By Alissa Bryden, CPA, CA

(4-5 minute read)

Within the first meeting of any new small business owner there is a standard question “So do I need a bookkeeper?”. This is a great question and one I thought necessary to discuss. Previously, many CPA firms did not have internal bookkeepers for two reasons 1) Charge out rates were typically too high for it to be recoverable and 2) It was generally thought to be a better service if there was separation of these duties to allow for a “second look”.

In the era, of cloud accounting, I would argue these arguments no longer hold true. To explain, I will first explain the difference between a bookkeeper and an accountant. Before cloud accounting, a bookkeeper would take the receipts, invoices, bank statements and credit card statements etc. (called source documents) and enter them into the desktop accounting program. They may have also assisted with payroll and GST remittances to Canada Revenue Agency. At year end, the accountant would take this information, adjust them using year end adjusting journal entries to fix any noted errors or omissions. The adjusted information would then be used to prepare a year end financial statement and file the tax return. Depending on how long the information exchange to get to the final numbers took, this may be 3-6 months or longer after the year had ended. At this time, the Accountant and business owner would meet to sign off the final numbers and have a general discussion on the business.

With cloud accounting, the data entry of the source documents is done using apps and automation. For example, a business owner would take a picture of their receipt using an app on the phone which then uploads to the accounting program. The program even suggests an entry based on previous transactions or matches to transactions already entered if it can. The cloud accounting software’s have invoice and quoting options so a business owner can use those (there are even phone apps) or there are options for integrating some “Point of Sale” systems. Credit card and bank statements are downloaded directly into program. All of this automation, reduces the data entry component of keeping the books and thus when it is looked at, it is mostly reconciliation (the “second look”) that remains. This automation, allows CPA’s to be able to perform this function. What’s more, is it provides the ability for the business owner to have quicker access to the financial information and with it advice from the accountant. This allows for more productive business discussion’s based on real time numbers.

So previously, the answer was yes, a bookkeeper and an accountant were needed. However, in today’s world of cloud accounting, it may not be necessary, or even desirable to have both.