Choosing Accounting Software (QuickBooks, Xero, etc.)

Introduction
Choosing accounting software is one of the most important decisions a business owner can make. The right accounting platform saves time, reduces errors, automates tax compliance, improves cash flow visibility, and ensures accurate financial reporting for CRA and Revenu Québec. Whether you run a small business, corporation, e-commerce store, real estate company, consulting practice, or online service, accounting software is the central tool that controls your financial operations. With dozens of options — QuickBooks Online, Xero, Sage, Wave, FreshBooks, Zoho Books, and specialized Shopify/Amazon integrations — business owners must understand which features matter most. This guide explains how to choose accounting software that meets Canadian and Québec tax requirements while supporting business growth.

Legal and Regulatory Framework
Choosing accounting software must align with the Income Tax Act, CRA books-and-records requirements, GST/HST and QST compliance, ASPE standards for corporations, payroll reporting rules (T4s, RL-1 slips), Québec’s Taxation Act, digital invoicing rules, bank reconciliation requirements, and audit-readiness guidelines. CRA requires businesses to maintain accurate, retrievable books for at least six years. The right software must support these obligations.

Why Accounting Software Matters
Manual bookkeeping is prone to errors, missing transactions, and incorrect tax reporting. Proper accounting software:
automates bank feeds
tracks GST/HST and QST correctly
prepares financial statements
manages payroll
reconciles accounts
tracks inventory
handles foreign currency
syncs with e-commerce platforms
supports corporation year-end reporting
Businesses that use modern cloud-based software generally experience fewer CRA and ARQ audits due to improved accuracy and transparency.

QuickBooks Online (QBO)
QuickBooks Online is Canada’s most popular accounting software. Key features include:
automated GST/HST and QST tracking
integration with banks and credit cards
e-commerce integrations (Shopify, Amazon)
project tracking
profit and loss statements
multi-currency support
payroll add-on
T2 and T2125 preparation support
QuickBooks is ideal for most small and medium-sized businesses, including service-based companies, e-commerce operations, contractors, and consultants.

Xero
Xero is a strong global competitor known for clean design and automation. Features include:
excellent bank-rule automation
powerful reconciliation system
multi-currency support
add-on ecosystem for e-commerce and inventory
integrations with Stripe, PayPal, Square
Xero is ideal for businesses wanting high automation, especially consulting firms, digital businesses, and companies with international operations.

Sage Business Cloud & Sage 50
Sage is widely used in more traditional industries. Sage 50 (desktop) and Sage Business Cloud (online) offer:
strong inventory management
robust payroll
enterprise-level reporting
multi-location support
Sage is ideal for manufacturers, distributors, and multi-location businesses needing strong internal controls.

Wave Accounting (Free Option)
Wave is a free accounting software suitable for small solo entrepreneurs. It includes:
invoicing
bank feeds
basic financial reports
Wave does not include robust inventory, payroll, or GST/QST tracking, making it unsuitable for growing businesses.

FreshBooks
FreshBooks focuses on service-based businesses and freelancers. Features include:
time-tracking
client billing
simple reporting
Limited inventory or advanced features restrict FreshBooks for larger operations.

Zoho Books
Zoho Books is part of the Zoho ecosystem. Strong for:
automation
workflow customization
multi-app integration
However, GST/QST features are more limited than QuickBooks.

Specialized E-Commerce Integrations
Shopify sellers, Amazon sellers, Etsy sellers, and drop shippers often require specialized integrations such as:
A2X for Amazon and Shopify
Dext for receipt tracking
Hubdoc for document automation
These tools sync orders, payouts, fees, and COGS properly into accounting software. Without these integrations, e-commerce bookkeeping becomes inaccurate and time-consuming.

Key Factors When Choosing Accounting Software
When evaluating software, consider:

1. GST/HST and QST compatibility
   Does it properly track multi-province tax?
   Does it support Québec QST rules?

2. Bank feed automation
   Does it sync with Canadian banks?

3. Scalability
   Does it support your future growth?

4. E-commerce features
   Are Shopify, Amazon, Stripe, and PayPal integrated?

5. Payroll
   Does it handle T4, RL-1, EI, QPIP, CPP/QPP correctly?

6. Inventory
   Does the software support COGS tracking?

7. Multi-currency support
   Essential for U.S.-based clients or suppliers.

8. Ease of use
   Will your staff understand it?

9. CPA compatibility
   Your accountant should be able to access and manage it easily.

GST/HST and QST Requirements
Accounting software must manage:
federal GST/HST tracking
provincial QST tracking
filing reports
remittance deadlines
input tax credits
QuickBooks and Xero are best for Canadian tax compliance.

Cloud vs Desktop Software
Cloud software is ideal for most businesses because it provides:
real-time data
automatic backups
remote access
integration with apps
Desktop software is better for businesses needing offline access, very heavy inventory management, or strict internal controls.

Common Software Mistakes
choosing software with no GST/QST support
using Wave for inventory business
not integrating Shopify or Amazon
mixing personal and business bank accounts
incorrect tax code setup
not reconciling bank accounts properly
These lead to CRA or ARQ issues and costly bookkeeping cleanup.

Key Court and CRA Positions
CRA requires accurate books that reflect true income and expenses. Courts uphold CRA reassessments when software was improperly used or records are incomplete. Using proper accounting software is considered best practice during audits.

Why CRA and Revenu Québec Audit Poor Bookkeeping Software
data inconsistencies
incorrect GST/QST reporting
missing financial statements
gaps in invoices or receipts
incorrect income categorization
e-commerce payout mismatches
Poor software usage increases audit risk dramatically.

Mackisen Strategy
Mackisen CPA helps businesses select and implement the best accounting software. We evaluate business needs, set up QuickBooks or Xero, configure GST/HST/QST codes, integrate e-commerce and payment systems, train staff, automate reporting, correct past bookkeeping, prepare financial statements, and ensure CRA/ARQ audit readiness.

Real Client Experience
A Shopify seller struggled with incorrect sales reporting; we implemented QuickBooks + A2X and fixed all COGS and GST/QST issues. A consultant used Wave and faced CRA reassessment; we transitioned her to QuickBooks with full compliance. A distributor needed Sage 50 for inventory; we configured internal controls and reconciliations. A corporation using manual spreadsheets upgraded to Xero; Mackisen automated their entire bookkeeping system.

Common Questions
Which accounting software is best for small business? QuickBooks Online for most cases.
Is Xero good for Canadian businesses? Yes, especially service businesses.
Do Shopify sellers need integrations? Yes — for accuracy.
Does accounting software handle GST/QST automatically? Only if configured properly.
Can I switch software mid-year? Yes with proper migration.
Should corporations avoid Wave? Yes — it lacks required features.

Why Mackisen
With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps business owners choose the best accounting software, set up tax compliance, automate processes, and maintain accurate financial records. Our expert team ensures seamless integration, improved efficiency, and audit-proof bookkeeping.