Updated Checked by the Tax-Services.ca editorial team How we check
Bookkeeping is recording what happened in your business: every sale, bill and payment, in order. Accounting starts where that record ends. It turns the records into financial statements and tax returns, and it tells you what they mean. If you’re weighing accounting and bookkeeping for a small business, think of one as the diary and the other as the reading of the diary.
What does a bookkeeper actually do?
A bookkeeper keeps the daily books. That means entering invoices, matching bank transactions, tracking what customers owe you and what you owe suppliers, and filing the paper or the scan that proves each entry. Payroll entries and GST/HST tracking usually sit here too.
It’s repetitive work, and it has to be steady, because a month of skipped entries turns into a miserable weekend of reconstructing what you bought, from whom, and why the bank shows a payment you don’t remember. The output is a set of books you can trust: totals that match the bank, and receipts that match the totals.
Where does accounting start?
An accountant takes those books and asks what they say. Is the business making money once you count everything? Should this purchase be deducted now or spread over several years? What should you set aside for tax? The accountant prepares the year-end statements and the income tax return, and can plan ahead so the bill isn’t a surprise.
Some accountants also do the bookkeeping, and some bookkeepers can file a simple return, so in a small firm the line is blurry, and that’s fine as long as you know who does which job for you.
Ask.
Side by side
| Question | Bookkeeping | Accounting |
|---|---|---|
| Main job | Record transactions as they happen | Interpret the records, prepare statements and returns |
| When it happens | Weekly or monthly | Quarterly, at year end, or when you need advice |
| What you get | Up to date books, reconciled accounts | Financial statements, tax filings, planning |
| What goes wrong if skipped | Missing receipts, wrong totals | Missed deductions, late or wrong returns |
What does a gap in the books cost you?
Here’s a case you can check yourself. Say you’re a sole proprietor in Ontario with $80,000 of net business income. The self-employed tax calculator shows $22,126 of income tax and CPP, and $57,873 left.
Now say $2,000 of real expenses never made it into the books, because the receipts were lost. If they’d been recorded, net income would be $78,000, and the same tool shows $21,421. That’s $705 you paid for no reason.
The calculator leaves out GST/HST, EI and the detail of your particular deductions, so treat the figure as a sketch. But the pattern holds. A weak bookkeeping habit shows up as tax you didn’t need to pay, and close to seven hundred bucks handed over for nothing is a hard thing to explain at tax time.
What should you hand your accountant?
A tidy package makes the year-end job quicker and usually cheaper, since the accountant isn’t rebuilding anything. Bring the year’s bank and credit card statements, your sales records and invoices, the bills you paid, payroll summaries if you have staff, your GST/HST returns, and last year’s tax return. If you run out of a home office or use your car for work, bring the numbers for those too. A short list of questions helps. Anything odd that happened this year, such as a big purchase, a new hire or a move, is worth flagging before the accountant finds it.
Do you need both?
Most one-person businesses need bookkeeping every month and an accountant once a year. If you have staff, the payroll remittance calculator gives a feel for the amounts that have to be sent to the CRA, and somebody has to track them. If you’re registered for GST/HST, the GST/HST calculator shows how tax is split out of a price, which is what your books have to do on every sale.
Doing the bookkeeping yourself is a fair choice when your sales are few and your time is cheap. Hand it off when the books eat evenings, or when you find yourself guessing. Fees differ from one provider to the next, so ask for a written quote that says what’s included. The guide to self-employed taxes shows where each piece fits.
Mistakes that cost money
Mixing personal and business spending is the classic. It makes the books hard to read and hard to defend. Open a separate account and use it for business only.
Another is treating the accountant as a bookkeeper at the last minute. Handing over a shoebox in March gets you a slow, pricey and less accurate result. And the reverse: a bookkeeper who has never seen your return may not know what the accountant needs from the books.
Records also have to be kept. The CRA says to keep them for six years from the end of the last tax year they relate to, so whoever keeps your books, the files are yours.
Where the numbers come from
The retention period comes from the Canada Revenue Agency pages on keeping records, including its guide Keeping Records (RC188). The tax figures above are worked out by our own tools using 2026 federal and Ontario rates. Nothing here is affiliated with any government body.
Frequently asked questions
Is a bookkeeper the same as an accountant?
No. A bookkeeper records and reconciles transactions. An accountant prepares statements and returns and gives tax advice, though some people do both.
Can a bookkeeper file my tax return?
Some can prepare a simple one. Ask what they're qualified to do and who signs off, since the rules on titles differ by province and we couldn't confirm them here.
Do I need an accountant if I have a bookkeeper?
Usually once a year, for the statements and the return, and any time you're making a big decision such as buying equipment or hiring.
How long do I keep my business records?
The CRA says six years from the end of the last tax year they relate to. Some records, such as property purchases, need to be kept longer.
What does it cost to hire either one?
We couldn't confirm typical fees. Ask for a written quote that lists what's included and what costs extra.
- Self-employed taxes in Canada: income, CPP and GST
How tax works when you are self-employed in Canada: reporting income and expenses, paying both halves of CPP, instalments and when to register for GST