The most common bookkeeping mistakes in small and Medium-Sized businesses: Insights from accountants in the Bankeo network

At a Glance. When an accountant takes over the books of a Quebec SME, they almost always find the same errors. Accountants in the Bankeo network, more than 1,500 professionals, report the following as top issues: mixing personal and business accounts, incorrectly tracked GST (5%) and QST (9.975%), missing supporting documents, even though the CRA and Revenu Québec require records to be kept for 6 years, data entry postponed until the year-end catch-up, and late filing of annual returns. Each of these errors can be corrected using a simple routine, detailed below, or delegated to a vetted accountant.

Sloppy bookkeeping doesn’t seem to cause any immediate problems. But it becomes a problem in March, when tax season rolls around, or the day Revenu Québec asks for your supporting documents. Since 2023, Bankeo has received more than 15,000 requests from business owners, and the network’s accountants, who are tasked with catching up on neglected books, describe a surprisingly recurring pattern. We’ve compiled their feedback from the field: here are the mistakes they see most often in small and medium-sized businesses, what they actually cost, and the right way to handle each one. This article complements our guide on The monthly cost of bookkeeping in Quebec.

What errors do accountants in the Bankeo network report most often?

A note on methodology, to be transparent: this ranking is based on qualitative feedback from the field, not a scientific survey. This information comes from ongoing discussions with accountants in the Bankeo network, more than 1,500 professionals, during mentoring sessions and, above all, catch-up accounting assignments, where an accountant takes over books that have been neglected for months. The errors are ranked according to how often accountants spontaneously mention them when asked what they find upon opening the books of a new SME client.

The following sections cover these errors one by one, providing the Quebec tax context and the corrective measures most frequently recommended by the network’s accountants.

Why does mixing accounts top the list?

This is the fundamental error, the one that leads to nearly all the others. A coffee paid for with a business card, business software charged to a personal card, a transfer from the company account to a personal account “just in case”: every mixed-use transaction will eventually need to be identified, justified, and reclassified. Accountants in the network describe situations where half the time billed is spent solely on separating personal expenses from business expenses.

• Open a separate business account from day one, with its own card, even as self-employed individuals where there is no legal requirement to do so. A clear distinction simplifies everything: T1 and TP1 returns, deductions, and audits.
• Incorporated companies: The rules are even stricter. The company is a separate entity from you. Paying for personal expenses with the company’s account adds to the shareholder advance account (error number 8 on the list), which carries a real tax risk.
• Make sure your reimbursements are done correctly. Did you pay a business expense from your personal account? Submit an expense report and request a documented reimbursement, don’t make an untraceable transfer.

GST and QST: Where are small and Medium-Sized businesses losing money?

In Quebec, Revenu Québec administers both the 5% GST and the 9.975% QST. As soon as your taxable sales exceed $30,000 over four consecutive calendar quarters, registration for both tax programs becomes mandatory; below that threshold, you are considered a small supplier and registration is optional. Accountants in the network report three recurring mistakes related to these taxes.

• Late entry. The $30,000 threshold is crossed during the year without anyone noticing; the business is then required to pay taxes it never billed for.
• Abandoned ITC and ITR accounts. A registered business recovers the GST paid on its business purchases through ITCs and the QST through ITRs. Without a valid invoice from the supplier, the claim is denied: that’s money left on the table with every tax return.
• Taxes collected mistakenly classified as revenue. The GST/QST amount billed to your customers passes through your account, but it belongs to the government. Spending it during the year leads to the classic “surprise balance” when it’s time to file.

Supporting documents: What to keep, and for how long?

The general rule from the CRA and Revenu Québec is clear: accounting records and supporting documents must be retained for 6 years after the end of the last tax year to which they relate. Legible digital images are accepted, which solves the problem of thermal receipts that fade: simply take a photo of the receipt on the same day in your accounting software, and you’re all set.

The most commonly reported pitfall in the field: believing that a bank or credit card statement is sufficient. It proves that a payment was made, but not what was purchased or the taxes paid. To support a deduction and claim your ITC and ITR, you need the supplier’s invoice with a description of the goods or services, a breakdown of the GST and QST, and, above certain amounts, the supplier’s tax registration numbers. During an audit, an expense without an invoice is considered a deferred deduction.

Source deductions, payroll, and bank reconciliation: Routine errors

From the moment it hires its first employee, an SME acts as a tax collector for the government: source deductions, contributions to the QPP, QPIP, and Employment Insurance, plus employer contributions. These source deductions (DAS) are remitted to Revenu Québec and the CRA according to the schedule assigned to the business, often on a monthly basis. Accountants in the network see two common mistakes: source deductions calculated manually using outdated rates, and late remittances because the money was used for other purposes. Penalties apply to the amounts owed and increase in the event of repeat offences, whereas the solution is as simple as this: set aside the source deductions with each payroll.

Another often-overlooked routine is monthly bank reconciliation: comparing, line by line, what your books show with what your bank statement shows. It’s the safety net that catches duplicate entries, forgotten bank fees, unrecorded customer payments, and suspicious transactions. Thirty minutes a month when the books are up to date; billable hours when everything is done at the end of the year.

What routine should you follow to ensure error-free books?

The good news from the field: none of these errors requires any individual skill to avoid. A short, regular cycle is all it takes, and that’s exactly what a bookkeeper or accountant implements first.

If this routine doesn’t last more than two months in your schedule, it’s not a failure, it’s a sign that bookkeeping has become a task best delegated. Our guide CPA or bookkeeper explains which type of professional is best suited for each situation: day-to-day bookkeeping is handled by a bookkeeper, while corporate filings (T2 at the federal level, CO-17 in Quebec) and tax decisions are handled by a CPA regulated by the Ordre des CPA du Québec.

Prevention or correction: How much does it cost?

Accountants in the network agree on one thing: catching up on 12 months’ worth of work costs more than entering data as it comes in, because it requires reconstructing the history, tracking down supporting documents, and correcting tax returns that have already been filed. In terms of figures, SMEs pay a median of about $3,000 per year for accounting services, with most paying between $500 and $6,000 depending on the industry and transaction volume. Based on actual fees from 1,248 contracts concluded through Bankeo (2024-2026), out of more than 15,000 requests received; the Bankeo Fee Barometer breaks down these fees by service.

When done properly, accounting actually costs less: well-maintained books reduce the number of billable hours at year-end, as detailed in Our Tips for Reducing Accounting Costs. And to compare profiles before making a choice, you can browse the Vetted accountants in the Bankeo network.

Frequently asked questions

What are the most common bookkeeping errors in small and medium-sized businesses?

According to qualitative feedback from accountants in the Bankeo network (1,500+ professionals), the most commonly reported issues are: mixing personal and business accounts, postponing data entry for months, incorrectly tracked GST/QST, missing supporting documents, failure to perform monthly bank reconciliations, miscategorized expenses, late submission of annual returns, and unmonitored shareholder advance accounts.

How long must you keep your supporting documents in Quebec?

As a general rule, the CRA and Revenu Québec require you to keep your accounting records and supporting documents for 6 years after the end of the last tax year to which they relate. Legible digital copies are accepted, provided you can produce them upon request during an audit.

Is a credit card statement sufficient as supporting documentation?

No. The statement proves that a payment was made, but it does not show what was purchased or the taxes paid. To support a deduction and claim your ITC and ITR, you need the supplier’s invoice, which must include a description of the goods or services, a breakdown of the GST and QST, and, depending on the amount, the supplier’s tax registration numbers.

Can I claim a refund for the GST and QST I paid on my business purchases?

Yes, if your business is registered for GST and QST. You can recover the GST paid on your business purchases through ITCs and the QST through ITR refunds, which are deducted from the taxes collected in the return filed with Revenu Québec. Each claim must be supported by a valid invoice.

What are the risks for an SME that submits its source deductions late?

Source deductions deducted from payroll belong to the government, not the business. Late payments to Revenu Québec or the CRA result in penalties calculated on the amounts owed, plus interest, and repeat offences cost even more. The solution: Set aside the source deductions with each payroll and follow the payment schedule assigned to your business.

How much does it cost to hire an accountant to keep your books error-free?

SMEs pay a median of approximately $3,000 per year for accounting services, with most paying between $500 and $6,000 depending on the industry and volume. Based on actual fees from 1,248 engagements completed through Bankeo (2024-2026), out of more than 15,000 requests received; the Bankeo Fee Barometer broken down by department. Matching with a vetted accountant from the network is free for business owners.

Official sources

1. Canada Revenue Agency - Bookkeeping
2. Revenu Québec - GST/HST and QST
3. Revenu Québec - Withholdings and Contributions
4. Ordre des CPA du Québec