Choosing accounting software How to pick the right one for your Canadian business

Q: Can I use AI to do my own bookkeeping?

For a simple sole proprietorship, it can work well if it is set up correctly. For a corporation, we don't recommend it yet, because the books have to carry forward and tie into the corporate tax return. We can review your setup in a 1:1 session or check the results with a Books Check-Up.

“My business is booming, but I have no idea where my money is going. What should I do first?”

Start with a system. And for most growing businesses, that means proper accounting software.

Here’s the short answer. For most Canadian small businesses, the choice comes down to Xero or QuickBooks Online. Both handle GST/HST and connect to Canadian banks. Which one fits depends on whether you’re a sole proprietor or incorporated, whether you run payroll, whether you get paid in US dollars, and how you want to handle receipts. If you’re just starting out with only a few transactions a month, a good spreadsheet can carry you for a while.

Spreadsheet or software?

A spreadsheet works when you have one bank account, a handful of sales a month and you aren’t registered for GST/HST yet.
It’s time for software once you’re registered for GST/HST, you have staff, you sell through online platforms, or you’re spending more than an hour or two a month typing things in.

Starting simple? Our bookkeeping spreadsheet template is built for new Canadian businesses.

What to look for in Canada

GST/HST built in. It should track the tax you charge and pay, and produce the numbers for your return.
Bank feeds with your bank. Transactions from your Canadian bank and credit cards should come in automatically.
Payroll that works in Canada, if you have staff, including source deductions, remittances and T4s.
US dollars, if you get paid or pay bills in USD. Multi-currency is usually only on the higher plans.
Receipts you can actually find later. Snap a picture or forward an email, and the receipt is filed somewhere you can search, not buried inside one transaction.
Connections to what you already use. Stripe, PayPal, Square, Shopify, your invoicing or job app.
Access for your bookkeeper and accountant, without sharing your login.

Xero or QuickBooks Online?

We work in both every day. Here’s where they actually differ for Canadian businesses:

Payroll: QuickBooks Online offers Canadian payroll as an add-on. Xero doesn’t run payroll in Canada, so it connects to a separate payroll app like Wagepoint.
Receipts: Xero includes Hubdoc for receipt and bill capture. QuickBooks Online stores receipts inside each transaction, so pulling them later, for a CRA review for example, means clicking into transactions one at a time. Hubdoc works with either.
US dollars: on Xero, multi-currency is on the top plan. On QuickBooks Online, it starts at the mid-level plans. In our experience, Xero handles it much better.
Feel: some people find one easier than the other. Both offer a free trial, so try them before you commit.

Plans and prices change often, so check the current options on each company’s Canadian website before you buy.

Why we stick to Xero and QuickBooks Online

There are other options out there, and we’ve worked in plenty of them. Many of the starter-level products are fine for sending invoices, but they make life harder once you need a bookkeeper or accountant. Some don’t give your accountant their own login separate from yours. Some have limited reporting. And some don’t carry your balances forward cleanly from one year to the next, which is exactly what year-end and your tax return depend on.

Starter software also tends to run out of road. You end up switching just as your business is growing and everything else is stretched too, maybe right when you incorporate, and moving all your accounting and history is one more big job on top. Xero and QuickBooks Online have plans for each stage, so you move up a level instead of moving platforms.

That’s why Xero and QuickBooks Online are the two we recommend and work in every day. If you’re already on something else, we’ll tell you honestly whether it will hold up or whether it’s time to switch.

Our pick: Xero

Most of our clients are on Xero, and it’s what we recommend first, especially for online businesses. It handles multiple currencies far better than QuickBooks Online, which matters as soon as you’re paid in US dollars through Stripe or PayPal. We also find it cleaner to work in day to day, and Hubdoc is included.

We do have clients on QuickBooks Online, and we’re happy to work with you there. But if you’re choosing fresh, we’d point you to Xero.

Get your receipts in one place

This is the piece we recommend to every client, and it matters even if you do your own books. Hubdoc works like a filing cabinet for your receipts and bills: it files them automatically, pulls out the details, sorts them, and sends them into Xero or QuickBooks Online. Everything sits in one place you can search, instead of scattered across your email, Google Drive and phone.

You can use it for your personal tax receipts too, with different tags, so medical receipts, donation slips and business expenses are all in one spot come tax time.

What about AI?

Sole proprietors: if your business is simple, using AI to help keep your books can work really well. The catch is the setup. If it isn’t built correctly from the start, you won’t know it’s wrong until tax time, because you don’t know what you’re looking for.

Already built your own AI setup, or thinking about it? Book a 1:1 session and we’ll review what you’ve created and make sure it will hold up. Or start with a Books Check-Up and we’ll check the results.

Incorporated businesses: we don’t recommend it yet. A corporation’s books carry forward from one year to the next and have to tie into the corporate tax return: assets, liabilities, loans to and from shareholders, and last year’s closing balances all have to line up. That takes a full accounting platform. Without one, year-end takes far longer to sort out, and your accountant’s bill goes up with it.

Want the full picture? Read can AI do your bookkeeping in Canada?

What about the new AI accounting platforms? We’ve looked, and so far we haven’t found one that properly handles Canadian dollars and Canadian sales taxes. They’re also priced about the same as Xero and QuickBooks Online, not cheaper. That may change, and we’re watching.

Watch for apps that don’t support Canada

Plenty of accounting and bookkeeping apps are built for the US. Before you sign up for anything, check that it handles GST/HST and PST, connects to Canadian banks, and runs Canadian payroll if you need it. An app that looks perfect in a US review can leave you doing the Canadian parts by hand.

Want help choosing or setting it up?

We’ll help you pick software that suits how you work, set it up properly and connect your bank, payment platforms and receipt capture. That’s available as an add-on to your monthly package, or as a one-time 1:1 session. Already set up and want to know if it’s right? The Books Check-Up will tell you.

Let’s get your books set up right No judgment, no accountant-speak

Want it handled? Book a free 15-minute video call. Rather keep it short? Email team@kcandcompany.ca with what you do and what’s bugging you.
Doing your own books? The Books Check-Up is a flat-fee review. We look at what you’ve got, flag what’s off and walk you through it.

Frequently asked questions

Which accounting software is best for a small business in Canada?

For most Canadian small businesses, Xero or QuickBooks Online. Both handle GST/HST and Canadian bank feeds. The right one depends on payroll, US-dollar transactions and how you handle receipts.

Does Xero do payroll in Canada?

No. Xero doesn’t run payroll in Canada. It connects to a separate Canadian payroll app such as Wagepoint.

Can I use a spreadsheet instead of accounting software?

Yes, when you’re small and simple: one bank account, a few sales a month and not yet registered for GST/HST. Once that changes, software saves you time.

Do I need multi-currency?

Only if you get paid or pay bills in another currency, like US dollars. It’s usually only on the higher plans of both Xero and QuickBooks Online.

Can I use AI to do my own bookkeeping?

For a simple sole proprietorship, it can work well if it’s set up correctly. For a corporation, we don’t recommend it yet, because the books have to carry forward and tie into the corporate tax return. We can review your setup in a 1:1 session or check the results with a Books Check-Up.

Can you help me switch software?

Yes. We can set up new software, connect your bank and platforms, and move your records over, as an add-on to a monthly package or a one-time session.