Accounting records for SMEs in Quebec: A practical guide 2026

Accounting records for SMEs in Quebec: A practical guide 2026

Maintaining accounting records is a legal requirement for all SMEs in Quebec. Whether you are self-employed, the owner of a corporation, or a partner in a general partnership, your records must be accurate, complete, and accessible at all times. This practical guide explains which records are required, how long you must keep them, and how to avoid costly mistakes during a tax audit.

What is an accounting ledger?

An accounting ledger is a document, whether paper or digital, in which a business systematically records all of its financial transactions. According to the Canada Revenue Agency, the records include “accounts, agreements, ledgers, charts, forms, invoices, letters, supporting documents, and any other evidence containing information.”

For a Quebec SME, keeping accurate records serves to:

• Compliance with the Law - Required by the Quebec Tax Act and the Income Tax Act (federal)
• File Your Tax Returns - The T2, CO-17, and GST/QST forms require accurate data
• Optimize Your Tax Situation - Complete records allow your accountant to identify all the Eligible Deductions
• Facilitating Financing - Banks and investors require reliable financial statements based on rigorous accounting records
• Preparing for a Tax Audit - Revenu Québec or the CRA can audit your records at any time

The 6 mandatory accounting ledgers in Quebec

Every SME in Quebec, regardless of its legal form, must maintain the following records. Rigorous adherence to bookkeeping is the foundation of sound business accounting.

1. The general ledger

The general ledger is your business’s central record. It contains All transactions categorized by account : assets, liabilities, equity, revenue, and expenses. Each entry must include the date, amount, description, and reference to the source document (invoice, receipt, bank statement).

2. The sales and revenue journal

This ledger records every dollar your business earns. For each sale, you must record:

• Transaction Date
• Client Name
• Amount Before and After Taxes
• Invoice Number
• Payment Method

Photo by Recha Oktaviani on Unsplash - Maintaining accurate accounting records is a legal requirement for all SMEs in Quebec

3. The purchases and expenses journal

As the counterpart to the sales journal, this ledger records All Outgoing Payments. According to Revenu Québec, each expense must be supported by a supporting document that includes:

• Purchase Date
• The seller’s name and address
• Description of Goods or Services Purchased
• The Amount of GST and QST Paid
• The seller’s business number (to claim ITCs/ITRs)

4. The payroll ledger

If you have employees, you must maintain detailed records that include gross and net wages, source deductions (federal and provincial income tax), contributions to the QPP, Employment Insurance, and the QPIP, as well as taxable benefits. These records are essential for preparing T4 slips and RL-1 forms at the end of the year.

5. The GST/QST ledger

Every business registered for taxes must record the GST and QST collected on sales and paid on purchases. This ledger allows you to correctly calculate your rebates and claim your input tax credits (ITC) and input tax refunds (ITR).

6. The fixed assets ledger

This ledger lists all of the business’s durable assets (vehicles, equipment, furniture, computer hardware) along with their acquisition cost, purchase date, and the applicable depreciation rate based on the CCA classes.

Required records by business type

Requirements vary depending on your legal form. Here is a summary by business type.

Document retention: Legal retention periods in Quebec

According to Revenu Québec and the CRA, you must keep your records and supporting documents for a at least 6 years after the end of the last tax year to which they relate. For more information, see our article on the Retention of Accounting Records.

Here are the retention periods to follow:

• Invoices, receipts, bank statements - Minimum of 6 years
• Tax Returns (T2, CO-17) - Minimum of 6 years
• Payroll Records and T4/RL-1 Forms - Minimum of 6 years
• Contracts and Leases - 6 years after the end of the contract
• Fixed Asset Ledgers - 6 years after the disposal of the asset
• Documents Related to a Tax Dispute - Until fully resolved

Photo by Kelly Sikkema on Unsplash - Accounting records must be retained for at least 6 years in Quebec

Manual records or accounting software?

Both methods are accepted by Revenu Québec and the CRA. However, most SMEs benefit from using accounting software to automate their record-keeping. Here is a detailed comparison to help you choose.

To explore the available options, visit our Comparison of the Best Accounting Software in Quebec in 2026. Solutions such as QuickBooks, Sage, and Wave offer features tailored to Quebec SMEs, including GST/QST management and the generation of compliant reports.

Photo by Eugene Chystiakov on Unsplash - Accounting software can reduce bookkeeping time by 50% or more

The 7 most common mistakes in bookkeeping

After receiving more than 15,000 inquiries from entrepreneurs since 2023, Bankeo has identified the most common mistakes. Here they are, along with tips on how to avoid them. For a complete list, see our article on Most Common Accounting Errors.

1. Mixing personal and business finances

Using a single bank account for both personal and business expenses makes bookkeeping extremely complicated. Open a dedicated business account as soon as you start your business.

2. Keep track of invoices and receipts

Putting off entering transactions until the end of the month (or worse, the end of the year) increases the risk of omissions and errors. Record your transactions at least once a week.

3. Failing to keep supporting documents

A record without supporting documentation is worthless during a tax audit. Scan your receipts as soon as you receive them and file them by category.

4. Forgetting about small cash expenses

Expenses paid in cash (parking, supplies, business meals) are often overlooked. Use an expense tracking app or a dedicated notebook.

5. Not reconciliating bank statements

Performing a monthly bank reconciliation helps identify errors, missed transactions, or fraud. Without this step, your records may not reflect reality.

6. Ignoring the GST/QST on small transactions

Even small purchases include recoverable GST/QST. Every unclaimed tax credit is money lost for your business.

7. Using an inappropriate chart of accounts

A poorly structured chart of accounts makes it difficult to classify transactions and complicates your accountant’s work. Have a professional set it up for you from the start.

When should you entrust your records to an accountant?

It is possible for a self-employed worker with few transactions. But there are several signs that it’s time to entrust this task to a professional in the bookkeeping or to a Accountant :

• Your revenue exceeds $100,000 per year
• Do you have employees (Payroll is complex in Quebec)
• You are registered with the GST/QST
• Do you have fixed assets (vehicles, equipment) to be depreciated
• Are you preparing for a Funding Application
• You have received a audit notice from Revenu Québec or the CRA
• Do you spend more than 5 hours per week on your accounting

L'Ordre des CPA du Québec recommends consulting a professional as soon as the complexity of your operations exceeds your accounting skills. A good accountant doesn’t just keep your records, they use them to Optimize Your Tax Situation and advise you on your business decisions.

Practical checklist: Setting up your records

Here are the steps to set up an effective accounting system for your SME:

1. Open a Business Bank Account - Keep your personal and business finances separate
2. Choose Accounting Software - QuickBooks, Sage, Wave, or another solution tailored to your needs
3. Set Up Your Chart of Accounts - Have it reviewed by an accountant to avoid classification errors
4. Register for Taxes - GST/QST if your revenue exceeds $30,000 over four consecutive quarters
5. Digitize Your Supporting Documents - Use a mobile app to take photos of your receipts
6. Schedule a Monthly Bank Reconciliation - Set aside time each month for this essential task
7. Set a Frequency for Data Entry - At least once a week, ideally daily
8. File Your Documents - Set up a clear filing system (both physical and digital) for at least 6 years

Frequently asked questions about accounting records in Quebec

What are the mandatory accounting records for an SME in Quebec?

Every SME in Quebec must maintain, at a minimum, a general ledger, a sales journal, a purchases journal, a payroll register (if there are employees), a GST/QST register (if registered), and a fixed assets register. Corporations must also maintain a minutes book and a shareholder register.

How long must accounting records be retained in Quebec?

Records and supporting documents must be retained for at least 6 years after the end of the last tax year to which they pertain. In the event of a tax dispute, the retention period must be extended until the matter is fully resolved.

Can accounting records be kept in digital format?

Yes. Revenu Québec and the CRA accept electronic records, provided they are legible, accessible, and printable upon request. Recognized accounting software (QuickBooks, Sage, Wave) generates records that comply with legal requirements.

What are the penalties for improper recordkeeping?

Penalties can be as high as 50% of the tax balance owed, plus accrued interest. The CRA may also disallow claimed deductions or credits if supporting documentation is missing. In serious cases, criminal prosecution is possible.

Do you need an accountant to maintain a small business’s records?

While not mandatory, it is strongly recommended as soon as your revenue exceeds $100,000, or if you have employees or fixed assets. An accounting technician or CPA ensures compliance and helps you maximize your tax deductions.

What is the difference between bookkeeping and record-keeping?

The two terms are often used interchangeably. Bookkeeping refers to the daily recording of transactions, while accounting records encompass all financial documents kept by the business (ledgers, invoices, contracts, and tax returns).

How should you organize your accounting records for a tax audit?

Organize your documents by tax year, then by category (income, expenses, payroll, taxes, fixed assets). Store the digital originals in a secure system with backups. In the event of a tax audit, an accountant can assist you in presenting your records in an organized manner.

Does a self-employed individual have the same obligations as a corporation?

The basic requirements are the same (general ledger, sales and purchase journals), but self-employed individuals are not required to maintain minutes or a shareholder register. They report their income on Form T1/TP-1 rather than Form T2/CO-17.

Which accounting software should you choose for bookkeeping in Quebec?

The software programs most commonly used by Quebec SMEs are QuickBooks (the most popular), Sage (ideal for payroll), Wave (free for invoicing), and Acomba (developed in Quebec). The choice depends on your company’s size, your budget, and your specific needs.

How much does it cost to have an accountant maintain your books in Quebec?

An accounting clerk charges between $45 and $75 per hour, while an accounting technician charges between $75 and $125 per hour for bookkeeping services. A CPA charges between $125 and $300 per hour for a full-service engagement. For an SME, the monthly budget ranges from $200 to $800, depending on the volume of transactions and the complexity of the work.

Sources

1. Canada Revenue Agency - Recordkeeping
2. Revenu Québec - Record-keeping and Supporting Documents
3. Ordre des CPA du Québec
4. Les Affaires - Accounting Requirements for Small Businesses
5. Quebec Registraire des entreprises