Your inventory records do more than keep the shelves full.

This is how we'd think about inventory records for a small business. It's a playbook, not a report on a client.

Our inventory playbooks were about running out. In retail stores, vape shops and daycares, one person knows what to order and when. The same records do a second job, though. Sooner or later someone outside the business asks to see them, and a notebook in the stockroom won't do.

6 years

how long the CRA says to keep business records, from the end of the last tax year they relate to

24 hours

to hand food trace-back records to the CFIA once it asks

37%

cite trouble working out what the business is worth as a barrier to succession, per CFIB

The CRA wants a count

Your cost of goods sold comes from what you had at the start of the year, what you bought and what's left at the end. The CRA tells businesses to do an actual stock count at the end of each fiscal period, unless they run a perpetual system and keep a written record of each count. That number sets your taxable income. Count high and you pay tax on stock you don't have. Count low and an auditor will want to know why.

Then you keep it. Business records have to stay around for six years from the end of the last tax year they relate to. A count sheet from 2021 is still a tax record.

Your insurer wants proof

After a fire, flood or break-in, you have to show what you lost. The Insurance Bureau of Canada tells business owners to attach purchase orders, invoices and receipts to a claim and to photograph damaged inventory. You also sign and swear that your proof of loss is true. If the stock list was in a notebook on the same shelf as the stock, you're estimating from memory, under oath. Severe weather alone caused over $1.8 billion in commercial insured losses in Canada in 2024.

Recalls and regulators want a paper trail

If you sell consumer products in Canada, the law says you keep the name and address of whoever supplied each product, plus where and when you sold it, for six years. Selling food at retail means tracing it one step back to its supplier, by lot code, keeping that for two years and giving it to the CFIA within 24 hours of a request. Vape shops add excise stamps on top.

When a recall lands, the question is short. Did you sell that lot, and is any of it still on the shelf? With good records that takes a minute. Without them you pull everything and hope.

Lenders and buyers want history

A bank or a buyer reads the same numbers. BDC's due diligence list asks for year-end financial statements for at least the past three to five years, inventory aging, and any sign of slow turnover or obsolete stock. Shaky counts make your margins look like guesses, and guesses get discounted.

That day is closer than most owners plan for. CFIB found 63% of small business owners plan to leave their business in the next decade, and only 6% have a formal succession plan. Clean inventory history is part of what a buyer pays for.

What we'd set up

• Sales from your point of sale update stock counts as they happen.
• The system logs every delivery with its supplier, invoice, date and lot code.
• Counts run on a schedule, and each one records who did it and when.
• Year-end value comes out the same way every year, ready for your accountant.
• Everything lives in a database you own, backed up off-site, for at least six years.

It's the same system that handles reordering in our retail playbook. Nobody types anything extra. The records pile up as a side effect of running the store.

Want to see this mapped to your business? Book a free call

Start small

Find last year's year-end count. If you can't, or it's one number with no list behind it, start there. Do one full count, save it somewhere other than the stockroom, and keep every supplier invoice in one folder.

Could you hand over last year's count today?

Walk us through how you track stock on a free 30-minute call. We'll show you how to keep records you can hand over the day someone asks.