The cloud accounting stack we recommend for Canadian small businesses

Most Canadian small businesses need five pieces of software, not fifteen: a general ledger, a receipt capture tool, a payroll system, a payments tool and, once the books are reliable, a reporting layer. Our default stack is QuickBooks Online at the centre, with Dext, Wagepoint, Plooto and A2X or Link My Books feeding it, and Fathom or Syft reading from it. Below is the order we add each piece, the point at which it earns its subscription, and the migration and month-end routines that make the whole thing work.

QuickBooks Online is the ledger; everything else feeds it

We build on QuickBooks Online for most clients because the Canadian edition handles GST/HST codes and the return worksheet natively, the bank feeds cover every major Canadian bank and credit union we work with, and nearly every add-on we rely on has a mature QBO integration. Xero is a good product and we run it for clients who arrive with it; the trade-offs are set out in our answer on QuickBooks Online versus Xero for a Canadian business. What matters more than the brand is that the ledger is the single source of truth. Every other tool either pushes transactions into it or reads results out of it.

Two setup decisions shape everything downstream. First, the chart of accounts should be short and built around the decisions you make, not copied from a template with 200 lines. Second, multi-currency should be switched on from day one if you invoice or pay in US dollars, because it cannot be turned off later and retrofitting USD history is slow work.

The feeders: Dext, Wagepoint and Plooto

Dext turns receipts into supported entries

Dext, which many owners still call Receipt Bank, photographs or receives receipts and supplier bills, reads the vendor, date, total and tax, and publishes each item to QuickBooks Online with the image attached. The image is the point. The CRA accepts electronic records provided they are legible, complete and retrievable for the six-year retention period, so a receipt in Dext attached to a QBO expense is a stronger record than a paper slip in a drawer. It also means input tax credits are claimed from the tax printed on the receipt rather than a guess.

Set a rule with your team: no receipt, no reimbursement, and every receipt goes to Dext the day it is received. Forward supplier e-bills to your Dext inbox address. A backlog of 300 receipts in a shoebox is the most common reason a year-end takes twice as long as it should. We cover the case for and against the tool in what Dext does and whether you need it.

Wagepoint handles payroll from the first hire

Payroll is the one function where we do not want owners improvising. Wagepoint calculates CPP, CPP2, EI and income tax deductions, remits source deductions to the CRA on your schedule, files T4s in February and produces Records of Employment when someone leaves. It posts a payroll journal to QuickBooks Online each pay run, so the wage expense, employer contributions and remittance liability land in the right accounts without a manual entry. Ontario Employer Health Tax and WSIB premiums still need to be tracked and paid, so check whether your payroll tool files them for you or simply reports the figures.

Other Canadian options exist and some suit specific situations, which we compare in which payroll software a Canadian small business should use. What we will not recommend is running payroll in a spreadsheet and paying deductions by online banking, because a missed or short remittance draws penalties faster than any other filing.

Plooto, or your bank, for payables and receivables

Below a certain volume, paying suppliers through your bank's bill-payment or e-transfer is fine, provided every payment is matched to a bill in QuickBooks Online. Plooto earns its place when two things happen: someone other than the owner needs to approve payments, or bills arrive faster than one person can key them. It pulls unpaid bills from QBO, routes them through an approval workflow, pays by EFT or cheque and marks the bill paid in the ledger. On the receivables side, it can collect pre-authorized debits from customers who pay you monthly, which shortens the cash cycle for retainers and subscriptions.

Selling online: connectors stop the payout guesswork

A2X or Link My Books for Amazon, Shopify, Etsy and eBay

A marketplace payout is not revenue. It is revenue minus fees, refunds, advertising, shipping labels and sometimes sales tax the platform collected on your behalf, netted into a single deposit. Recording the deposit as sales overstates some lines and understates others, and it makes GST/HST impossible to reconcile. A2X and Link My Books read each settlement, split it into its components and post a summary journal to QuickBooks Online that matches the bank deposit to the cent; we walk through the mechanics in how to record Amazon settlements and fees in QuickBooks.

Shopify and Stripe

Direct Shopify and Stripe connectors exist inside the QuickBooks app store and through the same settlement tools. Choose one route per channel and never two, because a duplicated feed doubles sales silently. Whichever route you pick, fees should land in their own expense account and payouts should clear through a clearing account so the bank deposit reconciles. Our note on recording PayPal and Stripe fees and payouts explains the clearing-account pattern.

Fathom or Syft, only once the numbers are trustworthy

Reporting tools are the last layer, not the first. Fathom and Syft connect to QuickBooks Online and produce management reports, KPI dashboards, consolidations for multi-entity groups and simple forecasts. They are excellent when the ledger closes monthly and someone reads the output; they are a distraction when the books are two quarters behind, because a dashboard built on unreconciled data is just a faster way to be wrong. Check current compatibility before subscribing, since integrations and ownership in this category change.

Most of our clients do not need a reporting subscription until they have a management meeting to bring the reports to. That is usually the point at which they start talking to us about fractional CFO and advisory support, and the reporting layer is where that work begins.

What we tell clients to avoid

• Spreadsheets as the ledger past roughly $250,000 in revenue. Below that a careful owner can manage; above it the volume of transactions, HST tracking and reconciliations outgrows a workbook, and errors compound silently.
• Desktop accounting software. A single-machine file cannot be shared with a bookkeeper or accountant in real time, bank feeds are weaker or absent, and backups depend on one person remembering.
• Two tools doing the same job. A bank feed plus a Stripe connector plus a settlement tool all posting the same deposit creates triple-counted sales that take hours to unwind.
• Turning on apps before turning on habits. Dext with an empty inbox and QuickBooks with 900 uncategorized transactions is a worse position than a clean ledger and a folder of receipts.
• Mixing personal cards through the business feed. Every personal transaction has to be recategorized as a draw or shareholder loan, and the HST on it must be excluded.

How to migrate without losing a year

1. Pick the conversion date. The first day of a fiscal year is cleanest; the first day of a GST/HST reporting period is the next best.
2. Export the lists. Chart of accounts, customers, suppliers, products and services come over as lists, not as history.
3. Enter opening balances. Post the closing trial balance from the old system as at the conversion date, including bank, credit card, loan, HST payable and shareholder loan balances.
4. Load open receivables and payables individually so customer statements and supplier balances are correct from the first day.
5. Configure GST/HST codes before the first transaction: the Ontario 13% code, zero-rated and exempt codes, and out-of-province rates if you sell across Canada.
6. Connect bank and card feeds from the conversion date, not earlier, or you will import transactions that are already inside the opening balances.
7. Reconcile the first month against bank statements before connecting Dext, payroll and any connectors. Prior-year history stays in the old system, which you keep read-only for the CRA's six-year retention window.

The monthly close routine that makes the stack work

Software does not close the books; a routine does. Ours takes a few hours for a typical client once the feeds are clean, and it runs in the same order every month:

1. Categorize every bank and credit card feed line and clear the Dext inbox to zero.
2. Reconcile each bank, card and loan account to its statement. Our answer on bank reconciliations explains why this is the step that catches everything else.
3. Match marketplace and processor payouts through the clearing accounts and confirm those accounts return to zero.
4. Post or verify the payroll journal and match the CRA remittance to the liability account.
5. Review the receivables and payables aging for anything that is really a write-off, a duplicate or a payment recorded against the wrong bill.
6. Run the GST/HST report and tie the collected and paid figures to the balance sheet accounts before filing.
7. Read the profit and loss and balance sheet against the prior month, then close the period so nothing posts back into it.

If that list reads like more than you want to own, it is exactly the work our bookkeeping and accounting service runs on this stack for clients every month. We set up the tools, connect them once, and hand you reports you can act on rather than a login you have to babysit.

Source: CRA — Keeping records.