What does CPA stand for? Or CGA or CMA? They're all different types of accountants, and you'll want to know the differences if you're running a Canadian small business.
Historically there have been three different accounting designations in Canada; the CA (Chartered Accountant), the CGA (Certified General Accountant), and the CMA (Certified Management Accountant), each having different educational and work experience requirements for certification:
CA (Chartered Accountant)
The CA designation required an undergraduate degree in accounting plus three years of training in a designated accounting firm. To receive final certification students were required to pass a very challenging three-day exam known as the Uniform Final Evaluation. The CA designation is highly recognized internationally.
CGA (Certified General Accountant)
CGA certification required an undergraduate degree, two or more years of CGA-related courses, an entrance exam and two to three years of business experience at the managerial level. One of the advantages of obtaining a CGA was the flexibility - students could complete the program while employed.
CMA (Certified Management Accountant)
For CMA certification the requirements were an undergraduate degree in a related discipline (such as a Bachelor of Commerce), an entrance exam, and suitable work experience.
CPA (Chartered Professional Accountant)
To reduce confusion and provide clarity and simplicity of oversight to the accounting industry, in 2012 the over 40 different provincial and national accounting associations representing the three designations began negotiating a solution, and in 2014 agreed to merge under a single designation - members are now known as Chartered Professional Accountants (CPAs).
Regardless of the designation, accounting professionals work in a variety of different fields as auditors, taxation specialists, or providers of general accounting services and consulting to businesses.
Almost all businesses need accounting expertise for tax preparation and/or general financial advice. Larger businesses tend to retain in-house accounting expertise whereas smaller firms normally utilize accountants on an as-needed basis contracted through public accounting firms.
The bookkeeping profession is currently unregulated in Canada, and anyone can advertise their services as a bookkeeper. Colleges and business schools typically offer certificate programs in bookkeeping that require completion of courses in record keeping and accounting software such as Simply Accounting and Quickbooks.
The Institute of Professional Bookkeepers of Canada (CFB) offers certification for bookkeepers. The Certified Professional Bookkeeper (CPB) designation requires at least two years of professional experience as a bookkeeper and completion of an exam.
Accountant vs. Bookkeeper
From a business point of view, the duties of a bookkeeper and accountant are quite different although there is some overlap. Generally, a bookkeeper is responsible for business record keeping, e.g., recording the daily financial transactions of your business (sales, purchases, expenses, etc.), as well as assisting with bill payments, invoices, and payroll. Many bookkeepers can also perform some accounting functions such as creating basic financial reports.
An accountant deals with the bigger picture; his or her main function is business planning. The accountant's role is to examine the numbers recorded by the bookkeeper, summarize the information, and prepare tax returns, financial statements, annual reports, and provide advice to the business as to the financial state of the company. Accountants are usually tasked with dealing with the tax authorities should any tax-related issues arise.
The rates charged by accountants and bookkeepers are commensurate with the differences in training, education, and responsibilities - bookkeeping hourly rates are a fraction of those charged by accountants. For business owners, having a good bookkeeper and a well-organized accounting system can reduce accounting costs substantially.
Saving Money With Accounting Software
One of the best ways for a business to save money on accounting and bookkeeping costs is by using small business accounting software. New cloud-based accounting software offerings from vendors such as FreshBooks offer starter packages for as low as $5 per month that are ideal for freelancers and sole proprietorships, including invoicing, expense tracking, and simple reporting. For a higher rate more advanced features such as payroll and double entry, accounting is also available.