If you are not registered with GST/HST, keeping your bookkeeping up-to-date is not complex.
You can use a few journals (spreadsheets using MS-Excel):
1) Purchases where you enter the date of your purchase, the amount, to whom and how paid (keep receipts).
2) Sales where you enter the net amount received (including shipping charges)
3) Expenses where you list all relevant expenses (such as eBay fees, postage, packaging materials, etc...)
Depending on your volume, you may total each journal weekly, monthly, quarterly or annually (keep receipts).
May I suggest you keep all "tax" questions in one thread. It is easier for interested readers to follow and avoids duplication of answers.
In case of tax audit, the CRA auditor will check all your bank account statements, credit card statements and all PayPal entries for the year(s) being audited.
As stated earlier, for purchases, you should keep whatever receipt was provider by the seller. If no receipt was provided, make one up: date, seller, purchases, amount and method of payment. That receipt will be quite acceptable to the auditor if nothing contradicts the information. For example - purchased piano from ABC on (date) and paid $500 cash. That information will be suplemented by a $500 cash withdrawal from your bank account around that date. That is good enough.
eBay fees are paid either by credit card or PayPal in most instances. No additional receipts are required but it would be a good idea to print your monthly eBay fee invoice as a reference. I attach mine to the credit card statement just like I attach all other receipt for purchases or expenses made with the card.
As far as PayPal fees are concerned you can handle them one of two ways:
1) record the transaction amount before fees for every transaction and the PayPal fee for every transaction
2) ignore the fees and record the net amount of the transaction as sales (net of fees).
Whichever way you select, the net results are the same but it is important to be consistant and always use the same method.
For expenses other than fees, keep records whenever available to match your journal entries.
Personally, I prefer to work with spreadsheets for each journal. I never liked those pre-packaged accounting systems.
