Financial Software Canada

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Finances.ca is a trusted resource for Canadians who are making financial decisions for themselves and their businesses. In order to assist more Canadians, Finances.ca has put together a comprehensive accounting software guide complete with defined needs by user, accounting software reviews and qualitative considerations. Whether you’re purchasing an finance software for the first time or are upgrading to a better system, you can stay informed with the below guide.

Determining Financial Software Needs

Before you can start shopping for financial softwares, it’s important that you define your needs. Each business is unique, but examples of things to consider include the size of your business, data storage requirements and special reporting obligations. For your ease of reference, common accounting software needs are discussed below based on the type of user.

Entrepreneurs, Freelancers & Self-Employed Individuals

The first type of accounting system needs we’ll consider are those of sole proprietorships. Entrepreneurs, freelancers and self-employed individuals usually obtain accounting software for compliance purposes, to manage cash flow, preserve client relationships, and to increase efficiency. Because these people work for themselves, low cost is of a greater concern.

The main form of compliance that entrepreneurs, freelancers and self-employed individuals are concerned with is sales tax reporting and T1 tax returns. It is possible to track data for these returns without an accounting software, but this can be time consuming and tedious. Sole proprietorships should seek accounting software that can track sales tax and provide a summary of income and expenses, otherwise known as a profit and loss statement. Fortunately, these are not difficult features to find.

Cash flow is of the utmost importance for entrepreneurs, freelancers and self-employed individuals because they operate on a smaller scale. In addition, they usually rely on their sole proprietorship to pay for personal expenses, such as rent and groceries. For this reason, an accounting software that can provide analytics on cash flow is favourable.

More often than not, entrepreneurs, freelancers and self-employed people are good at managing the interpersonal side of client relationships. However, they don’t always know how to communicate financially. By using an accounting system to generate proper invoices and remittances, sole proprietorship owners often foster better relationships with clients. The reasoning behind this phenomenon is that sole proprietorships can effectively track sent invoices, paid invoices, estimates and fees which reduces financial confusion. If you do the monetary work for your clients, getting paid will be easier and smoother than ever. Be sure that the accounting software you choose has user friendly invoicing features.

Sole proprietorships tend to operate on a project basis. They are often thought to be part of the “gig work” economy. Entrepreneurs, freelancers and self-employed individuals find it helpful to have an accounting software that can track income and expenses for each project separately. This way, you can better analyze the profitability of your work.

Small Businesses

Small businesses and sole proprietorships have similar needs when it comes to accounting softwares. The main difference arises from their corporate structure. Small businesses are either corporations, partnerships or cooperatives in the eyes of the law. These entities have different compliance requirements than sole proprietorships. Small businesses need to consider compliance, payroll, reporting, and security when it comes to accounting systems.

Small businesses rarely operate with one person, they usually have employees. If you have a labour force, payroll is a big consideration for your accounting software. You’ll also need to consider payroll remittances to the Government of Canada which includes Canadian Pension Plan (CPP), Employment Insurance (EI) and income tax deductions. Many accounting softwares include a payroll system. However, you might choose to use an external payroll system and import the transactions into your accounting software. Either way, this is an important aspect to consider.

Compliance becomes more complex for small businesses because they’re not considered an individual legally. Owners must file a personal tax return in addition to a corporate tax return which adds an extra layer to compliance. Also, personal and business finances should be kept separate. Because small businesses operate on a larger scale than sole proprietorships, they might be working with other governing bodies as well. For example, they may be receiving grants or operating under a regulatory body in their industry. Make sure that you consider all of the compliance requirements of your small business and ensure that your desired accounting software can make reporting more efficient.

Reporting becomes more complicated for small businesses when compared to sole proprietorships. You might have unique benchmarks or key performance indicators (KPIs) that you need to assess regularly. It’s also beneficial to have customizable reports in the event that your operations and reporting changes in the future.

Last but not least, security and protection is a crucial consideration. It’s likely that more than one person will be accessing your accounting system as opposed to just the owner. A small business’ accounting system should allow for multiple users, incorporate passwords and have an accessible audit history.

Large Businesses

Similarly to small businesses, large businesses will have a corporation, partnership or cooperative legal structure. Another significant difference is their volume and diversity of financial activity. The main things that large businesses need to consider for accounting software include data storage, payroll, multi-entity accounting, security and compliance.

Large companies have a lot more data than sole proprietorships or small businesses. You’ll need to ensure that your new accounting system has the capacity to store all your data. You should also consider if you’re going to import historical data into the new system because this could significantly increase the amount of storage you need.

Without a doubt, your large business has employees and possibly independent contractors. You might also be dealing with payroll in other countries which comes with more compliance issues. The accounting software you select should be able to handle all of your payroll requirements.

Big businesses often have more than one related entity. There are numerous ways you can account for multiple entities, but it’s important that you decide on an accounting method and find a software that can support it. A common approach is using an accounting system that supports multiple ‘books’ which are used to account for each entity separately. If some of your entities exist in another country, you’ll have to consider multi-currency accounting as well. Managing multiple currencies is tricky, accounting softwares that alleviates the process should be sought out.

Security and protection needs increase as the size of a business increases. There is a greater risk that your financial data will get into the wrong hands the larger your operations are. For this reason, having multiple accounts and password protected data is important. If you have multiple entities, also consider how you will manage restricted access to data.

Finally, compliance for large businesses is the most complex out of any type of user. There is also more room for error in large entities which can impact reporting. You might even have compliance requirements that reside outside of Canada, such as American tax returns. Make sure that your accounting system can handle all of the compliance issues of your business. Unfortunately, this could mean obtaining a customized software which is more expensive. However, compliance is crucial and the cost is worth it if it makes the reporting process efficient.

Popular Bookkeeping Software in Canada

At the moment, many financial softwares are transferring their systems online. The benefit of this trend is that your financial data is accessible anywhere at any time. In addition, there is less risk that your data will be lost because it’s stored in the cloud and storage is typically unlimited. Older systems tend to be installed onto the hardware of a computer which means that they can only be accessed on that computer. There are numerous other limitations too, such as restricted storage and dated usability. Finances.ca is only discussing softwares that are 100% online to ensure that your business doesn’t suffer in the long run.

At Finances.ca, our goal is to provide honest, unbiased reviews. To help you make your purchase decision, we’ve gathered information on the most reputable accounting softwares in Canada. Check out their history, key features and pricing below.

Sage

Sage was originally founded in Britain during the year of 1981. The goal of David Goldman, the founder, was to create quotes quickly and keep track of his accounts for his printing business. David found out that other businesses were interested in Sage’s services and the operations began to grow. Within 10 years, Sage was listed on the London Stock Exchange.

Today, Sage is an integrated accounting system that offers payment systems and supports small businesses and entrepreneurs. In order to better service their customers, Sage offers customer support, human resource systems, fixed asset management and payments in addition to accounting systems. Sage also offers specialized systems for certain industries such as real estate and construction.

Sage has a variety of accounting systems, too many to list here. The most popular systems are Sage Accounting and Sage 300Cloud. Sage Accounting is designed for small businesses and sole proprietorships. It offers cash flow management, invoice tracking, easy expense entry and compliance efficiencies. It costs $30 a month and Sage is offering a promotion of 75% off for the first three months. As for Sage 300Cloud, it is marketed towards medium sized businesses, but large businesses could easily use it too. You can manage numerous currencies, handle international compliance issues, manage inventories and utilize powerful analytics. Sage 300Cloud incorporates the basic features of Sage Accounting as well. Because Sage 300Cloud is more specialized, you’ll have to request a quote before obtaining a price.

For more information, visit Sage’s website.

Zoho Books

Zoho Books is an accounting software solution that’s based out of India. The business was originally founded and branded under the name AdventNet Inc. By 2006, the company was rebranded under the name Zoho and offered a variety of cloud computing applications. In 2011, Zoho Books was introduced to their product portfolio. The company focuses on providing an excellent product to their customers while giving back to their community. The business has a local program that hires recent high school graduates and trains them to work for Zoho.

In addition to Zoho Books, the business offers a variety of tools, applications and services to help businesses operate online and automate their processes. Zoho offers tools for sales, marketing, culture, human resources and so much more. If you’re looking to adopt more than just an online accounting system, Zoho is a great option. Interested individuals can start using Zoho Books and add on additional features, such as inventory, projects, analytics and CRM. The basic accounting system comes with banking, sales, purchases, time sheets and simple reports which is what most sole proprietorships and small businesses need. Potential customers can test out the service with a 14-day trial.

Zoho is reasonably priced at $24 a month for a standard subscription. There are other tiers besides the standard subscription which some entities might choose to take advantage of. The professional tier is priced at $36 a month and comes with 10 users, purchase and sales orders, a custom domain and inventory tracking in addition to the standard subscription features. There is also a basic tier which freelancers, entrepreneurs and self-employed individuals may prefer. Additional users cost an extra $2 per month. If you pay for Zoho Books annually, you’ll receive two months of free service.

For more information, visit Zoho Books’ website.

FreshBooks

The founder of FreshBooks, Mike McDerment, was self-employed and used to operate a small design company. One day by mistake, Mike saved over an invoice and lost all his work. The founder knew he could create a better accounting system which was how FreshBooks was born. Like many startups, FreshBooks began its operations in a basement, this one happened to be in Toronto.

FreshBooks has one comprehensive system that incorporates invoicing, expenses, time tracking, project management, estimates, payments and reports. There are accounting system solutions for freelancers, self-employed individuals, entrepreneurs, businesses that have contractors and businesses with employees. The accounting system was originally designed for sole proprietorships and small businesses, but it is possible to use the service for medium and large businesses as well. This is especially true since there are add-on payroll services.

There are three tiers of service, Lite, Plus and Premium. There is another tier which is a customized accounting system, however, the pricing varies based on what you want. The Lite plan is $6 per month, the Plus plan is $10 per month and the Premium plan is $20 per month. FreshBooks is currently offering a promotion of 60% off for three months and an additional 10% discount if you pay annually instead of monthly.

For more information, visit FreshBooks’ website.

Quickbooks

Quickbooks is an accounting system that is developed, operated and marketed by a parent company called Intuit. Turbo Tax and Mint are other services offered by Intuit. Their goal is to provide prosperity to their customers through their services. Intuit was founded in 1983 by Scott Cook and Tom Proulx. Their business went public in 1993 and their current CEO is Sasan Goodarzi.

Today, Intuit earns a large chunk of their revenue from small businesses and self-employed people. They offer three different types of accounting systems which are designed by need. These include systems for freelancers, accounting firms and small businesses. The freelancer module is the most basic system and is designed for the sole purpose of filing a T1 or personal tax return. As the name implies, the module for the accounting firms is meant for professionals who offer bookkeeping and accounting services. Finally, the small business system is the most flexible and widely used module. Quickbooks offers an integrated payroll system as an add on, multi-currency support, estimates, project tracking and much more in addition to accounting system basics.

Quickbooks is a little bit more expensive than their competitors, however, they offer promotions. You can test out the system for 30 days for free. After that, the EasyStart option is $20 a month, the Essentials option is $35 a month and the Plus option is $50 a month. For the first three months, customers receive 70% off. Keep in mind that the payroll system will cost more if you choose to add it on.

For more information, visit Quickbooks’ website.

Wave Financial

Wave Financial is one of the newer players in the game as it was founded in 2010, however, that doesn’t mean it lacks quality. In fact, 55% of Wave’s employees have owned a business of their own which reflects in their service. By 2012, Wave had already achieved a lot of success and surpassed 500,000 customers. Over the years, Wave introduced a few more modules to compliment their accounting system. In 2019, Wave was acquired by H&R Block.

There are five modules offered by Wave Financial: accounting, invoicing, receipt scanning, payments and payroll. All of the modules are rather self-explanatory. Their services are designed for small businesses and sole proprietorships. Large businesses might be able to take advantage of the service too, depending on their needs.

Wave Financial is one of the cheaper competitors on the market considering that their accounting, invoicing and receipt modules are free. According to Wave’s website, the money they earn from their paid services covers the cost of the free modules. It is also likely that Wave takes advantage of the massive resources provided by H&R Block as well. Users of the payments and payroll software must pay. The pricing for payments is a pay per use model which means that the cost is variable. Payroll costs are also variable, but the base fee is $20 a month.

For more information, visit Wave Financial’s website.

Xero

In 2006, Xero was founded in New Zealand. Their systems were originally designed for small businesses, but there are modules for bookkeepers and accountants as well. They quickly became leaders in the New Zealand, Australia and United Kingdom cloud computing accounting markets. Today, Xero has over 2 million users around the globe.

Xero has a large array of features that can streamline your business’ operations. Bank reconciliations, invoicing, inventory, banking, bill payments, project tracking, multi-currency accounting and quotes are a few of the features. An advantage of using Xero is that many of your other services can be integrated into the accounting system. This can make your entire financial system a lot stronger and efficient.

At the moment, all of Xero’s services are priced in USD dollars. However, on November 9, 2020, their services will be offered in Canadian dollars. Xero has three different tiers of their system. The Starter plan is $20 USD per month, the Standard plan is $30 USD per month and the Premium plan is $40 USD per month. Potential users can test out the software using a free 30 day trial.

For more information, visit Xero’s website.

Other Considerations for Accounting Softwares

The technical capabilities of the accounting software is one thing, but there are other qualitative issues to consider as well. Take a moment to assess the below factors before making a final decision on an accounting system.

Hardware Compatibility

Everyone has different preferences when it comes to how they do their accounting. Some prefer to do it on a laptop whereas others prefer to do it on a mobile device or tablet. Older accounting softwares and systems may only be functional on computers or laptops. This is not recommended because you will only be able to access your data on that specific device. Newer accounting softwares, such as all of the ones listed above, can operate on a mobile device, tablet, computer or laptop. Essentially, if you have a browser and internet connection, you can access your financial data.

Free versus Paid Options

Cost is always a consideration, especially when it comes to business. Free options are always great, however, you should complete a cost versus benefit analysis as opposed to just cost analysis. Chances are free softwares will come with ample limitations that could be avoided if you paid a little more.

Integration with Other Systems

More often than not, sole proprietors and businesses use other softwares and systems in conjunction with their accounting software. For example, you might be using an external payment software or payroll processing system. Before you select an accounting software, ensure that your other systems can integrate into your accounting system easily. Usually integration is done by taking an export from one system and importing it into another. Although, not all imports and exports are compatible. Check out what kind of exports your other systems have and if they will be compatible with your new accounting software.

Internal Control Compatibility

Internal controls are a series of mechanisms, rules and processes designed and implemented by a business to ensure that financial and accounting information maintains integrity. In simpler terms, internal controls are a series of procedures that minimize and prevent fraud and errors. The larger a business is, the more internal controls they will have. For an accounting system to be effective, it must be compatible with existing internal controls. Be sure to consider how your new accounting system will compliment your internal control environment.