Bookkeeper vs accountant vs CPA – which is which. If you’re a business owner, it’s important to know the difference. In this post, I’ll go over the difference between the three, how you can determine which one you need, and when you should begin seeking their support for your business.

I included a quick summary here for your reference but everything is discussed in detailed in the video above. Watch it now to learn more!

What’s an Accountant? 

An Accountant is a professional who performs accounting functions, such as analyzing financial accounts, reviewing financial statements and preparing tax returns. 

Most accountants have a bachelor’s degree in accounting or a related field. 

What’s a CPA? 

A CPA (Certified Public Accountant) is an accountant who has passed rigorous testing and licensing requirements (such as work experience) in the state in which they practice. CPA candidates typically have to have extensive college course work, specifically in areas such as accounting, auditing and business. 

A CPA has ongoing continuing education requirements as well. 

What’s a Bookkeeper? 

A bookkeeper prepares your financial accounts, including ensuring all transactions are documented correctly. 

Bookkeeping is straightforward; accounting involves subjectivity and interpretation. Unlike accountants, bookkeepers are not required to have a bachelor’s degree or any special training. 

A Bookkeeper’s Tasks:

• Input and track financial transactions 
• Prepare cash flow, profit/loss, and balance sheet reports 
• Follow up on unpaid invoices 
• Pay outstanding bills 
• Collect and pay sales tax 
• Reconcile your bank statements 
• Provide your tax preparer with the necessary reports 
• Monitor your budget and prepare your budget-to-actual 
• Process payroll 

An Accountant’s Tasks: 

• Everything a bookkeeper does 
• Advise on business structure 
• Advise you on tax laws and notify you of law changes 
• Prepare financial projections 
• Prepare tax returns 

Accountant vs CPA 

1. Licensing  
   • Rigorous standards to become a CPA
   • Must pass 4 exams
   • Required to have work experience under a CPA
   • Ongoing continuing education requirements

2. Fiduciary Responsibility 
   • Considered a fiduciary for their clients, meaning they have a legal duty and power to act on behalf of, and in the best interest of, their clients (non-CPA accountants don’t have this) 

3. Taxes and Regulations 
   • Both can prepare tax returns 
   •  Only CPAs can represent clients before the IRS if audited

4. Code of Ethics 
   • CPAs follow a strict code of ethics 

When Should I Hire a Bookkeeper? 

Hire a bookkeeper when you want someone to oversee the daily transaction reporting, monthly reconciliation, and go over financial tasks in your business that you don’t want to do yourself. 

When Should I Hire an Accountant or CPA? 

Hire an Accountant or CPA when you want someone to prepare your tax returns, or advise you on tax matters.  

I hope this brought more clarity for you when it comes to learning the difference of bookkeeper vs accountant vs CPA. If you’re more of a DIY person when it comes to taxes, you might want to check this post about how you can prepare year-round for tax time.