who owns the move. Someone on your side should be able to answer questions about customers, suppliers and unusual transactions, and your bookkeeper or accountant should agree on the date in advance. If you are still comparing products, the article on choosing accounting software covers that decision; this guide begins once you have chosen.
Get the old books into good order first
Importing a mess into a new system gives you a new mess. Before exporting anything, reconcile every bank, credit card and payment processor account to the cut-over date, clear or explain old suspense and clearing balances, and review customer and supplier balances for items that are duplicated or no longer expected. The monthly bookkeeping close checklist describes this routine.
Then print or export the reports you will rely on as proof of the opening position: a trial balance, a balance sheet, an aged receivables report and an aged payables report, all dated at the cut-over. Keep the originals as read-only files. These reports are what you compare against when the new system opens.
Export and rebuild what carries over
Most products can import a chart of accounts, a customer list and a supplier list, but few carry over everything. Export the chart of accounts, the contact lists, open invoices and bills, a fixed asset schedule with cost and accumulated depreciation, and recurring transactions. Review the chart of accounts before importing it rather than copying years of accounts you no longer use.
Enter opening balances as at the cut-over date and make the new trial balance match the old one. Open invoices and bills should be entered individually, dated as originally issued, so that aging and collections stay accurate. A single lump-sum balance for receivables hides which customers owe what. Record the date and method of every import so a reviewer can retrace it later.
Set up GST/HST and payroll carefully
Tax settings deserve their own check. Confirm the tax codes, the registration details and the reporting period, and test that a taxable sale, a zero-rated sale and a purchase with an input tax credit each land in the right accounts. The CRA expects records detailed enough to calculate the tax you collected and the credits you claim, and purchase invoices that support credits must be kept.
If payroll runs inside the software, bring across year-to-date earnings, deductions and employer contributions for each employee so that year-end slips are complete. A mid-year switch is a common source of slips that are short or reported twice. Keep copies of employee TD1 forms and your remittance history, and ask your accountant to compare the first remittance against the old method.
Run a short overlap, then reconcile
Where practical, keep the old system available for one period after cut-over and compare the first month’s results. The bank balances should agree, the receivables and payables should agree and the tax amounts should be reasonable against the previous month. Investigate differences immediately, while the source documents are fresh.
Check that bank feeds are connected to the correct accounts and that rules for categorizing transactions are reviewed rather than trusted. Feeds help with data entry, but they do not decide how a transaction should be treated.
Keep the old records, in a usable form
Cancelling the old subscription can end your access to years of history. The CRA generally expects you to keep required records and supporting documents for six years from the end of the last tax year they relate to, and some records, such as those about property acquisitions and share registers, must be kept indefinitely. Records that began as electronic have to be kept in an electronic, readable form.
Before you cancel, export the full transaction detail, reports and attachments, test that you can open them, and store backup copies in more than one place. Be aware of where the data lives: records kept on servers outside Canada are not treated as kept in Canada unless the CRA has given permission, and they must still be accessible to CRA officials on request. Ask your accountant how to handle this if your provider stores data abroad.
Your conversation checklist
- Pick a cut-over date at a month, period or year boundary
- Reconcile all bank, card and processor accounts to that date
- Save a trial balance, balance sheet and aged reports as read-only files
- Export the chart of accounts, contacts, open invoices and bills and the asset schedule
- Match the new opening trial balance to the old one
- Test GST/HST codes with a taxable, a zero-rated and an input-tax-credit purchase
- Carry over year-to-date payroll and TD1 forms for each employee
- Compare the first month against the old system
- Export full history and attachments before cancelling the old subscription
- Store backups in more than one place and note where the data is hosted
Further reading & sources
- CRA: Where to keep your records, for how long and how to request the permission to destroy them early
- CRA: Acceptable format, imaging paper documents and backing up electronic files
- CRA: GST/HST and payroll records
Tax rules and administrative requirements can change. Check the applicable official guidance and confirm your circumstances with a qualified adviser. This guide is not an assessment of your filing, payment or legal obligations.