Now that we are living in a proverbial bubble, we’ve come to realize that we live in an accounting bubble too. At Purpose CPA, we specialize in Controller-for-Hire, Advisory and Bookkeeping and there are many other services available beyond us. While our product offer may sound clear to us, it’s confusing to the average business owner. We’ll explain the differences so you can seek the right people to address those needs.
Who is This For?
Startups & Entrepreneurs
Small Business Owners
Growing Businesses
Keeping reading if you…
Need accounting services and don’t know the different services available.
Can’t tell the difference between bookkeeping and accounting
Thinks your bookkeeping or year-end accountant will take care of everything
TLDR: The type of accounting service depends on your current needs and future plans. If you’re starting out, privately owned and/or a small business, you likely just need Bookkeeping, Annual Tax return Filing and a few Additional Bookkeeping Services. If you’re growing, thinking big, and taking on lenders and investors, you may need a Compilation/Review/Audit Engagement, Controller-for-Hire, and/or Advisory services.
Accounting Services
Bookkeeping: This service involves collecting, categorizing, and processing your data to create accounting records. At the basic level, someone will categorize your income and expenses and reconcile your bank and credit card accounts. The output is a general ledger, trial balance or system-generated financial information. System-generated information would be say, the default profit & loss report from Quickbooks Online.
Additional Bookkeeping Services: As your business becomes larger, there is more work is required to operate the business and maintain accounting records. You may require assistance with:
Tax filings including: PST, GST, Payroll Tax, Worksafe BC, and Employer Health Tax.
Day-to-day tasks including: payroll, banking, collections, and payables.
Annual Tax Return Filing: This service involves taking your according records and preparing the annual tax return. Depending if you are incorporated or self-employed, a T-2 corporate tax return or personal return combined with your self-employed income & expenses are required. Keep in mind this service includes the preparation and filing only. While your Accountant may provide cursory advice on minimizing your taxes. Detailed and holistic (business-personal) tax planning are charged separately.
Compilation Engagement, Review Engagement and Audit Engagements are services to prepare year-end financial information or financial statements. The services range from no assurance provided in a Compilation to Reasonable Assurance in an Audit. In each case, a report is issued to communicate the nature and limitations of the engagement and the respective responsibilities of you and your accounting firm. The level of engagement required depends on factors like public/private company, regulated industry, investors/lenders, business size and growth. As these are regulated reports, only a licensed accounting firm can prepare these reports.
Straight from the folks at CPA Canada, here are the differences between the three engagements:
Compilation Engagement: An engagement to compile your financial information based on information received from you, with no expression of assurance by the practitioner.
Review Engagement: An engagement to perform a review of your financial statements and to form a conclusion on whether anything has come to the practitioner’s attention to cause the practitioner to believe that the financial statements are not prepared, in all material respects, in accordance with the applicable financial reporting framework
Audit Engagement: An engagement to perform an audit of your financial statements and to form an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework.
Controller-for-Hire: This service involves engaging an experienced accountant to oversee your accounting on a part-time basis. This person is likely too seasoned to perform data-entry but are capable of leading the internal staff or external vendors to complete the above tasks. Additionally, the Controller-for-Hire provides you with a resource on strategic matters such as profitability, financing, budgeting, risk management, cash flow management. This service also goes by the names Fractional, Part-Time, Outsourced, or Virtual Controller.
Advisory: This is the catch-all for all other services. Accounting firms large and small provide a variety of advisory services catering to businesses of all sizes. Instead of diving into a rabbit hole, let us share where you as a small business owner may have some needs:
Tax: This service involves looking for tax-efficient opportunities in your business. As your business grows, this service advises on the best way to deal with global business, cross-border, sales and commodity tax, employer tax, and family tax.
Technology: This service may involve selecting and implementing new accounting software to run your business. This advisory is carried out with integrated knowledge of accounting, operations, and technology.
Operations: This service may include needs such as process improvement, control implementation, training and development. Understanding how your industry, vertical, distribution channel works is critical to operational success.
Financial: This service may include preparing and communicating financial information, budgets and business packages for lenders, investors, acquirers. Again, an understanding of the needs of those aforementioned third parties is critical to success.
