Your chart of accounts (COA) is the master list of every account your business uses to categorize financial transactions. Get it right at the start and bookkeeping becomes systematic. Get it wrong and year-end becomes an expensive cleanup project for your accountant.
There is no universal CRA-mandated COA structure, but the standard five-category framework used by Canadian accountants maps cleanly to the financial statements that matter for tax purposes.
The Five Account Categories
| Category | What It Tracks | Appears In |
|---|---|---|
| Assets | What the business owns | Balance Sheet |
| Liabilities | What the business owes | Balance Sheet |
| Equity | Owner's stake in the business | Balance Sheet |
| Revenue | Income earned | Income Statement |
| Expenses | Costs incurred | Income Statement |
Recommended Structure for a Canadian Small Business
1000s — Assets
- 1010 — Chequing Account
- 1020 — Savings Account
- 1100 — Accounts Receivable
- 1200 — GST/HST Receivable
- 1300 — Inventory (if applicable)
- 1400 — Prepaid Expenses
- 1500 — Equipment (at cost)
- 1510 — Accumulated Amortization
2000s — Liabilities
- 2010 — Accounts Payable
- 2100 — GST/HST Payable
- 2200 — Payroll Liabilities (CPP, EI, income tax withheld)
- 2300 — Credit Card Payable
- 2400 — Line of Credit
- 2500 — Shareholder Loan
- 2600 — Corporate Income Tax Payable
3000s — Equity
- 3010 — Common Shares / Owner's Capital
- 3100 — Retained Earnings
- 3200 — Owner Draws / Dividends Paid
4000s — Revenue
- 4010 — Service Revenue
- 4020 — Product Sales
- 4900 — Other Income
5000s — Expenses
- 5010 — Advertising and Marketing
- 5020 — Bank Charges
- 5030 — Insurance
- 5040 — Interest and Bank Charges
- 5050 — Meals and Entertainment (50% deductible)
- 5060 — Motor Vehicle Expenses
- 5070 — Office Supplies
- 5080 — Professional Fees
- 5090 — Rent
- 5100 — Salaries and Wages
- 5110 — Subcontractors
- 5120 — Telecommunications
- 5130 — Travel
- 5140 — Home Office (if applicable)
- 5900 — Amortization Expense
Critical CRA-Specific Accounts
Two accounts that Canadian businesses frequently get wrong:
- GST/HST Receivable (asset) and GST/HST Payable (liability) — track these separately from revenue and expenses. Your net GST/HST position (payable minus receivable) is what you owe the CRA each period.
- Meals and Entertainment — must be a separate account because only 50% of this expense is deductible for corporate income tax. Your accountant needs to see it isolated.
- Shareholder Loan — if you personally put money into or take money out of the business, it goes here. The CRA audits this account closely under section 15(2) of the Income Tax Act.
Common Mistakes to Avoid
Too many accounts
Some business owners create an account for every possible expense type. This makes reconciliation harder and generates reports so detailed they're unreadable. Aim for 30–60 accounts for most small businesses.
Mixing personal and business
Personal expenses paid from the business account should go to the Shareholder Loan or Owner Draw account, not to an expense account. Coding a personal dinner to "Meals and Entertainment" is an audit risk and overstates your deductible expenses.
Putting GST/HST into revenue
GST/HST collected is not your income — it belongs to the government. Depositing client invoices and coding the entire amount to revenue (including the tax portion) will overstate revenue and create a reconciliation problem when you file your GST/HST return.
Starting Fresh or Cleaning Up Existing Books?
MaxRefund can set up or restructure your chart of accounts to match CRA requirements and your accountant's preferences — then keep it clean month after month.
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