Do I Need a Bookkeeper or a CPA?

Start ups or existing owners that have no accounting or bookkeeping experience commonly find themselves asking the question “Do I need a bookkeeper or a CPA?”.  Though I am flattered to be called an “Accountant” at times, I think most of the CPAs I work with would not want to perform my duties anymore than I would want to perform theirs. Yet, the relationship is vital. The raw information I present in their desired format is how they create the all-important tax returns.

A bookkeeper can do much of what an accountant does, but for a lesser cost. Though there are many certifications for bookkeeping, unlike a CPA, it is not a requirement.  The role of a bookkeeper normally ends at the Trial Balance. Many businesses are able to keep the records they need with the help of a qualified bookkeeper and only use a CPA when absolutely necessary for income tax planning and preparation. A CPA would normally prepare reviewed financial statements and audited financial statements.

Bookkeeping for many is the tedious part. A bookkeeper basically keeps a company’s books by entering data into a double entry system. In large companies, you may have different departments or processes, Accounts Receivable, Accounts Payable, or Payroll. While most often these people are referred to as “clerks”, they might also be considered bookkeepers as they are “keeping the books” for a company. The bookkeeper in a smaller company would normally have knowledge in each department to perform the entire bookkeeping process.

What is the CPA’s Function?

Accountants or Certified Public Accountants (CPAs) require certification in any state they practice in. An accountant is a well educated financial analyst and tax preparer. A CPA has likely majored in accounting at an accredited university, sat for exams covering practice, theory, auditing, and law. He or she will have worked for a well established accounting firm for a minimum of 2 years. Additionally, 500 hours of auditing experience is required for certification. A CPA will also have to complete a specified number of hours in continuing education courses in order to maintain a license. Additionally a CPA will stay current on all the changes in tax law and how they affect the business.

So who needs a bookkeeper? Many business owners spend more than they save both time and money-wise when doing the books themselves. Here’s what you need to know about letting go.

1) How much is your time worth?
Many spend far too much time focusing on keeping their books in order and end up forfeiting time that could be spent on other vital business task such as personal and sales.

2) Always stressed during tax season?
Having to hire a CPA to organize your records for the year will normally outweigh that cost of having a consistent bookkeeper track things. By having them ready to go and properly prepared, you can save valuable time and money.

3) How much do you really know?
Bookkeepers are skilled in just that: keeping books. It’s what they do for a living. Not only can they make sure your checks are written out properly and expenses and assets are properly accounted for, but they can also find different tax exempts you may not be aware of currently.

Just like sales, bookkeeping should be a normal, ongoing task in any company and should be included in the budget.

Amy Kathleen
Author: Amy Kathleen

Amy is a small business consultant and bookkeeper and has experience in marketing and web design. She has lived and worked in the Geauga County community for the past 30 years.