53. Bookkeeping for Small Business Canada: 4 Essential Practices to Master Your Finances with Sarah Moser
- Brittany Miller
- Apr 9, 2024
- 14 min read
Updated: Jan 2
I always start these conversations a little nervous because numbers have never been my favorite thing. But when Sarah and I sat down to chat about bookkeeping for small business Canada, something shifted. She has a way of making numbers feel doable—and even a little fun.
Sarah says that’s exactly her goal. Bookkeeping for small businesses doesn’t have to be scary. It’s the foundation that lets you make confident choices, whether you want to hire your first team member, raise prices, or finally pay yourself consistently.
Why bookkeeping for small business Canada matters (and why most of us avoid it)
The biggest piece of advice I (Sarah) give every entrepreneur is simple: separate your money. Separate your personal bank account from your business bank account. When you start with a clean separation, bookkeeping for small business Canada becomes manageable instead of chaotic.
I totally agree—because when everything is mixed together you spend hours trying to untangle Amazon purchases and coffee receipts. And if you’re like me, you’ll shove it to the bottom of your to-do list.
Sarah notes that avoidance often comes from fear. People feel like they must be doing well because sales are coming in, but if you never look at the books you could be missing major problems. Bookkeeping for small business Canada is black and white: income minus expenses equals profit. Knowing that number gives you options. So that's exactly what we're going to talk about today, but before we dive in.
If we haven't met yet, I’m Brittany, an online marketing strategist for female entrepreneurs. I teach women how to make their entrepreneurial dreams a reality through smart, actionable marketing strategies that get them seen, loved, and paid. Whether you’re eager to DIY your way to success or hire professionals to help you along the way–my goal is to make sure you walk away with the clarity you need to see the results you desire and build a life you love.
And if you haven't met Sarah, she's a CPA turned virtual bookkeeper for creative entrepreneurs and service based businesses. She helps entrepreneurs navigate the numbers side of business so they can focus on their true passion! Sarah has more than 5 years experience in the corporate accounting world, but fell in love with the world of small business. Now she educates and empowers entrepreneurs on managing their money with confidence, so that is one of my favourite topics to discuss if your audience would benefit from my experience in that area.
Table of Contents
Bookkeeper vs. Tax Professional: Who do you actually need?
Brittany: I had no idea there were so many different titles. How should a small business owner think about these roles when they’re building their financial team?
Sarah: Think of it like doctors. A bookkeeper is like a nurse, the person who keeps daily and monthly records—categorizes transactions, tracks invoices, and runs reports. A tax professional (CPA, EA, or tax preparer) prepares your tax return and helps with tax strategy, must like a doctor would conduct surgeries. An accountant can fall anywhere in between. Bookkeeping for small business owners is the day-to-day work; tax preparation uses that work to file correctly and plan ahead.
Brittany: So if someone is just starting and budget is tight, do they need both?
Sarah: If you’re new, start with a bookkeeper —unless you want to DIY. Clean, accurate books will make tax time smoother and help you make decisions. And when your business grows or taxes get complicated, bring a tax professional onto your team.
Start simple: systems that actually stick
Sarah: My second rule is to choose a bookkeeping system you will use. If you’re overwhelmed by QuickBooks or Xero, start with a spreadsheet. The goal of bookkeeping for small business Canada is to capture all income and expenses by category. If a spreadsheet keeps you consistent, it’s better than a fancy software you never open, bonus points because spread sheet software is usually free with most email accounts.
Brittany: That was a relief to hear. I think a lot of people assume they must jump into accounting software on day one and that definitely feels overwhelming.
Sarah: Software is helpful, but sustainability is the priority. If you do move into software, link bank feeds carefully and reconcile regularly—those connections can be finicky. No matter what you use, keep it up-to-date. Monthly is the minimum I recommend for bookkeeping for small business Canada.
Listen to our full conversation here:
The monthly rhythm: make bookkeeping feel delightful, not dreadful
Sarah: I want entrepreneurs to find a rhythm. I call mine “Finance Friday”—a dedicated hour or two once a month to reconcile accounts, run reports, and check the numbers. If you keep it on your calendar and make it slightly special—a coffee shop date, a cozy blanket, whatever makes it enjoyable—you’ll be more likely to stick to bookkeeping for small business Canada.
Frequency: Monthly as a minimum. Weekly if you have high transaction volume.
Duration: 1–3 hours depending on volume; less if you maintain the habit.
Mindset: Treat it like self-care for your business. Knowing your numbers reduces stress.
The four essential monthly practices for bookkeeping for small business Canada
Sarah: There are four things I ask every business owner to do each month. These are the backbone of bookkeeping for small business Canada:
Reconcile your accounts. Match your bank statement to your books. This catches duplicates, missed transactions, and bank feed glitches.
Review your reports. Run a profit and loss statement. Look at trends month-over-month and year-over-year. Know what changed and why.
Compare actuals to budget. Check your numbers against your plan. Adjust the plan or your behavior if you’re consistently off.
Set aside money for taxes. Move a percentage of your profit into a separate tax account so you’re not surprised at year-end.
Brittany: That list feels both doable and powerful. Setting aside taxes is the one I’m most guilty of skimping on. I used to be really good at it but I've been investing more in my business this year and I haven't been as diligent at putting money aside for taxes. I'm going to start doing that again now, how much do you recommend we set aside?
Sarah: So many business owners do. I recommend 20–30% of profit for Canadian business owners, depending on your tax situation. Put it in a separate account—ideally with a different bank if you’re tempted to borrow from it. Bookkeeping for small business Canada is as much about cash flow planning as it is about record-keeping.
Key numbers that actually matter
Sarah: Entrepreneurs obsess over sales, but sales alone don’t tell the truth. The most important number is your net profit—what’s left after expenses. That’s what pays you and lets you reinvest.
Brittany: What else should people be watching? My bookkeeper has recommended things like:
Gross margin and net profit: If your expenses outpace sales you’ll be operating at a loss even with high revenue.
Most profitable service or product: Track which offerings bring the best revenue relative to time spent.
Time vs. money: If you spend the most time on a service that brings in the least revenue, that’s a red flag.
Expenses by category: Spot creeping subscription costs and unused tools.
But truthfully, I don't know what some of these are and I haven't tracked my hours for client projects before.
Sarah: Bookkeeping for small business Canada is a storytelling tool. The numbers tell you where to raise prices, where to stop offering something, or where to hire support to buy back time. Every business will track different numbers depending on their goals. There are great things to track if they make sense for your business.
How to track your time so your pricing makes sense
Brittany: Time tracking was a game-changer for me. It made me realize how much I was undercharging for services I loved doing. If this is something you'd like to do to, I typically recommend a free online tool called Toggl for time tracking.
It’s user-friendly and allows you to tag time by project or service. When you pair Toggl time data with bookkeeping for small business Canada, you can calculate hourly profitability and make informed pricing decisions.
Tips for time tracking:
Start simple: track only the core services for 30–60 days to get a baseline.
Compare revenue to time: which services give you the best return for your effort?
Use tags or projects to group similar activities (admin, client work, marketing).
Managing expenses: how to stop subscriptions from eating your profits
Sarah: Subscription creep is real. I love a free trial as much as anyone, but if you don’t audit subscriptions, they multiply. Part of bookkeeping for small business Canada is an expense audit at least once a year.
Brittany: What’s your rule of thumb for annual vs monthly billing?
Sarah: If your cash flow is steady and predictable, paying annually usually saves you money. But if you operate month-to-month and find large annual bills stressful, stick with monthly to smooth cash flow. The right choice depends on your planning discipline and the timing of your cash inflows.
Practical ways to manage expenses:
Keep a running list of subscriptions and renewal dates.
Set calendar reminders for annual payments so you can prepare cash in advance.
Combine tools where possible—one app might replace two or three others but requires a bit of research to find initially. Asking other entrepreneurs is a great idea, or check out this blog post to see what tools I use in my business
Check for ROI: if a tool or service doesn’t generate measurable returns, cancel it.
Websites like AppSumo are great options to look into as well. You can pay low one-time fees to support emerging businesses and have access to their tools and software for life. I've purchased things on here that have streamlined my operations and saved me so much money!
Budgeting as a busy entrepreneur: backwards math
Sarah: Budgets don’t have to be complicated. I recommend “backwards math.” Start with the end goal—how much you personally need to take home—and work backward to sales targets and expenses.
Steps she recommends to build a practical budget:
Decide your personal take-home target for the month.
Estimate taxes to set aside (e.g., 20–30%).
List fixed monthly expenses (tools, subscriptions, rent, payroll).
Calculate required net profit to cover take-home plus expenses.
Determine how much revenue you must generate to reach that net profit.
Adjust pricing, services, or expenses to make the math realistic.
Brittany: That approach made my goals feel achievable because it connected my lifestyle needs directly to business decisions. Bookkeeping for small business Canada becomes a planning tool, not just a chore when you do it your way and I really like that but I often struggle to rationalize the higher costs (compared to competitors).
Pricing your services: balancing time, value, and market
Brittany: Pricing always trips people up. How do you set a price that covers your time, pays your bills, and doesn’t scare potential clients away?
Sarah: First, know your numbers—time tracked, expenses, and target profit. Use your bookkeeping for small business Canada data and time tracking (like Toggl) to calculate the real hourly cost of delivering services. Then decide how much value you deliver compared to competitors. If you can clearly communicate the results and benefits, you can charge more. Confidence in your price helps too—if you hesitate, potential clients sense it.
Tips to test pricing:
Offer a few pilot clients at a higher rate to validate demand.
Create tiered offerings (basic, premium) to capture different budgets.
Track conversion rates and client satisfaction—price isn’t the only reason people buy.
Five common bookkeeping problems and how to fix them
Sarah: When I clean up client books, these five issues show up most often. If you can avoid them, your bookkeeping for small business Canada will stay in great shape.
Unpaid invoices. Track accounts receivable and follow up promptly. Nothing is worse than doing the work and forgetting to invoice—or letting invoices go unpaid.
Unreconciled accounts. If you don’t reconcile your bank statements monthly, small errors become big problems later when you can't remember what you've purchased. Reconcile to ensure your bank and books match.
Personal expenses in business books. Mixing personal and business purchases leads to messy records and potential legal issues. Keep separate accounts and transfer owner draws when you pay yourself.
Misclassified transactions. Incorrectly categorized expenses distort profit and tax reporting. If you’re unsure, consult a bookkeeper or accountant.
Missing receipts. Receipts back up your deductions and are essential if you’re audited. Don’t rely on credit card statements alone; capture receipts in a system.
Brittany: I definitely learned this the hard way—my bookkeeper asked for receipts I hadn’t saved. I had to reconstruct months of purchases. I really didn't know I needed to keep receipts, I thought the line items on my credit card statement would be sufficient. Oops!
Sarah: A simple receipt process solves that. I use a Google Drive folder system: a top-level receipts folder, subfolders by year, then by month. Use an app to scan or forward email receipts to that folder so everything is searchable. This is one of the easiest habits to build, and it pays off in less stress and cleaner bookkeeping for small business Canada. Or if you're using Quickbooks you can take photos of your receipts and store them in there.
Receipts, records, and Updates: how to be audit-ready
Sarah: No one wants to think about audits, but the best protection is organized records. Keep receipts in one place and link them to transactions in your books. If you operate in Canada, keep five to seven years of records depending on your structure and tax rules.
Brittany: And don’t get fooled by misinformation on social media. A lot of people give tax tips who aren’t qualified, and rules change regularly.
Sarah: Right—always vet your sources. If in doubt, ask a professional. Bookkeeping for small business Canada relies on current rules and accurate record-keeping and those can change without you realizing it.
When expenses exceed income: practical next steps
Brittany: What if a business owner looks at their numbers and expenses are higher than sales? Panic mode sets in when they really really can't lower their expenses (or so they think).
Sarah: First—breathe. Then decide whether you can cut expenses or increase revenue (sometimes you just need an outside perspective on your expenses).
It’s a simple equation: sales minus expenses equals profit. If expenses are non-negotiable, sales must rise. If sales can’t be easily increased, ruthlessly evaluate expenses for what’s essential. Be honest about ROI on every expense, including networking events and subscriptions. If something isn’t delivering measurable value, cut it.
Brittany: And sometimes you do need to lean into uncomfortable choices—raise your prices or stop offerings that don’t scale. This was another lesson I learned the hard way.
Five practical bookkeeping habits to adopt this month
Sarah: If you want quick wins for bookkeeping for small business Canada, start with these habits:
Schedule one Finance Friday each month and protect that time.
Reconcile your bank account every month—no exceptions.
Keep receipts organized in cloud storage and link them to transactions.
Track time for at least 30 days to see where your hours are going.
Set up a tax savings account and automatically transfer a percentage of profit monthly.
Communication, motherhood, and business: surprising transferable skills
Brittany: We had a bit of a mom moment in our chat. How has being a mom influenced your bookkeeping approach?
Sarah: Honestly, communication. My toddler helped me sharpen how I explain things. I avoid jargon, break concepts into simple steps, and document everything. Those skills translate directly to client work—clear, simple guidance helps people actually implement bookkeeping for small business Canada without feeling overwhelmed.
Failure, consistency, and the messy action that moves you forward
Brittany: You mentioned one of your biggest mistakes was waiting until everything felt perfect before launching.
Sarah: Yes—paralysis by perfection. The lesson was that imperfect action wins. Consistency beats perfection. Start with messy action and build habits, and iterate as you go. The progress compounds and that's all you need in the beginning.
Frequently Asked Questions
What is bookkeeping for small business Canada and why is it important?
Bookkeeping for small business Canada is the process of recording and organizing all financial transactions for a Canadian small business. It’s important because it tells you whether your business is profitable, helps you plan cash flow, supports accurate tax filings, and provides the insight to make strategic decisions like pricing, hiring, and investments.
How often should I do bookkeeping for small business Canada?
At minimum, review and update your books monthly. If your business has many transactions, consider weekly maintenance. A monthly cadence—your Finance Friday—is a realistic rhythm that keeps your bookkeeping for small business Canada tidy and prevents large cleanups later.
Do I need to use accounting software for bookkeeping for small business Canada?
Not immediately. Start with a spreadsheet if that keeps you consistent. The core of bookkeeping for small business Canada is capturing income and expenses by category. When transaction volume grows, move to accounting software like QuickBooks, Xero, or Wave for automation and better reporting.
What percentage should I set aside for taxes?
A common guideline is 20–30% of your net profit, but it varies by business and province. The safest approach in bookkeeping for small business Canada is to consult a tax professional for a tailored estimate and then automate transfers into a separate tax savings account.
How do I handle personal expenses that accidentally went through my business account?
If personal expenses appear in your business books, categorize them as owner draws or reimbursements and move funds accordingly. Going forward, separate accounts to prevent commingling. For bookkeeping for small business Canada, consistent separation is essential to avoid tax and legal complications.
Which expenses are deductible for bookkeeping for small business Canada?
Deductible expenses generally include costs that are ordinary and necessary for your business—like software, advertising, and professional fees. Personal clothing or personal expenses are not deductible unless they are specifically required and exclusively used for business (which is rare). Always verify with a qualified accountant to ensure compliance with current tax rules.
How can I track time effectively for bookkeeping for small business Canada?
Use a simple tool like Toggl and tag time by project or service. Track for 30–60 days to get a baseline. Then compare time data to revenue in your bookkeeping for small business Canada to calculate true profitability by service and inform pricing decisions.
What if my expenses are higher than my income?
Review your budget and cut non-essential expenses, revisit pricing, and look for ways to increase sales. Bookkeeping for small business Canada gives you the clarity to choose: reduce costs or increase revenue. Often a mix of both is necessary.
How long should I keep records for bookkeeping for small business Canada?
Retention periods vary by jurisdiction and business type. In general, keep records and supporting receipts for at least five to seven years. Keeping organized digital copies in a cloud folder makes retrieval simple and supports compliance if you’re ever audited.
Can I do bookkeeping for small business Canada myself or should I hire someone?
You can start DIY if your transactions are simple and you’re willing to maintain consistency. A bookkeeper becomes valuable as your business grows or if you need cleaner financial reporting. Regardless, bookkeeping for small business Canada is essential; hire when it frees up time to grow or when accuracy becomes critical.
Where to go next
Brittany: If you’re feeling overwhelmed, remember: small consistent steps win. Bookkeeping for small business Canada is a muscle—you build strength with regular practice.
Sarah: If you want a ready-made guide, I’ve created a bookkeeping checklist that outlines exactly what to do each month to keep your finances tidy and stress-free. Follow practical steps, build a habit, and your business will thank you. Start simple, stay consistent, and let your numbers guide your next best move.
Brittany: And for my fellow entrepreneurs—if you need help with marketing while you focus on the books, I’m here for that too. But first, get your bookkeeping for small business Canada steady. It’s the foundation everything else rests on.
Final thoughts on Bookkeeping for Small Business Owners in Canada
Sarah: Don’t let fear of the numbers hold you back. Bookkeeping is the tool that gives you clarity and control. Separate your accounts, pick a sustainable system, reconcile monthly, set aside taxes, and use your data to make decisions about pricing, services, and growth.
Brittany: This was such a great conversation. If you remember one thing today, let it be this: consistent, simple bookkeeping is more powerful than sporadic perfection. Make bookkeeping for small business Canada part of your routine—and then build the business you actually want to run.
Episode References
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00:00 Intro
2:45 Getting into finances
5:15 Book keeper vs tax accountant differences
7:45 Book keeping practices for business owners
13:00 What numbers you need to look for
15:45 Identifying unneeded expenses
19:00 Managing expenses with unpredictable income
22:24 4 things to stay on top
26:15 Budgeting as a small business owner
31:00 5 most common problems with your books
38:10 Being a mom in business
40:00 Failures & what she learned
42:00 Wrap up
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