Bookkeeper vs CPA

When a small business needs assistance with their books or finances, outsourcing accounting services often proves to be the best option. These services are typically provided by either a bookkeeper or a certified public accountant (CPA). Although bookkeepers and CPAs may appear similar, there are distinct differences between the two. Understanding these differences can help you determine which is best suited for your business.

Read below for key differences between the two and when each may be best for your business.

Bookkeeper

A bookkeeper maintains daily accounting records, and may generate invoices, process payments and payroll. A bookkeeper is focused on accuracy and data entry. A good bookkeeper is organized, comfortable with numbers, detail-oriented, and has a basic understanding of accounting principles.

CPA

A Certified Public Accountant (CPA) is a licensed professional that earned the designation through fulfilling rigorous education, exam, and experience requirements. A CPA is well-versed to provide professional services in the areas of tax and financial planning, tax reporting, auditing, and management consulting for individuals and for business.  

Key Differences

Education

Bookkeepers have no educational requirements. Bookkeepers may have a degree in accounting or a certification in bookkeeping, although neither are necessary to perform the essential functions of their position. Bookkeepers may have trainings related to data entry, payroll, and invoicing, and related to specific accounting or payroll systems.

 CPAs have education, licensing, and experience requirements to ensure comprehensive accounting and tax expertise and prepare them to manage more complex financial tasks. CPAs must have at least 150 hours of college credits and 21 hours of accounting credits, pass all parts of the CPA exam, and 2,000 hours of relevant experience under a CPA.

Services

Bookkeepers are responsible for providing accurate and current financial information about a business, and may also help process invoices, payments, and payroll. Generally, bookkeepers do not provide any services regarding taxes or financial analysis.

CPAs have expertise in accounting principles, financial reporting, and tax regulation, and thereby can service all accounting needs and tax requirements for a business or individual. CPAs can be responsible for all bookkeeping, payroll, tax planning and filing, financial and tax compliance, financial reporting, financial planning, and consulting.

Regulation

Bookkeepers do not have any regulatory requirements. Each state has a Board of Accountancy that has authority to regulate all CPAs. Each CPA must adhere to the rules and requirements of their respective state’s Board of Accountancy, including abiding by ethics standard and completing annual continuing professional education requirements.

Fees

For outsourced accounting services, both bookkeepers and CPAs usually charge an hourly rate. CPAs have a higher hourly rate because of their additional expertise and qualifications. However, the potential savings that comes with the additional value of a CPA should be considered when determining the most cost-effective option. See our blog 6 Ways a CPA Can Save Your Business Money for examples of how having a CPA can lead to savings.

Recommendations

If you are looking someone that can provide accurate data entry and process consistent financial activities for your businesses, do not expect significant business changes, and won’t use tax planning, financial planning, or financial analysis, a bookkeeper is your best bet.

If you want additional services beyond accurate books, anticipate business growth, prefer comprehensive accounting and tax services, or value financial and tax expertise, a CPA is your best bet.

Want to discuss if having a CPA is best for your business? Reach out today!