Starting a new accounting practice in Canada

Hey @rooftop - welcome to QB Community. It's great to have you here!

We've got plenty of accountants here in Community who have "been there, done that." @Peter_G_Stone, @Pen, @LeahIlanah, @JenPM, what are your suggestions for tackling some of these key starting-up questions?

@PracticalSandy and @ParkwayInc may have some insights on the right third-party apps for your needs. And @lynda recently posted a fantastic article on safe ways of transmitting sensitive tax information via the net.

In the meantime, I'd love to hear more about you and your business. Are you starting from scratch or shifting to a different set of service options targeting a new client base? What inspired you to pursue this direction?

Thanks Emily.  I am starting from scratch.  I have worked in the corporate accountant role for many years and it's just the perfect convergence of factors where it's time for me to give this a go.  And I think the accounting part is the easy part.  It's the practical part I don't quite get.  For example, suppose you as the accountant or bookkeeper remit payroll taxes to the government each month (Ontario) on behalf of your client.  Does the client give you a login to their business bank account?  Or do you remit from your own bank account and bill the client a pass-through?  If you are invoicing on behalf of a client, and they use a Simply Accounting desktop version, what is your workflow?  Do you go to their site one day a week, enter all invoices and apply all payments?  Or do you get your own Simply Accounting license, then get an Accountant's Copy of the client's books, enter the invoices and apply payments, then go back to their site and enter the changes?  Also, let's say you file someone's tax return but it's a walk-in, much like H&R Block or some provider at the mall.  Generally speaking the return can be done, but won't be filed until payment is received.  But the fee can be netted from the return.  How exactly does that happen?  Do you give them their return, less the fee, and have the return deposited to your bank?  That seems wrong, but these are the things I don't quite understand.  How does H&R Block do it?  I looked up multiple variations of that search string and found nothing of use. 

Hello @rooftop, congratulations on dipping your toes into the waters of self employment! You have a lot of of great questions. I'll answer a few based off my own experiences thus far. Taxes and bookkeeping go hand-in-hand, so you are on point with that thought process. When you provide the bookkeeping for a small biz client, preparing their taxes is a breeze (relatively speaking).  It is valuable to BOTH PARTIES and as such makes a great selling point for you. The end game should be to have employees to handle bookkeeping duties (which I'm sure you know) and for you to utilize your qualifications in more meaningful and lucrative ways. I view bookkeeping as a necessity, a great way to get your foot in the door with clients, and an excellent way to keep the ship full steam ahead with the recurring revenue it provides. It is a powerful portal to more valuable tax, planning, and consulting services. 

As far as software is concerned, pick one and run with it. I'm responding to you on a Quickbooks forum, so you know which one I prefer. That is nothing against Xero, Sage, etc., but I have the most experience and demand with QBDT & QBO. I don't have time to learn various accounting software packages and quite honestly I could spend more time mastering the QB products. You should not cater to clients when it comes to accounting software. Your value comes from your experience and knowledge. BE GREAT WITH ONE THING & not a jack of all trades.

Furthermore, if you are using a cloud-based application (QBO) they all utilize 3rd party apps and that alone will take up time figuring how to efficiently use those. However, like you saw and read, it depends on your clientele. A lot of my clients (sole proprietor contractors) don't take my recommendations to utilize some of the efficiencies 3rd party apps provide because they don't want to pay the subscription costs. So there is a lot of cost-benefit considerations that you need to figure out for yourself through further research and asking questions on forums like these.

For tax software, I use Lacerte. It is powerful enough to handle all my different types of clients, from very simple US 1040's to very complex consolidated Corp returns. So again, it depends on your clientele. See what the packages offer and what you need. What you don't want is to have to continually learn new tax software. Obviously, it is highly ineffective  come tax season to be playing around with your tax software because it can't handle what you need it to...learned that the hard way!! Think about your clients today but also the ones you want in the FUTURE. They may look different and you should have the technological ability to handle whatever business comes through the door. The knowledge is already in your head, but transferring it to the software can be a PITA, so I suggest purchasing a quality tax software package and get to know it inside and out. As I said, I use Lacerte. I have also heard positive remarks about Drake and Prosystem fx. 

Wow, thanks for that @Peter_G_Stone!!

@rooftop, as you mull over your options I also highly recommend checking out Tools for Accounting Professionals in Canada. There's even a "Quickopedia" of resources for QuickBooks Online Accountant should you choose to go that route.

Have you considered training to become a QuickBooks ProAdvisor?

@rooftop I do not know about Canadian law, but in the U.S. you cannot normally have your client's refund sent to your bank account. I am not sure how HR Block does it. That is a well capitalized business that has the ability to front clients part of their refunds and get it back plus some on the back end. How they legally do it, I do not know. Big company, a lot of lawyers I'm sure! As you said, the easiest way to get your money for the tax returns is filing upon payment and that is how most small firms do it. I have HR Block directly across the street from me. I feel bad for the people who go see them. For the most part they provide little value and excessive prices for very simple returns. They have the market cornered on those types of returns because they can provide instant refunds up to X amount of dollars. If I were you I would not compete with that business model; provide valuable high cost services! People have no problem cutting a check when they are receiving exceptional service.

The workflows you need to just experience for yourself and modify as you go. Internet forums and ads do a great job of making everything sound so easy and efficient. Everyone loves telling their amazing experiences, but we both know that isn't real life. You are starting out and most likely you will have to utilize different workflows for your clients to get a solid foundation built for your business. THEN you will be able to be more selective in how you operate.

Of all the workflows you mentioned, I can check a box for each one. Different clients require different services. I go to offices and work on client's DT files, some drop off info at my office, or send me Accountant's copies to clean up. The best clients and my ideal ones are cloud-based, and virtual. I hardly see them (not because I don't like them lol) and everything runs smoothly. While it is not my ideal situation to do a little of everything, I have sufficient funds coming in and I am slowly being able to be more selective with new clientele. Success doesn't come with the snap of a finger; you will probably have to have a variety of workflows starting off and that's okay. Try to focus on what niche service you can provide, but while you corner that market do what you must to keep the revenue flowing. 

Thanks everyone for the replies.  I agree completely with mastering one application and figuring out how to work work with a client who may be using a different, in-house application.  The reason I asked in the first place is that it’s already come up; someone found out by word of mouth that I am doing this, they need someone, but they use Sage.  I suppose the solution there would be “it depends”.  Yes I would consider becoming a ProAdvisor, not necessarily to market that designation, more to make sure I’m using the application in the most efficient way possible.  Re: compete with H&R Block.  Never.  That isn’t what I want to do.  I only want to understand the mechanism by which they can offer an instant refund and then get paid.  @Peter_G_Stone I agree, stories make it (whatever “it” happens to be) sound easy/glamorous/efficient.  It seems we have both learned that practice never looks like theory and sometimes you just have to figure it out.  I have signed up for the QBAO trial and will see how that works.  

Hello @rooftop:

This is a really big question, so I will try to tell you what I would do now, instead of how I built my practice 20 years ago, as it would not be applicable today.  

It is great that you have selected a niche.  Since your particular niche is real estate and you use desktop qb already, I would stay with that since you are familiar.   I know from being part of the first International Intuit Advisory Council, that there are numerous differences between the US vs Canadian versions of QB, so my advice might not be spot on.  I would do the following:

1. Learn QB and it's functions. Get certified in QB.  Get Advanced Certified.  Not only will this show you know the program but it will generate leads for you.

2.  On Facebook, join QBO HC, the Canadian private group. Meet, introduce yourself and interact with  your peers.

3. Hire an attorney that can help you be compliant in setting up a business in your area.  He will do the filings and perhaps recommend insurance, etc.

4.  I recommend Sharefile for sharing documents.  It will encrypt data on the way to/from the folder. This is not so with dropbox, etc.

5.  Look into QB Online version. I started with Desktop version as that was all there was.  But online (although more expensive) is more automated.  Meaning less time/touches in each customer file = more customers you can handle.

6.  Do no use journal entries in QB if there is a transaction that can handle the job. Many times Accountant's use journal entries and you lose some of the details with that. 

I am a bookkeeping only service, so maybe a cpa or tax provider will jump in on this thread. There is Intuit ProConnect that works with QBO.  That is a good tax program,but I don't know what is best for Canadians.

I used to have about 7-10 customers with one full time bookkeeper and one part timer.  I have 83 customers now.  Not all have full bookkeeping services.   I am a qb online only firm.    I have 3 part time bookkeepers on my team and a virtual assistant. My leads come from being active here and writing for Intuit. Also from social media, ProAdvisor forum, referrals, and you tube videos.  I have a blog that I post to every week.  

I hope this was helpful. 

Lynda

@lynda - very helpful indeed.  The proposed niche of rental properties, FYI and in the interest of disclosure, is because my brother has rental properties and he needs an accountant ... so I better get that right(!)  And if I get it right for him, I might as well get it right for other people and presto, business plan.   All your other points are spot on and you are the second person to advocate for Sharefile.  The Canadian equivalent of ProConnect is Profile, one version of which is TurboTax T2, which I have in fact used.   About your business:  1. you are an online-only bookkeeper using QBO.  So that means that both you and your clients have access to their company files.  How are the passwords administered?  Is it two-step authentication (password + SMS code for example)?  2. Do you have to take any extra steps for data security or do you leave that to Intuit?  3. How do you get your clients' information for bookkeeping entry?  Do they upload scans of their bank and credit card statements through Sharefile?  Do they make any of their own entries with their QBO credentials, and then you and your team make adjusting entries?  4. Do you send them monthly statements, or do you only ensure the accuracy of the QB monthly entries, and teach them how to run their own P&L or balance sheets from within QBO to know where they stand?  5. Do you send QB extracts to their CPAs or tax preparers for tax filings?  6. Do any of your clients require inventory tracking?  7.  Do you do payroll administration in QB for any of your clients?  8. Do you complete any government remittances on behalf of any of your clients?  I know that's a lot of questions and please know I genuinely appreciate your time.

Here are my answers to the extra questions:

1.  I use qb online accountant.  They invite me as an accountant user.  So I use my normal log in.

2.  I use Chronobooks on my customer's files so I have my own backup.   I use this mostly for clean up work then offer it to my customer if they become ongoing.

3.  I use Hubdoc or ledgersync.  That will provide me the statements to reconcile the accounts.  Then I create a shared file in Sharefile to upload anything that does not import in  Hubdoc or Ledgersync.   Some clients I do the downloading, some they do.  Depends on their level of service. My niche is the small business owner.   

4. This depends on the level of services that they select.  Some I give monthly financials, some quarterly.  Some clients are annual. 

5.   My client will invite their CPA for year-end tax filing. Part of the service I offer is unlimited access to me for questions throughout the year and Diamond Team Support with Intuit.

6. No inventory for the type of client that I work with .   I would refer another ProAdvisor for that work.

7.  I only use full service payroll with Intuit for my clients or if they have a different payroll service, I export the journal entry.

8.  No