3 Cloud Accounting Packages for Canadian Business

Should I use online, cloud-based accounting software?

  1. Do I need accounting software at all?
  2. Who should do the bookkeeping?
  3. What are the security issues?
  4. How important is efficient collaboration with my accountant?
  5. How important is cost?
  6. Do I understand how to interpret financial statements?
  7. Do I use financial statements regularly (monthly or quarterly) as an aid in managing my business?

Almost Certainly the Answer is YES!

(if your business is incorporated that is…)

In this post we’ll discuss why.

1. Do I need accounting software at all?

Well no, but you need to keep records. Clearly you could do everything manually and use spreadsheets.

In fact as CPAs we do that ourselves. To facilitate after-the-fact bookkeeping for our clients, we built our own write-up tool for client work. We also use it to facilitate the preparation of working paper files for year end work. But that’s not something any small business should consider until they reached the point of hiring a full-time professional accountant for their business. Typically that means until you’ve become an SME (“Small to Medium Enterprise” 50+ employees).

Even though we generally do all of the bookkeeping for our own individual practice segments using spreadsheets, we still use online accounting software for each segment as a general ledger, for invoicing and to simplify internal reporting.

So theoretically all of your bookkeeping and accounting could be done with a spreadsheet – but it would certainly be inconvenient.

In any business, inconvenience translates as “higher cost”

So the time spent building your own idiosyncratic bookkeeping system using a spreadsheet – and then explaining it to your  accountant or anyone else that needs to rely on it, just doesn’t make sense.

YES – you should keep your accounting records in a cloud-based accounting system. This is true even if you only update the accounts once a year…

2. Who should do the bookkeeping?

i.e. do we have the skills, time and desire to do all of the bookkeeping locally?

Bookkeeping is actually a skilled trade. On occasion people learn by doing, and as a result there are many many people who have picked up  many of the skills of a bookkeeper over the years. The problem with hiring someone to perform a function that you don’t understand, is that you will have difficulty first in defining the job and second, in evaluating your employee’s effectiveness.

often there’s very little accounting to do in a business that is just starting up anyway

Another key consideration is that there often is very little accounting to do in a business that is just starting up. So the investment of time to get sufficiently skilled to either perform the bookkeeping function – or to supervise it – is most often not cost-effective.

In fact many new businesses won’t have more than 30 or 40 hours of actual bookkeeping work in their first year of operation – if you can find the records that is!

Record-keeping, payroll and invoicing are really the key issues for any new business

If you don’t keep good records, no one can do the bookkeeping effectively. The good news here though, is that with the way our economy has moved to digital, there is better access to electronic records than there ever was with manual records. This makes it easier to retrieve and share transaction data with others. However, having a simple and effective process for managing and accessing records is critical – regardless of how the accounting function is performed.

Most CPA firms are aware that a good bookkeeper can be hard to find. Some so-called “certified” bookkeepers are excellent. However certification isn’t a guarantee of suitability.

For all of these reasons we recommend outsourcing the bookkeeping for your small business – especially at a very early stage. Instead concentrate on the record-keeping, payroll (if applicable) and invoicing.

Not that much bookkeeping at an early stage anyway

Record-keeping, payroll and invoicing are more important (we’ll discuss 2 options for small business payroll that are free – in a later post)


3. What are the security issues?

Most people that are reluctant to use cloud-based accounting software probably have issues with data security. While that is understandable, any time you hire an employee or outsource work to someone other than yourself you introduce a certain amount of risk.

Any bookkeeper or CPA firm could in theory, steal confidential financial information from your company. That is true whether you work online or use desktop accounting software on a local machine.

Identity Theft is Probably the Biggest Risk for your Data – but isn’t related to your Accounting Data

Identity theft is a risk, regardless of whether you use cloud-based accounting software or not. Thieves have actually stolen identities by stealing mail from post boxes or other so-called secure systems. What is most important in my view, is to carefully safeguard online banking passwords and access.

For the most part it’s less dangerous to use online accounting software than it is to have a FACEBOOK page or a company website. You’re probably more likely to have security breached by a supplier or service like EQUIFAX over which you have no control.

Accounting data for most small businesses isn’t nearly as valuable to thieves as data from large firms. Some years ago I used to buy computer hardware from a supplier named NCIX. After the company went into bankruptcy, it turns out that someone sold computer hardware with NCIX’s own customer data. That put my credit card data at risk.

Luckily my wife scans our credit card info like a hawk, making sure that all charges are legitimate.

Loss of Data is a Bigger Risk than Data Theft

(at least as it relates to your accounting data)

If you store your data on a local hard drive, it is very susceptible to hard drive failure. If you don’t backup your data, you risk the loss of your data. If you do back it up, the chances are you are using cloud-based storage anyway:

  • Dropbox
  • GOOGLE Drive
  • iCLOUD
  • Microsoft OneDrive

Also Consider the Viability of the Software Publisher


When it comes to data security, it is important to consider whether your software publisher is adequately financed and will stick around long enough to safeguard your data. That is one reason we recommend only 3 packages:

Wave Logo

  2. XERO


Using cloud-based accounting software will improve your ability to collaborate effectively with bookkeepers and your accountant. In reality your data will be more secure – if you use software that is well-established

4. How important is efficient collaboration with my accountant?

There is no question that cloud-based accounting software is much more efficient when it comes to collaborating, than desktop applications. As a CPA not only do I have immediate access to detailed bookkeeping, I can easily post year end adjusting entries to my clients’ systems, and produce detailed working papers much more easily.

When it’s much easier for your accountant- and for you – that also translates to lower cost.

5. How important is cost?

The cost for the cloud-based accounting from free to thousands annually, depending on which package and subset of services you select.

We use WAVE ACCOUNTING for one of our segments. The software itself is free. However we facilitate online payments using WAVE’s interface. That can easily cost us thousands in a year. However it also serves to accelerate the receipt of cash. For another segment we use PAYPAL for invoicing. The software is free, but the charge for payment processing is about 3% – similar to WAVE’s charges.

Cost is important particularly at an early stage, however determining what it will cost will depend on which package, which version and what specific services you use.

6. Do I understand how to interpret financial statements?


7. Do I actually use financial statements to manage my business?

One of the justifications for the use of any accounting software is to have:


As a CPA in practice – and as any professional financial controller will tell you – there is always work to do before the financial statements are accurate. That is what professionals mean by doing the MONTH END.

In our practice we manage the work during the year and don’t look at the financials except for compliance purposes. That works for us, but every business is different. You need to ask yourself these questions:

i. If we got an accurate balance sheet and P&L monthly, would we review it monthly?

ii. Would we change our behaviour as a result of that review?

Clearly you need a sense of how things are going on a regular basis. Most of us monitor the cash receipts, payments and sales regularly.

The frequency with which you would actually review and evaluate your financial statements should help you decide how frequently you need to do a month-end (i.e. monthly, quarterly or annually). The more frequently, the more resources (aka “money”) you need to allocate to the bookkeeping and accounting functions.

Cloud Accounting