Quick answer
Accounting software makes bookkeeping faster, but it does not do the bookkeeping for you. Bank feeds bring transactions in and the software suggests how to record them, yet someone still has to review each one, fix what it gets wrong and reconcile the accounts to the statements. Whether that someone should be you or a bookkeeper depends on your volume, your time and how current the books are.
What does accounting software actually do?
QuickBooks, Xero and Sage are capable tools, and the cloud products have taken a lot of typing out of bookkeeping. Typically they:
- Connect to your bank and card accounts and bring transactions in automatically
- Suggest a category for each transaction and let you set rules for repeat ones
- Send invoices and record customer payments
- Track sales tax on the transactions you record
- Produce a profit and loss statement and balance sheet from what has been recorded
QuickBooks Online, for example, sends downloaded transactions to a Pending tab with a suggested category for each,1 and Xero says its assistant can reconcile transactions automatically when it is highly confident they match.2
What does the software leave to you?
The same help pages are clear that a person is still in the loop. QuickBooks tells you to review each downloaded transaction,1 and Xero describes reconciliation as matching each statement line to a transaction or creating one.3 Its automatic matching page still tells you to log in to review and approve everything.2
That review is where the judgment sits:
- Is this expense business or personal? The software sees a charge at a store, not what was bought.
- Is it an expense at all? A loan payment, a transfer between accounts or an owner’s draw is not.
- Does the balance match the statement? Only a reconciliation against the real statement confirms that what the feed brought in is complete and not doubled up.
- Is the tax right? A suggested category does not know whether the supplier charged GST/HST or whether you can claim it.
- Is the receipt there? CRA expects the records and supporting documents behind your books to be kept, and made available when it asks.4
A rule that categorizes something wrongly does it every month until someone notices. Software speeds up the right answer and the wrong one equally.
Do the software companies expect you to have help?
They plan for it. QuickBooks runs a directory for finding a certified ProAdvisor near you,5 and Xero runs a directory of bookkeepers and accountants whose firms have staff trained in Xero.6
When is doing it yourself reasonable?
Plenty of owners keep their own books well. It tends to work when:
- There are few transactions — a handful of invoices and regular bills a month
- There is one bank account and one card, used only for the business
- There is no payroll, and GST/HST is simple or not required yet
- You enjoy it, or at least do it every month rather than every spring
The warning sign is not one hard month. It is a review queue that grows faster than you clear it, month after month.
If you are not registered for GST/HST yet, note that CRA requires registration once you are no longer a small supplier and make taxable sales — something to watch as sales grow.7
What are the signs the books need a bookkeeper?
| What you see | What it usually means |
|---|---|
| Hundreds of transactions waiting for review | The bookkeeping is weeks or months behind |
| Accounts not reconciled for months | The balances cannot be trusted yet |
| A large “uncategorized” or “ask my accountant” total | Decisions have been put off |
| GST/HST return time is a scramble | The tax is being reconstructed, not tracked |
| Personal and business spending on the same card | Each transaction needs a judgment call |
| Payroll run outside the books | Wages and remittances may not match the ledger |
Any one of these is fixable. Several at once usually means the software has become a second job — and, if it has been a while, the first step is catching up. See what happens if you fall behind.
How do software and a bookkeeper work together?
The software is part of the system; it should not become another job for the owner. With a bookkeeper, the month gets reviewed and reconciled whether or not you log in, and year end starts from books that already match the statements.
In practice, a bookkeeper working in your file each month is:
- Reviewing every imported transaction, not only the ones the software was unsure of
- Fixing rules that record things in the wrong place, before they repeat
- Reconciling each account to its statement and investigating differences
- Matching receipts to transactions, and listing what is missing
- Bringing you the questions only you can answer, in one list
Frequently asked questions
Can QuickBooks or Xero replace a bookkeeper?
They replace a lot of typing, not the review. Both vendors’ own help pages describe transactions that still need to be reviewed and approved by a person.1,2
Will I have to switch software if I hire a bookkeeper?
Not necessarily. Ask any bookkeeper which systems they work in before you start. We work with QuickBooks, Xero and Sage.
Is a bank feed the same as a reconciliation?
No. A feed imports transactions; a reconciliation checks that what is recorded matches the statement, line by line and balance by balance. Xero describes reconciliation as matching every statement line.3
Is it cheaper to do my own books in software?
In fees, yes. The cost shows up in your time and in errors found late. See how much a bookkeeper costs.
Sources
- Categorize online bank transactions in QuickBooks Online, Intuit QuickBooks Canada. Accessed .
- Reconcile bank transactions, Xero Canada. Accessed .
- Bank reconciliation in Xero, Xero Central. Accessed .
- Your responsibilities and the requirements associated with records the law requires you to keep, Canada Revenue Agency. Accessed .
- Find an Accountant, Intuit QuickBooks Canada. Accessed .
- Find a Bookkeeper or Accountant Near You, Xero Canada. Accessed .
- When to register for and start charging the GST/HST, 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.