Bookkeeper, Accountant, or CPA? Who Does Your Business Need?

Does your company require a CPA to conduct an audit, an accountant to optimize cash flow, or a bookkeeper to maintain your daily ledger? Learn more about the distinct responsibilities of a bookkeeper, accountant, and CPA in this blog post, as well as how they differ from one another.

Do you frequently conflate the terms “CPAs,” “accountants,” and “bookkeepers”? Would a bookkeeper suffice in place of all three, or do need you to hire all three? What precisely is the distinction between a bookkeeper, an accountant, and a CPA?

While it is true that all three of these specialists are capable of handling your finances and collaborating to achieve a similar objective, their areas of expertise differ. While an accountant may provide a thorough analysis of your financial operations, a bookkeeper would keep track of each transaction, whereas an accountant may offer a detailed analysis of your financial transactions. In contrast, CPAs are qualified public accountants who would manage your accounting operations.

Who do you need to hire for your company’s accounting needs? Let’s investigate.

The Bookkeeper

A bookkeeper is in charge of a company’s daily financial activities, they are primarily focused on recording and maintaining accurate financial records.

Responsibilities of a Bookkeeper:

• Transactional recording: Bookkeepers handle the recording of financial transactions such as sales, purchases, payments, and receipts. They ensure that all transactions are properly classified, recorded, and organized.
• Data entry and reconciliation: Bookkeepers enter financial data into accounting software and reconcile bank statements with the company’s records. They identify discrepancies and work to resolve them.
• Financial statements: Bookkeepers generate financial statements, such as profit and loss statements and balance sheets, based on the recorded transactions. These financial statements give a general picture of the company’s financial situation.
• Payroll and basic tax preparation: Bookkeepers may handle payroll processing, including calculating wages, and deductions, and preparing payroll tax filings. They may also assist in basic tax preparation by organizing financial records and providing information to accountants or CPAs.
• Education and certification: While bookkeepers do not require formal certification, many possess a degree in accounting or finance. They may also hold certifications such as Certified Bookkeeper (CB) or Certified QuickBooks ProAdvisor.

Bookkeeping is the process of accurately, consistently, and systematically recording each day’s financial transactions of a business. A bookkeeper can carry out tasks like keeping daily records, billing for goods and services, entering transactions, paying suppliers, making loan payments, issuing invoices, managing payroll, and creating financial reports without having received any professional training. A bookkeeper would use specialized software like QuickBooks to keep a daily ledger. This would maintain a record of every dollar of revenue that entered and left an organization.

The Accountant

Accountants are financial professionals who analyze, interpret, and communicate financial information to support decision-making. They go beyond the day-to-day transactions and provide a more comprehensive view of a business’s financial performance. Here’s what you need to know about accountants:

Responsibilities of an Accountant

• Financial analysis and reporting: Accountants analyze financial data, identify trends, and provide insights into the financial health of a business. They prepare and interpret financial reports, such as income statements, cash flow statements, and financial ratios.
• Tax planning and compliance: Accountants help businesses navigate complex tax regulations. They assist in tax planning, ensuring compliance with tax laws, and preparing tax returns. They stay up-to-date with tax code changes to optimize tax strategies for businesses.
• Budgeting and forecasting: Accountants work closely with business owners and managers to develop budgets and financial forecasts. They help set financial goals, monitor performance against budgets, and provide recommendations for improving financial outcomes.
• Audit preparation and support: Accountants assist in preparing for external audits by organizing financial records, ensuring compliance with accounting standards, and answering auditors’ questions. They may also conduct internal audits to assess internal controls and identify areas for improvement.
• Education and certification: Accountants typically hold a bachelor’s degree in accounting or finance. Many accountants pursue professional certifications such as Certified Public Accountant (CPA) or Chartered Accountant (CA) to enhance their credentials and expertise.

Accountants offer a higher level of financial analysis, reporting, and strategic guidance. They are well-suited for businesses that require in-depth financial expertise, tax planning, and support in making critical financial decisions.

Certified Public Accountant (CPA)

A Certified Public Accountant (CPA) is an accountant who has met specific state requirements and passed the CPA exam. They have an enhanced level of expertise and are authorized to provide additional services that regular accountants cannot.

Responsibilities of a CPA

• Advanced tax planning and compliance: CPAs have an in-depth understanding of tax regulations and can provide advanced tax planning strategies to minimize tax liabilities. They assist with complex tax matters and can represent businesses before tax authorities.
• Auditing and attestation services: CPAs are qualified to conduct audits of financial statements and issue audit reports. They provide assurance to stakeholders, such as investors or lenders, about the accuracy and reliability of financial information.
• Business valuation and consulting: CPAs can provide business valuation services, helping owners determine the worth of their business for various purposes, such as mergers, acquisitions, or estate planning. They also offer consulting services, advising on financial strategies, internal controls, and risk management.
• Expert witness and forensic accounting: CPAs can serve as expert witnesses in legal proceedings involving financial matters. They are skilled in forensic accounting, investigating financial fraud, and providing litigation support.
• Education and certification: CPAs are required to hold a bachelor’s degree in accounting, pass the CPA exam, and meet specific experience requirements. They are licensed by state boards of accountancy and must complete continuing education to maintain their credentials.

CPAs are the highest level of financial professionals and are suited for businesses that require specialized expertise in areas like taxation, auditing, and consulting. They provide a comprehensive range of services and play a crucial role in complex financial matters.

Which accounting expert should you pick?

A bookkeeper would be your best bet if you wanted to manage your accounts and finances. A qualified bookkeeper can handle your payroll, provide reports, do account reconciliations, and handle bill payments. An accountant is the person you need if you want to maximize the value of your reports and data. The ideal person to manage your taxes and enhance your cash flow is an accountant.

An accountant, however, would not be sufficient if your business dealings were complicated or if you were to appear before the IRS and needed a more credible specialist. You can then pick a CPA in that situation.

We at Velan are your one-stop shop for all of your accounting needs. Our team can provide you with whatever accounting service you desire, from basic bookkeeping to complex accounting. Our team of experts has a wealth of expertise in meeting the accounting demands of multinational corporations in addition to being trained and accredited. We bring you in contact with the top experts in the field, whether your company needs a bookkeeper, accountant, or CPA. By recruiting and training a group of accountants, CPAs, and bookkeepers in-house, outsourcing eliminates the bother and puts you in touch with a knowledgeable group of professionals.