Proper record keeping is not optional - it is a legal requirement for every business. Your tax authority requires you to keep records of all business transactions, and the records must be in English (or translatable), verifiable and retained for the required period. Good records protect you in an audit, help you claim all entitled deductions and make financial management much easier.
Understand the minimum record retention period in your country (typically 5-7 years)
Keep records of all income - invoices, receipts, bank statements
Keep records of all expenses - receipts, bills, credit card statements
Maintain records of all assets - purchase price, depreciation, disposal
Keep payroll records including pay slips, tax withholding and super/pension
Store records securely - digital records are acceptable in most countries
Back up digital records regularly
Organise records so they can be produced quickly if requested by the tax authority
Businesses in Canada operating under the GST/HST/PST/QST system must meet these compliance requirements set by CRA:
Throwing out records before the retention period expires
Not keeping receipts for small cash purchases
Relying solely on bank statements without supporting documents
Not backing up digital records
Mixing personal and business records in the same filing system
Not keeping records of assets and their depreciation history
SortBooks connects to your Xero account and finds transactions sitting in catch-all accounts. AI suggests the right account and tax code, learning from your own past coding. You approve it and SortBooks updates Xero. Reconciled transactions are locked by Xero, so those stay in SortBooks with an Open in Xero link.
AI suggests a category and GST/HST/PST/QST code for each transaction. You approve it before anything changes in Xero.
Growth and above get a quarterly GST/VAT estimate to check before you lodge with CRA.
Ask about your P&L, cash and who owes you, using live Xero data. Every dollar figure is checked against Xero.
Requirements vary: Australia 5 years from the date you lodge your tax return. UK 6 years (5 years after 31 January filing deadline). US generally 3 years (6 years if underreporting). Canada 6 years. Most countries recommend keeping records longer if there are complex transactions.
Yes. Most tax authorities accept digital records provided they are legible, complete, backed up and can be produced in a readable format. SortBooks and Xero together provide a fully digital, cloud-based record keeping solution.
SortBooks writes the changes you approve straight to Xero, so your records stay in one place. Every change SortBooks makes is also recorded in an activity log.
AI suggests, you approve, SortBooks updates Xero. Try it free for 14 days.