Bookkeepers Vs. CPAs

By Joshua Botello

Bookkeepers and accountants are professionals that help your business manage the money in your company and are worth their weight in gold. Accountants charge a hefty fee, while some bookkeepers run a simple business. But when do you need a bookkeeper and when do you need an accountant? In this video, I’ll cover what each professional does and stay till the end to find out which one you might need. 

What’s a Bookkeeper or Accountant?

So let’s start with what is a bookkeeper and what is an accountant. Let’s do a quick rundown before we get into the differences.

Bookkeepers are in charge of recording and keeping financial data. The bookkeepers are responsible for keeping track of daily transactions. They are concerned with the day-to-day operations of the company.

Accountants are responsible for the creation of reports. They are in charge of summarizing, evaluating, and interpreting the work of the bookkeeper. Accountants deal with financial issues such as cash flow and they provide a clearer picture from the raw facts provided by the bookkeeper.

What are the requirements to become one?

So what does it take to be a bookkeeper or accountant? Each has different requirements to operate in their space or as a contractor. 

A bookkeeping career can be obtained with a high school diploma and basic communication, writing, and math skills. Compiling bookkeeping records either on paper or through software is needed for managing money in a business.

In order to become an accountant in any of the 50 states, you must complete credit hours of coursework or obtain a degree and pass a written exam to become a CPA from the state licensing board. 

What do Bookkeepers and Accountants do?

A bookkeeper is in charge of keeping track of financial information. Here's a list of five things bookkeepers take care of:

Bookkeepers keep track of major transactions like invoicing, collections, and customer payments, for example.

Budgeting is another component of the bookkeeper's job description. They can use financial reports to design a budget tailored to your business.

Payroll is handled by bookkeepers, and they can assist you in making financial decisions by gathering data. A small business owner can obtain information on current and future payroll costs.

Forecasting is also handled by bookkeepers, and bookkeeping data can help you calculate your company's growth rate. Increased traffic, new accounts, and other financial records.

Your money is managed by bookkeepers and their work combines with bank data to aid in financial decision-making.

The way accounting procedures handle financial data is slightly different. Even with a simple accounting service, you should anticipate the following:

Financial Accounting - Internal financial statements will be used by an accountant to compile reports. A professional accountant must be familiar with both Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).

Tax Accounting - A certified public accountant prepares a variety of tax returns. They have the knowledge and experience necessary to comply with tax laws. These tax preparation services assist company owners in preparing and filing their taxes.

Public Accounting- An accountant can provide a business with guidance and consulting services. Auditing, examining, and creating financial statements such as a balance sheet or income statement.

Forensic Accounting - An accountant must have enough experience in this area. However, it does not require a full-time accountant. Financial records can be reconstructed by an auditor and this type of financial situation is commonly found in the insurance sector.

Conclusion

So which one do you need? If you are looking to do your own bookkeeping and it's taking up too much of your time, then hiring a bookkeeper can help you save money. If your business has expanded quickly, then you'll need the expertise of an accountant. 

While accountants can do bookkeeping, for small firms, it's usually best to keep the two separate. Although bookkeepers and accountants can collaborate, their skills are very distinct when managing your business's financial health. 

Let me know what you think. Are you handling your own bookkeeping or are you outsourcing it? Let me know down in the comments below.

Funded in part through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, conclusions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.