Bookkeeping – why it’s important

One of the concerns I hear on a regular basis is regarding bookkeeping.  Why do I need it and why is it expensive and can I do anything to reduce my costs?

This article covers bookkeeping for corporations; bookkeeping for sole-proprietors may or may not need to be as rigorous depending on your situation.  To be sure always ask your CPA who can advise you for your specific situation.

So you have a corporation and you have contacted your CPA to get the year end done and the question comes up – is your bookkeeping complete?  What does this actually mean and why do I need it done?

What is bookkeeping?

Bookkeeping allows transactions to be categorized and totalled; it also allows the GST and / or PST to be calculated to be able to prepare the GST/PST returns.  Depending on your situation it may also include preparing payroll for you and your employees.

Who can do my bookkeeping?

Bookkeeping is not currently a regulated field so it can sometimes be difficult to find a quality bookkeeper.  Your CPA likely can do the bookkeeping for you if not will be able to provide you names of a quality bookkeeper.  If you want to find a bookkeeper on your own look for someone with certification from IPBC (Institute of Professional Bookkeepers) or CIB (Canadian Institute of Bookkeeping).  You can do your bookkeeping yourself as well as long as you understand how to do it.  There are courses available that can help.  Most people get a bit lost however when it comes to the GST and/or the PST (in BC).  Some of the rules especially the ones around PST can be quite complex.

Why do I need all the receipts, can’t you just go from Bank or Credit Card statements?

Often the receipts are required to determine how much GST / PST was paid.  This information can’t be obtained from the statements.  Particularly for things like utilities, meals and professional services since the amounts aren’t always standard.

Also the receipts tell us if there is something that is not a business expense purchased — many times we see a pack of cigarettes or gum on the fuel receipt for gas.  The cigarettes and the gum would not be considered a business expense so shouldn’t be included.

Sounds time consuming – how long does this take?

Experience shows that it takes about 1 hour for every full page of bank and/or credit card statements that you have for the company.  If you have a lot of company expenses paid by cash or have personal expenses mixed in with the company bank and credit card accounts, that hour can become two hours quite quickly. Being organized and having all the receipts is the best way to keep the costs down.

Is there any way to make this faster / less expensive?

There are tools in the marketplace that can speed up the bookkeeping, services like HubDoc and ReceiptBank will retrieve information from your scanned in receipts that can be imported in to your bookkeeping file.  The service is not free so you need to balance out the bookkeeping fees with the fees from these services.

Online bookkeeping services like QuickBooks and Wave allow connections to most bank and credit card service providers.  The connection will provide a ‘feed’ into your bookkeeping file taking some of the pain out of the data entry.  While some automation does exist, the transactions need to be reviewed to make sure they are classified correctly.  There is a monthly fee for these services but typically is it less than the cost of the bookkeeping.  The longer you use these services the better the classification of the feed gets – thus reducing your bookkeeping costs over time.

For payroll there are 3rd party products like Ceridian and Payworks and most online services like QuickBooks and Wave provide a payroll feature – again for a fee.

OK so I understand what the bookkeeping is and some of the methods to get it done, why do I need it?

Bookkeeping needs to be done to classify the transactions to prepare your tax returns and to prepare financial statements. Different tax rules apply to different types of transactions so it is important that they are classified properly for taxation purposes.  For example, meals and entertainment are taxed at a different rate than office supplies.  Drawings and / or owners contributions for your incorporated company also need to be properly identified as this is directly connected to the income that you are required to report on your personal tax return.  GST returns depend on income being properly recorded and GST on expenses calculated as this offsets the amount of GST you are required to pay.  PST (BC) rules are industry specific and can sometime be quite complex and even contradictory.  Taxes filed incorrectly can result in penalties and interest and in the worst case scenario a CRA audit.

For more information about bookkeeping and getting your bookkeeping done, please contact us at or check out our website at:


Virtual Accountant — FAQs

What is a virtual accountant?

A virtual accountant is a real accountant who works in the ‘cloud’.   Virtual accounting allows qualified accountants to offer services remotely. Businesses across the Canada are taking advantage of this efficient, flexible, and cost-effective accounting option so that they can meet their business goals by focusing on their core business.

Why would I want to work with you as a virtual accountant?

This would make sense for you if:

  • You find it difficult to get in to see your accountant.
  • You travel a lot.
  • You live in a small community in Alberta or British Columbia and you don’t have access to a professional accountant (CPA).
  • You already have most of your information online.
  • You prefer to work on line.

Who doesn’t this work for?

  • This wouldn’t make sense for someone who is looking for traditional accounting services. Ie: Face to face in person meetings.
  • It doesn’t make sense if you are uncomfortable being online
  • You don’t want to have your data in the cloud.
  • You prefer to pay someone to manage the paper – want to just hand over the ‘shoebox’.
  • You like the paper and aren’t ready to go online.

If I want to work online can I still meet you?

Of course you can.  We can meet online via Skype or you can come to my office in Kelowna, British Columbia.  I also am regularly in Calgary Alberta and would be happy to arrange a meeting while there.

Is my data safe?

Once your data is online you do lose some control over it.  That is an unfortunate side effect of cloud based systems.  Your banking, your credit card information and even the Canada Revenue Agency are all online these days.  Even if you don’t actively put your information on line – it’s there.  To be safe, use only reputable service providers and make sure you have good passwords that you change regularly.

Who are you?

My name is Michelle Duford.  I am a Chartered Professional Accountant and I am a real person. I am registered to provide public practice services (basically tax services) in British Columbia and Alberta.

I live in beautiful Kelowna British Columbia. I have been doing this since 2002.  I have a systems background and I have embraced cloud technology.

Who is working on my file?

All of your work is done in Canada – nothing goes offshore.  You will be working directly with me and my staff.

What kind of services do you provide virtually?

  • Tax returns and yearend financial statements for small incorporated businesses
  • Tax planning
  • Bookkeeping training and review
  • Bookkeeping if you don’t want to do it yourself
  • Personal Tax returns (for corporate clients)

Ok I am in, what’s next how does this all work?

First contact me and let me know what services you want.  All of my services can be found on my website under ‘Services’.  You can even request a meeting under the ‘Contact Me’ menu.

Once we decide to work together, I will send you an engagement letter to sign as well as estimated fees for your file and a list of things I might need.

How do I get my information to you?

There are a number of ways you can get your information to me.

Shared online folders.  This is simple, you copy your scanned information to a shared folder, we use what we need and put the completed documents there for you to sign

I recommend Sync.Com at  They are based in Canada and provide 5G of storage for free.  The only one in the list that’s 100% Canadian.

While not based in Canada many people are already using the following services.

There are other services out there. As well many cloud based bookkeeping systems let you upload your expenses and bank information directly to your bookkeeping file.  QuickBooks, Wave, Xero for example.  E-courier is more like secure email than a shared folder.  While you still scan in your information, instead of saving to a shared folder it gets sent like an email.  This does not go through regular email channels and is secure so is safe to send things like T4’s, SIN etc.

Are there any online bookkeeping services you recommend?

Yes, while I recommend QuickBooks Online, there are a multitude of online bookkeeping systems you can use.

* Please note that Freshbooks isn’t a complete accounting system, if you use Freshbooks, there is still bookkeeping to be done.

Still have questions?

Send me a email to or call me at: 250-763-7923.

Michelle Duford, CPA


Using Online Accounting Systems

So you have decided to take your accounting online.  You are always on the go and it makes life easy for you.  Here are some things for you to consider.

1. Some online systems are not as robust as the desktop.  Wave for example doesn’t let you put in a closing date, so it’s easy to change information in a prior year.  Think that’s a good thing?  Just ask your accountant what they think about prior year changes.  You may find that using a tool like Wave increases your year end fees.

2.  Many online systems don’t use account numbers.  While this makes the accounting system seem more friendly, the accounting systems that your accountant uses, has account numbers.  It makes setting up your year file just a bit more difficult, and more   difficult often means more expensive.

3.  Many of these online systems are subscription based, so as soon as you quit paying you lose access to your data.  Except for printing all the transactions to PDF or exporting to excel, there really isn’t an easy way to back up your information.

4. You don’t know where your data is, nor who has access to it.  It seems like everyday there is a report of a ‘data’ breach somewhere.  Once you put your data online you lose control of it.

5.  CRA hasn’t yet come around to online accounting systems, see the following from the CRA website site.

E-commerce records

Your obligations for maintaining, retaining, and safeguarding books and records when conducting business on the Internet are the same as for any other type of business operation.

These records must be sufficient to determine and verify your tax obligations.

You must keep your business records for a minimum of six years from the end of the latest year to which they relate unless written permission is given by the Canada Revenue Agency (CRA).

Your records:

  • must be maintained in Canada unless permission is granted by the CRA to maintain them elsewhere;
  • must be made available to CRA officials upon request; and
  • include electronic records that are maintained and created by computerized record keeping systems.

So yes the online accounting systems can be convenient, but like anything in the cloud — just be cautious.

Want to move your accounting online but not quite sure?  Contact Michelle at or visit the website at:

How to keep your accounting costs down

As a small business, I understand that you are looking to keep your costs down. The easiest way to keep your accounting costs to a minimum is to be organized and not use your accountant as a bookkeeper. Here are some simple tips to get you started.

Get a good bookkeeper (or at a minimum take a bookkeeping course)

If you want to do the bookkeeping yourself, consider moving to the cloud.  If you run a small business check out or  However, before you do this, check out my post regarding online accounting systems.

Both of these sites offer ‘free’ online bookkeeping options for small businesses.

If you are more comfortable working off of your desktop QuickBooks Pro is the way to go.

Keep all your documents, and keep them organized !

CRA requires a minimum of 7 years. For more information on CRA’s retention polices click here .

  • Organize your information by type (ie: Bank statements, fuel expenses, CRA statements etc)
  • Further refine by month or quarter if you have a lot of expenses)
  • Mark on your invoices and bills how they were paid (ie: chq #, company visa, personal debit) and when.
  • If not showing on bill or invoice indicate what was purchased.
  • Keep a travel log of your business travel if you use the same vehicle for both personal and business.
  • Mark on your business lunch receipts who you took for lunch and why.
  • Make sure the receipt is in your business name.

Whatever you do, don’t put your receipts in a box or bag and drop them off to your accountant.  Your fees will definitely go up and you might just be looking for a new accountant next year!

Want to go Paperless?  Check out my post that discusses how to be organized in a paperless setting.

Have more questions?  Feel free to contact me or visit me on my website at


Managing your information in a Paperless world

So you have decided that you have had enough and now you want to go paperless.  Seems to make sense, most of your bank statements, bills, and receipts come online anyway.  Why print them?

Sounds simple enough but like anything, you need a way to organize your documents.  There are many software packages that do just this, two that come to mind are Paperport and Neat, but there are many more available.  Often if you have a scanner the software comes along with it so you don’t even have to buy separate software.  You can also just use file directories on your computer, it doesn’t really matter the important thing is to be organized.

For years I have been giving my clients a system to manage their paper documents.  Recently, I am getting more and more requests about how to manage the information in an electronic or digital setting.  I have come up with a process, it is pretty simple sort of a ‘virtualization’ of the paper folders.

Here’s what I recommend:

Create a file directory(folder) called “Business Info”  <– if you have more than one company, call this the company name.

Under that folder create a folder called “2014” <– or what ever the year is

Under each year create folders for the various categories:

  • Bank Statements
  • Credit Card Statements
  • Computer and Equipment
  • Advertising Expense
  • CRA documentation
  • Office Expenses

And so on..  If you are not sure, just look at your last years financial statements or ask your accountant for what expense categories apply to your business.

Anything that goes more than one year, put directly under the ‘Business Info’ folder.

Call it “Permanent Documents”.  Things like leases, contracts, incorporation information etc.

Each year just start over again with a new year and create subfolders (directories) for each of the categories that you used in the previous year.

This is easy to manage, easy to back up and very easy to replicate if you have more than one company.  Whether you are just using the file manager of your computer system or a file management system in a document management system, this is an easy way to store and later be able to retrieve your documents.

And please don’t forget to back up your data!!

Once your data is all in ‘electronic’ format, it is very easy to copy to a USB drive or send to your accountant via something like ‘e-courier’.  No paper to lose and your accountant will thank you!  At least I will 🙂

For more information please contact me at or visit my website