Do I need an accountant for my small business? (And when to hire one)

Most Canadian business owners don't hire an accountant because they hit a particular revenue number. They hire one because something specific happened. A Canada Revenue Agency (CRA) letter arrived, a first employee came onto the payroll, or a return turned out to be more complicated than a weekend filing could handle.

The honest answer is that you probably don't need an accountant on day one. There are clear points, though, where doing it all yourself starts costing more than hiring help. 

Here's how to tell where you stand.

What an accountant actually does for a small business

An accountant handles the judgment calls in your finances. In practice that means:

• Compliance filings
  Your T2125 statement of business activities or T2 corporate return, GST/HST returns, and payroll slips.

• Tax planning
  How you pay yourself, when to claim capital cost allowance, and which expenses hold up under review.

• Financial statements
  The balance sheet and income statement your bank or investor will ask for.

• Advisory
  Whether to incorporate, how to structure a partnership, or what a big purchase does to your cash position.
   

Categorising transactions and reconciling your bank feed falls under bookkeeping instead. That distinction matters more than most owners expect.

One thing hiring an accountant does not do is move the liability off you. The CRA is direct about it: Even if someone else prepares your return, you are responsible for all the information on it. A good accountant reduces your risk. They don't absorb it.

Accountant vs. Bookkeeper: Which one do you need?

Plenty of owners searching for an accountant actually only need a bookkeeper and decent software.

If your books are messy, an accountant will charge you accountant rates to tidy them up. Getting the bookkeeping right first, either in-house with accounting software or through a bookkeeper, makes everything an accountant does cheaper.

Seven signs it's time to hire an accountant

1. You crossed the $30,000 GST/HST threshold

The threshold counts revenue before expenses from your worldwide taxable supplies, including your associates'. How you cross it changes what you owe and when, and the two cases work differently.

• Over $30,000 in a single calendar quarter: You stop being a small supplier immediately, and you have to charge GST/HST on the very sale that took you past the limit, even though you aren't registered yet. You then have 29 days from that day to register.

• Over $30,000 across four consecutive quarters but not in any single one: You remain a small supplier until the end of the month following that fourth quarter, then you must start charging on your first sale after that, with 29 days from that sale to register.

Read that first case again, because it's the expensive one. Tax becomes payable on a sale you may have already invoiced without it, and the shortfall comes out of your own pocket.

2. You're weighing incorporation

Choosing between a sole proprietorship and a corporation affects your tax rate, your liability, and how you draw income. It's a one-time decision with years of consequences.

3. You hired your first employee

Payroll brings source deductions, remittance schedules, and T4 slips, which are due the last day of February after the calendar year they cover. Late remittances carry a penalty of 3% for one to three days late, rising to 10% past a week, and 20% for a repeat failure in the same calendar year made knowingly or through gross negligence. Interest compounds daily on top of those rates.

4. You're filing a T2 for the first time

A corporate return is due six months after your fiscal year end. The balance is generally payable two months after the year's end, or three months for a Canadian-controlled private corporation that claimed the small business deduction and meets the CRA's further conditions on prior-year taxable income. For tax years starting after 2023, most corporations must file electronically or face a $1,000 penalty.

5. Your business income flows through your personal return

As a sole proprietor, you file by June 15, but any balance owed is due April 30. That gap catches people every year. File on time even if you can't pay in full, because the late-filing penalty is 5% of the balance plus 1% per month for up to a year, and that sits on top of interest you'd owe anyway. When a due date falls on a weekend or public holiday, it moves to the next business day.

6. You're claiming expenses you're unsure about

Only the business portion is deductible, and the tests are specific. Business-use-of-home expenses require the space to be your principal place of business, or used only to earn business income and regularly to meet clients, and they cannot create or increase a business loss. Vehicle costs need a log to support the business share. Guessing here is where reassessments come from.

7. You're raising money, or the CRA has written to you

Both situations call for someone who can produce clean statements and defend them.

How much does an accountant cost in Canada?

Fees vary by city, by complexity, and by whether you have tidy books. Rough ranges to budget against are:

These are market observations rather than published rates, so treat them as a starting point and get two or three quotes. Two things move the numbers: the state of your records, and how much advisory work you want beyond bare compliance. Ask for a written scope so you know what's included and what gets billed on top.

Questions to ask before you hire

• Are you a CPA, and which provincial body are you registered with?

• Have you worked with businesses my size in my industry?

• Which accounting software do you work in, and can you work in mine?

• What's in scope, and what's billed separately?

• Who handles my file day to day, you or a junior associate?

• How do you charge, hourly or a fixed fee?

You can confirm a CPA's standing through your provincial CPA body's member directory.

FAQ

Can I run a business without an accountant?

Yes. Many sole proprietors with straightforward income and few expenses file their own returns using accounting software.

Do I need an accountant or can I do it myself?

Handle accounting tasks yourself while your situation stays simple. Bring in help once incorporation, payroll, or GST/HST enters the picture.

At what point is it worth getting an accountant?

When the tax you could save, or the penalty you could avoid, exceeds the accountant's fee. For most businesses, that lands around incorporation or the first hire.

Do I need an accountant for a sole proprietorship?

Usually not just to file. A single planning session before the year's end often pays for itself.

Do I need an accountant or a bookkeeper?

You need a bookkeeper if your records need work, and an accountant if your filings or your structure need management.

The short version

Software handles your financial recording tasks. An accountant handles the management. Getting the first part right is what makes the second part affordable, which is why most owners start with solid books and bring in professional advice at the moments that genuinely call for it. When your year-end comes around, work through a year-end checklist before you decide whether you need help with it.

Zoho Books keeps your Canadian small business books CRA-ready all year, with GST/HST tracking and reports your accountant can work straight from. Try it for free.