If you cannot say what your gross margin was last month, or how many months your cash would last if sales stopped tomorrow, you are running your business on guesswork. Six numbers tell you nearly everything: revenue, gross margin, fixed costs, cash runway, receivables aging and your tax set-aside. Once your books are clean, reviewing them takes about 30 minutes a month, and it changes how you price, spend and plan.
What numbers should a small business track every month?
Most Canadian owners watch one number, the bank balance, and it is the least useful of the lot. It mixes your money with the CRA's money, with deposits you have not earned yet and with bills that have not cleared. These six monthly numbers give a far more honest picture.
| Number | What it tells you | Warning sign |
|---|---|---|
| Revenue | Whether the business is growing, flat or shrinking | Two or more months of decline with no seasonal explanation |
| Gross margin | How much of each sale you actually keep after direct costs | Margin falling while sales grow |
| Fixed costs | Your monthly overhead before you sell anything | Overhead growing faster than revenue |
| Cash runway | How many months you could survive a bad stretch | Less than three months of runway |
| Receivables aging | Who owes you money and for how long | Invoices sitting unpaid past 60 days |
| Tax set-aside | Whether the CRA's share is sitting safely in a separate account | Set-aside balance below the GST/HST you have collected |
None of these requires a finance degree. They require books that are reconciled monthly, so the numbers you pull are real.
How do you track revenue and gross margin?
Revenue: what you earned, not just what hit the bank
Record revenue in the month you earned it, not the month the client finally paid. A $9,000 month followed by a $21,000 month often is not a boom and a slump; it is one slow-paying customer distorting your view. Tracking earned revenue month over month, and against the same month last year, shows the true trend line and exposes seasonality you can plan around instead of being surprised by.
Gross margin: the number that catches silent profit leaks
Gross margin is revenue minus direct costs, shown as a percentage. Take a Shopify seller with $20,000 in monthly sales: $7,200 of product cost, $1,600 of shipping and $1,200 of platform and payment fees leaves $10,000, a 50 per cent gross margin. If that margin was 56 per cent two quarters ago, roughly $1,200 a month is leaking out through supplier price creep, discounting or freight. Sales went up, profit did not, and only the margin line tells you why. Margin tracking is one of the first things we set up for e-commerce clients because platform fees hide the leak so well.
What do fixed costs and cash runway tell you?
Fixed costs: the bills that arrive whether or not you sell
Add up everything you pay even in a zero-sales month: rent, insurance, software subscriptions, phone, loan payments, base payroll. Most owners guess low. A business that assumes $6,000 of overhead and actually carries $8,200 is misjudging its break-even point by more than $25,000 a year. Review the list quarterly; unused subscriptions and forgotten services are usually the easiest money you will ever save.
Cash runway: how long you could survive a rough patch
Runway is cash in the bank divided by monthly fixed costs. With $24,000 in the account and $8,000 of overhead, you have three months. A common rule of thumb is to hold at least three months of runway, and closer to six if your business is seasonal, like most real estate, tourism or landscaping businesses. Runway is the number that tells you whether you can afford to hire, whether a slow quarter is survivable, and when a line of credit needs to be arranged, which is always before you need it.
Why do receivables aging and a tax set-aside matter so much?
Receivables aging: revenue is not real until it is collected
An aging report groups unpaid invoices by how overdue they are: current, 30, 60, 90-plus days. If clients owe you $15,000 and $6,000 of it is past 60 days, you do not have a sales problem, you have a collections problem, and the odds of collecting drop with every month you ignore it. Reviewing the report monthly turns awkward chasing into routine follow-up while the invoice is still fresh.
Tax set-aside: separate the CRA's money from yours
The GST/HST you collect was never yours. Invoice $10,000 plus 13 per cent HST in Ontario and $1,300 of that deposit belongs to the CRA. Move it to a separate savings account the week it lands, along with a slice of profit for income tax. Many owners set aside 25 to 30 per cent of net profit as a starting point, then refine it with their accountant based on province and business structure.
Three CRA rules make the set-aside non-negotiable. First, once your taxable revenues pass $30,000 over four consecutive calendar quarters, or in a single quarter, you must register for and charge GST/HST. Second, individuals whose net tax owing is more than $3,000 ($1,800 in Quebec) in the current year and in either of the two previous years must pay quarterly tax instalments rather than one payment in April. Third, self-employed filers get until June 15 to file, but any balance owing is still due April 30, and interest starts the day after. A funded set-aside account turns all three from emergencies into line items.
What does a simple monthly review ritual look like?
Pick a fixed date, the first Friday of the month works well, and block 30 minutes. Then run the same six checks every time:
- Confirm the previous month's books are reconciled, meaning every bank and credit card transaction is categorized and matched.
- Write down revenue and compare it to last month and to the same month last year.
- Check gross margin against your baseline. A drop of more than two points gets investigated.
- Recalculate runway: cash divided by monthly fixed costs.
- Scan the receivables aging report and send follow-ups on anything past 30 days.
- Top up the tax set-aside account to cover GST/HST collected plus your income tax percentage.
Finish by making one decision based on what you saw: raise a price, chase an invoice, cancel a subscription, delay a purchase. A review that produces no decision is just admiration. If you would rather have the numbers handed to you already checked, that is exactly what a monthly bookkeeping package is for.
How do clean books turn tracking into better decisions?
Every number above is only as good as the books behind it. If transactions sit uncategorized for five months, your margin is fiction and your runway is a guess. Clean books also keep you onside with the CRA, which requires you to keep records and supporting documents for six years from the end of the last tax year they relate to. Our guide to record-keeping rules for Canadian small business owners covers what that means in practice, and if your books need rescuing first, start with the most common bookkeeping mistakes we see.
This is also where fixed-fee bookkeeping earns its keep. When you pay hourly, every question costs money, so owners stop asking questions and go back to guessing. A fixed monthly fee flips the incentive: your books are reconciled every month, the six numbers arrive without you building them, and asking your accountant "can I afford to hire?" costs nothing extra. For most small businesses the fee is a rounding error next to one bad decision made on stale numbers.
Frequently Asked Questions
How many months of cash runway should a Canadian small business keep?
A widely used rule of thumb is a minimum of three months of fixed costs held in cash, and closer to six months if your revenue is seasonal or concentrated in a few large clients. Calculate it as cash in the bank divided by monthly overhead. If you are below three months, treat rebuilding the buffer as a monthly line item, and arrange a line of credit while your numbers are strong rather than waiting until you need it.
What percentage of income should I set aside for taxes in Canada?
There is no single CRA percentage because it depends on your province, income level and whether you operate as a sole proprietor or a corporation. Many self-employed Canadians start by setting aside 25 to 30 per cent of net profit for income tax and CPP contributions, then adjust after their first filing. GST/HST is separate: whatever you collect on sales belongs to the CRA and should be moved to a dedicated account as soon as it is deposited.
When do I have to register for GST/HST in Canada?
You must register once your total taxable revenues exceed $30,000 over four consecutive calendar quarters or in a single calendar quarter. Below that threshold you are a small supplier and registration is optional, though registering early lets you claim input tax credits on the GST/HST you pay on expenses. Track revenue monthly so the threshold never sneaks up on you; crossing it in one strong quarter means you start charging GST/HST almost immediately.
How long does the CRA require me to keep business records?
Generally six years from the end of the last tax year the records relate to. That covers invoices, receipts, bank statements, contracts and anything else supporting the amounts on your returns. Digital copies are acceptable, so a habit as simple as photographing receipts the day you get them satisfies the requirement. If you file a return late, the six-year clock runs from the date you filed, and the CRA can ask you to keep records longer in specific cases.
Do I need accounting software to track these six numbers?
You can start with a spreadsheet, and for a very small business that is genuinely fine for the first year. The problem is upkeep: the numbers are only useful if the underlying transactions are complete and reconciled, and manual entry is where owners fall behind. Cloud software like QuickBooks Online or Xero, with bank feeds connected, removes most of the typing. What matters more than the tool is that someone closes the books every single month.
If you want these six numbers delivered every month without building them yourself, book a free 30-minute consultation with SNF Accounting. We are a CPA-led firm serving all of Canada with fixed pricing from $199 per month, so you always know your cost and you always know your numbers.