CPA, Accountant or Bookkeeper?

by Lynnea Bylund on July 11, 2013

Late last year a post by Angie Mohr on Intuit’s Small Biz Blog attempted to differentiate between an accountant and a bookkeeper.  

It helps to know the difference when you decide what is actually needed. Especially if you want to get good value pricing return on service.

“Many times it depends on the industry and the level of expertise required. Questions we ask our clients in order to structure our services include: What industry is the company is in? Do they maintain a number of fixed assets or a large amount of inventory? How many employees do they have? The more complex the organization, the more important it is to make sure that the company’s bookkeeper is also supported by a good CPA who can provide advice as and if needed.”

Jan Haugo blogs about QuickBooks bookkeeping and accounting in Orange CountyThe first question is whether we’re discussing professional credentials, in general, or specifically hiring someone to do your books. Professionally, I always say a bookkeeper knows where to book the transaction, and an accountant knows why it’s booked there.

It wasn’t the best analysis, blogs Jan Haugo commenting on Mohr’s article  –

When we get into hiring, though, I think there are three levels of service. The bookkeeper, the accountant, and the CPA; and there is a definite difference between an accountant and a CPA. I liken these levels to a nurse, a PA, and an MD. Yes, the educational requirements may be different, but from a layperson’s perspective, and from the perspective of the work performed, these roles form a decent analogy.

The bookkeeper, like a nurse with a patient, works closely with the client in a supportive role. The bookkeeper’s job is to handle routine tasks, gather information, give that information back to the accountant, and carry out instructions provided by the accountant and client. This role often gives the bookkeeper a better understanding of the company’s tone than the accountant or CPA.

The accountant, like a PA versus an MD, can perform generally the same services as a CPA, but there are some limitations. An accountant without a CPA usually cannot represent a client before the IRS, and absolutely cannot sign off on compiled, reviewed, or audited financial statements.

So, why have an accountant instead of a CPA? Well, unless you’re a really small business, it’s best to work with both.

Like the PA dealing with routine medical appointments to open an MD’s schedule, an accountant can handle the books right up to the point that a CPA needs to be involved for taxes or independent statements. That saves money and, at least with the CPAs I work with, makes them happier because the books are pristine. 

Nothing says all three roles have to be three different people or providers. Some CPAs also handle bookkeeping, and some accountants do bookkeeping and taxes. It’s a matter of service and price.

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