Quick answer
A bookkeeper records, categorizes and reconciles your business’s transactions so the books are accurate and current all year. Tax returns are built from those books, and can be prepared by the bookkeeping practice that keeps them or by an accountant. What needs a licensed public accountant in Canada is assurance work — audits and review engagements, the kind of statements a lender or investor may ask for.
What does a bookkeeper do?
Bookkeeping is the day-to-day record of the business. It is detailed, regular work, and everything else is built on it:
- Recording and categorizing sales, expenses, deposits and transfers
- Reconciling every bank account and credit card to its monthly statement
- Matching receipts and invoices to the transactions they support
- Tracking GST/HST collected and paid through the year
- Running payroll and keeping source deductions in step with the books
- Tracking who owes the business money, and what the business owes
- Producing monthly reports — a profit and loss statement and a balance sheet
Done well, bookkeeping means that on any given day the numbers in your software match what actually happened in your bank accounts.
What does an accountant do?
An accountant works from the books rather than on them. Typical accounting work for a small business includes:
- Year-end adjustments and year-end financial statements
- Tax planning, and explaining the tax consequences of decisions
- Advice on structure, financing and growth
- Reviewed or audited financial statements for a lender or investor, where the accountant holds a public accounting licence
In Canada, the accounting profession is regulated provincially, and the Chartered Professional Accountant (CPA) designation is governed and granted under provincial legislation.1 Not everyone who does accounting work holds the designation, so if it matters for the work you need, ask.
Who prepares the tax return?
Not only accountants. A tax return is built from the books, and it can be prepared by an accountant, by a bookkeeping practice that offers tax preparation, or by the owner. CRA’s EFILE program for tax preparers is open to any firm, organization or individual providing tax preparation services who meets its requirements and passes its suitability screening.7
What makes the difference is how close the preparer is to the books. When the people who keep the books all year also prepare the return, nothing has to be handed over, re-explained or rebuilt at year end, and a question about a transaction is answered by whoever recorded it.
Side by side
| Bookkeeper | Accountant (CPA) | |
|---|---|---|
| Focus | Recording and reconciling transactions | Statements, planning and advice built on the books |
| How often | Every month, often every week | Mostly at year end, plus when decisions come up |
| Regulated? | No — not a regulated occupation in Canada | Yes — the designation is provincially regulated |
| Tax returns | Prepared from the books, if the practice offers tax preparation | Prepared from the books, if the firm offers tax preparation |
| Needs a public accounting licence for | Not for bookkeeping itself | Audits and reviews (and, in Nova Scotia, compilations) |
Is a bookkeeper licensed or regulated?
No. Job Bank, the Government of Canada’s labour-market site, lists bookkeeping as an occupation that is not regulated in Canada. It describes the usual preparation as high school plus a college program in accounting or bookkeeping, or accounting courses combined with several years of experience.2
Voluntary designations exist — for example, the Certified Professional Bookkeeper designation from CPB Canada, which describes itself as a credentialing body.3 A designation can show training. It is not a licence, and experience with businesses like yours matters as much.
What work needs a licensed public accountant?
Public accounting — issuing a report that gives a third party assurance on financial information — is licensed by each province, and the rules differ between provinces.
- Nova Scotia: CPA Nova Scotia says no one in the province can sign off on a public accounting engagement without a public accounting licence it has issued, and its licensing covers audit, review and compilation work.4
- Newfoundland and Labrador: the province’s Act says a person who is not licensed as a public accountant must not practise as one — and its definition of a public accountant does not include someone who engages only in bookkeeping.5
Compiled financial statements in Canada follow CSRS 4200, the compilation standard effective for periods ending on or after December 14, 2021.6 If a bank, landlord or investor asks for statements of a certain kind, ask exactly what they need; it decides who can prepare them.
Who deals with CRA for my business?
You do, unless you authorize someone. CRA lets a business authorize a representative to deal with it on the business’s behalf, and its own list of who that can be includes an accountant or a bookkeeper.8
Whoever you choose, the obligations stay with the business: CRA expects you to keep the records the law requires and to make them available when it asks for them.9
Do I need a bookkeeper, an accountant, or both?
- A sole proprietor with a handful of transactions may manage the bookkeeping alone and use a tax preparer once a year.
- A busy business with employees, GST/HST and several accounts usually needs regular bookkeeping — the monthly volume is the work.
- A resident corporation generally has to file a T2 return every tax year, even with no tax payable,10 and the return is only as good as the books behind it.
- A business asked for reviewed or audited statements needs a licensed public accountant for that engagement, whoever keeps the books.
Frequently asked questions
Is a bookkeeper cheaper than an accountant?
They do different work, so compare the total rather than an hourly rate: books that are kept current leave less to sort out at year end. See how much a bookkeeper costs.
Can a bookkeeping practice prepare my tax return?
Yes, if it offers tax preparation. CRA’s EFILE program for tax preparers is open to any firm, organization or individual providing tax preparation services who passes its screening,7 and CRA lets a business authorize a bookkeeper as its representative.8 Ask whether a practice prepares and files returns itself or hands the books to someone else.
Do I need a CPA for my corporation’s tax return?
The CPA designation is regulated,1 but preparing a corporate tax return is a different job from issuing an audit or review report on financial statements, which is the work that needs a public accounting licence.4 If a lender, investor or partner has asked for more than the return, ask exactly what they need.
Sources
- CPA provincial and regional accounting bodies, CPA Canada. Accessed .
- Bookkeeper in Canada: Job requirements, Job Bank (Government of Canada). Accessed .
- About CPB Canada, CPB Canada. Accessed .
- Public Accounting, CPA Nova Scotia. Accessed .
- Chartered Professional Accountants and Public Accountants Act, SNL 2014 c. C-10.1, House of Assembly, Newfoundland and Labrador. Accessed .
- CSRS 4200, Compilation Engagements: Guidance resources, CPA Canada. Accessed .
- EFILE for electronic filers: Eligibility, Canada Revenue Agency. Accessed .
- Authorize a representative: Overview, Canada Revenue Agency. Accessed .
- Your responsibilities and the requirements associated with records the law requires you to keep, Canada Revenue Agency. Accessed .
- Find out if you have to file a corporation income tax return (T2), Canada Revenue Agency. Accessed .
This article is general information about how things usually work in Canada, current as of the date it was last updated. It isn’t advice about your own tax or accounting position, which depends on facts we haven’t seen.