Bookkeeping

What’s the right accounting software for your small business?

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Pick the right accounting software for your small business

Cloud accounting expert

I get this question a lot, maybe its because I am an accountant/bookkeeper, maybe its because of my IT background, or just people don’t really know.

I don’t think there is any one answer for people it really depends on your needs.  Read on for some tips that may help you decide.

Synoptic Journal

This is a paper based ledger, you may have seen them it is large binder with a page for each month.  This is the ultimate in low tech.  Don’t really see these too much anymore but you can still buy the ledger books. 

Best for – someone who doesn’t want to use a computer. Very inexpensive.

Drawback –  It might be hard to find an accountant to work with a paper based system. It is also easy to make mistakes. It also really only tracks income and expenses so your accountant will have to have a system to track any balance sheet items like equipment, loans etc separately.

Excel

This is typically an computer version of the synoptic journal.  These usually come from smaller businesses who have simple needs.  Think consultant or a small service provider.

Best for – business owners with a simple, low volume business. Because it is excel it is easy to find templates online and easy to add up the numbers.

Drawback – It is excel and this type of accounting method doesn’t scale well if your business gets complicated. While there are more options to track the balance sheet items, typically like a synoptic journal these are tracked separately at tax time.

Desktop Software

Accounting software for the desktop has been around for a very long time.  While most of the accounting software providers are encouraging migrating to the cloud, there is still a large component of businesses who prefer to work on the desktop.  The most common ones are Sage 50 and QuickBooks Desktop but there are a number of ‘free’ or ‘almost free’ options. A few like Sage 50 cloud and AccountEdge are ‘hybrid’ which have a desktop component but ‘sync’ to the cloud.

Best for – Bookkeepers or businesses that have multiple companies and individuals who don’t want to work in the cloud.  Because of the need to roll out updates, the software is more consistent to use and changes to the software can be managed.  As it is on your desktop theoretically it can be used where there is no internet (however some companies require an internet connection to verify licensing).  Many bookkeepers prefer desktop software because of the ability to pay once and use it for multiple companies.

Drawbacks –  Can be challenging to share the software, updates and backups have to be managed by the end user.  The software is ‘tied’ to a specific computer and typically there is a process to setup a new computer.

Accounting tech stack

Cloud Based software

This is the newest advance in accounting methods.  Xero was the first main cloud accounting software (CAS) provider first launching in 2006.  QuickBooks started offering cloud accounting software in the early 2000s and Sage offered an online version in the mid 2010s.  There are other cloud accounting software providers like  Zoho, Wave, Freshbooks, Odoo to name a few but Xero and QuickBooks are the most popular.

Best for – Businesses who want to work in the cloud and be location independent. It is easy to share the software with team members and accountants.  Various apps are available to extend the functionality of the software and reduce the amount of manual data entry.  Backups and updates are managed by the software provider.  The software can be used in any location and isn’t tied to a specific computer.

Drawbacks – each company is setup individually so there can be more cost for the accounting software. There is no control to how often changes are made or features updated, and this can be frustrating to the person using the software.  An internet connection is mandatory to be able to use cloud accounting software.

Summary

So there are a lot of options when deciding the accounting method that works for you. Your method may end up being decided by the accountant or bookkeeper you use.  Just remember regardless of the method, most tax authorities require you to keep a copy of your business receipts for 7 years.  How you do that is outside the scope of this post but watch for another post on ways to  store business document receipts.

Not sure which is the best method for your small business? Reach out and we can help you decide.

Help me pick!

Proudly Canadian

Accounting MD is proudly 100% Canadian.  All service providers are accredited Canadian Financial Professionals. No portion of our work is outsourced outside of Canada. 

6 letters to look for before you hire an accountant or bookkeeper (hint its CPA / CPB).

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What you need to know before you hire an accountant or bookkeeper.

What you need to know before hiring your next accountant

Unlike many other professionals, anyone can call themselves an accountant or bookkeeper. The term accountant is not reserved or in any way restricted. This does not mean that a non-designated accountant is not competent, it only means that they do not have to adhere to the standards of professional accountants.

Only Chartered Professional Accountants (CPA) are recognised in Canada as Professional accountants. CPAs study for many years and are required to pass rigorous examinations before they can use their designations. Additionally, professional accountants are required to keep their knowledge up to date, which is closely monitored by the respective associations. Public accountants must go one step further and attend additional training and all CPAS are required to carry insurance. Every three years, a mandatory practice review is conducted by the associations to ensure the quality of the work performed meets the high standards that you have come to expect.

Looking for a qualified bookkeeper? Then you want a Certified Professional Bookkeeper or CPB. Like CPAs, CPB’s go through an extensive training process before they are recognised as Professional Bookkeepers. Both CPAs and CPBs require annual professional development and carry insurance. Additionally, they are bound to adhere to the standards and Ethical requirements of their respective associations.

Currently market demand for accountant and bookkeepers significantly exceeds the supply. While CPAs and CPB are regulated with what they can say and do, non designated accountant and bookkeepers are not.
With limited barriers to entry for non designated accountants and bookkeepers and high market demand for accounting services it is easy for anyone with any level of experience to start an accounting or bookkeeping company.


As a small business owner there is limited protection for you if you decide to work with someone other than a CPA/CPB.

Please take a look at the links below to find qualfiied accountants and bookkeepers in Canada.

Find a Qualified Bookkeeper

Find a CPB in Canada

Find a CPA

I am behind in my bookkeeping

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Stressed out from being behind in bookkeeping

Behind in your bookkeeping? An experts guide to getting caught up.

When you started your business you likely had some really big plans. Provide great customer service make lots of money and have more time to spend with friends and family.

Sometimes things don’t go as planned. Perhaps you ‘fell’ into your business as a result of a great opportunity or maybe you had a plan. In any case you didn’t intend for your accounting to get behind. After all, you aren’t an accountant. Maybe you even had someone helping you but they are long gone.

At first it wasn’t too bad, maybe one GST return was missed. Clients were paying and your suppliers were getting paid, so nothing that caused you worry.

Now fast forward to today and suddenly the books are way behind. You might be getting letters and phone calls from CRA. Maybe you aren’t getting letters and phone calls yet, but you know they will be coming soon.

Where to start?

  1. Set up your CRA online business account to see what has been filed and what is missing.
  2. Collect your business documents and receipts. Click HERE for a list of what you need
  3. Connect with a professional. Make sure who ever you work with is qualified. In Canada this would be a CPA (Chartered Professional Accountant) or a CPB (Certified Professional Bookkeeper).

How long does it take?

The next question on your mind might be how long will it take? Once CRA starts calling there is pressure to have things caught up quickly. A lot of that depends on you and how organized you are and how far behind things are. Getting all of your receipts together and organised BEFORE you connect with an accountant or bookkeeper will speed up the process. At my firm one year of bookkeeping and taxes can be completed in as little as 4 -6 weeks as long as we have all the information.

How much does it cost?

There are a lot of variables that affect the cost of your bookkeeping and taxes.

  • How many years you are behind
  • The state of completeness or organization of your documents
  • The volume of transactions
  • The number of bank and credit cards
  • Are items purchased with cash vs credit/debit cards or PayPal
  • Do you use industry software (BuilderTrend, MindBody etc)
  • Whether the information is provided electronically or via paper
  • Did someone else already do some of the accounting or is it a fresh start?

Can I go to jail?

This question does come up a lot. On occasion taxpayers do end up in jail. It just isn’t going to be the first conversation CRA has with you so be wary of any ‘CRA’ calls that suggest you are going to jail. Please check this link at the Canada Revenue Agency Website . CRA – Slam the scam.

 If you still aren’t sure, call your CPA or CPB if you get any suspicious calls from people claiming to be from CRA.