Category Archives: People

BPO (“business process outsourcing”) for Startups

For startups outsourcing isn’t really new.

As a public accountant I have embraced the concept of outsourcing. Most businesses of any size in North America outsource at least some of their tax and financial reporting functions to local or international CPA firms.

And many startups outsource their bookkeeping to local, independent bookkeepers or bookkeeping firms.


The key problem for startups is that finding quality bookkeeping services isn’t that easy. As a CPA I know that most of my colleagues have difficulty finding qualified bookkeepers that they can recommend. Most CPAs jealously guard their recommendations and keep them for valued clients.

From a public accountant’s perspective, good quality bookkeeping is necessary in order to provide profitable professional accounting services. For the most part our clients want us to help them file their taxes and they may need financial statements for their bank or investors. Whether our clients outsource the bookkeeping or do it themselves, they don’t appreciate paying public accountants to fix the bookkeeping.

However, all too often the lion’s share of a company’s year end fees can relate to bookkeeping problems – particularly when it comes to small businesses.


If you research ‘bookkeeping certification’ on the internet you’ll find organizations that are trying to ‘professionalize’ bookkeeping by forming ‘institutes’ and similar certifying bodies. In addition you’ll find various colleges that offer courses which culminate in graduates receiving certificates. While members of these institutes and graduates of these courses may do a decent job of bookkeeping, our experience teaches us to be skeptical.

Education is one thing, while training and experience is something else. The discipline of working under professional supervision is vitally important. As far as I am aware, Chartered Professional Accountants are the only accounting professionals that combine education, mandatory supervision and ongoing professional development.

Perhaps most problematic is the tendency for some of these ‘professional’ bookkeepers to take on too much – particularly as it relates to filing corporate tax returns.



In the past I have outsourced bookkeeping and accounting functions to firms and individuals with recognized qualifications in India and the Philippines. I suspect that this may be an appropriate strategy for some CPA firms, however I don’t believe that accounting firms that reside overseas can readily handle local tax issues on a part-time basis.

A few months ago I hired a recently graduated CPA from the Philippines on a full-time basis. I would point out that CPAs in the Philippines receive their designation shortly after graduation. So she was really a bit of a blank slate when I hired her.

Together we are investing in developing her understanding of Canadian tax issues, and professional working paper preparation. While it is awkward dealing with time zone differences – she starts work when I am beginning to wind down – after a few short months she is progressing well and becoming a real asset to our firm.


Know Your Compliance Quotient (“CQ”)

Understanding who you are – and being honest with yourself about your characteristic strengths and weaknesses – is important in life and in business. Over the years I’ve worked with entrepreneurs who were extremely well organized and self-disciplined, and who maintained fastidious records.

I’ve also had clients with very high turnover in the accounting department, abysmal financial records and yet managed to be very successful and profitable.

Along the way I’ve come to believe that certain individuals have a high tolerance and capacity for detail – while others rely more on a kind of ‘gestalt’ overview to keep things in perspective. Those with a higher capacity for detail have what I would call a ‘higher compliance quotient’ – a high “CQ” if you like. These individuals are better suited to running companies that are subject to a lot of scrutiny – for example public companies.

High tech startups in Canada typically receive a great deal of funding from our generous tax incentives for R&D. Maximizing benefits under the scientific research and experimental development program (called “SR&ED” or SHRED) generally requires putting development staff on salary and documenting the development activities.

This is not for the faint of heart – or more accurately it isn’t for those with a low CQ. Payroll must be paid on pay day – you can’t put off employees the way can contractors. You should be aware that the Canada Revenue Agency isn’t particularly tolerant of late payroll remittances.

If you are equipped with a low CQ – recognize it and delegate compliance functions to someone more suited to compliance work. In some cases that may mean dealing with an outsourced payroll service.

At home my wife and I buy everything we can on our credit cards, in order to maximize our travel points. However if we miss the payment date, these credit cards have high interest rates, so they need to be paid on time. Left to me we wouldn’t be able to manage accurately enough, since I’m more focused on my clients’ needs and meeting their deadlines than on my own.

On the other hand my wife is blessed with a very high CQ. Over the years we’ve learned to delegate managing credit card debt to my wife. The downside is that I can’t buy anything without her knowing about it….

The Institute of Certified Records Managers (ICRM)

You’d probably be surprised to learn that there is an international certifying organization of and for professional records and information managers – clearly they work in the shadows at very large governmental and multinational organizations. Otherwise we’d have bumped into them more often.

For small companies the records management functions are typically outsourced to lawyers, accountants, bookkeepers and payroll services. However they are rarely described as records management services. By default bookkeepers typically end up with the lion’s share of the responsibilities, and many have little or no formal training.