Bookkeepers work hand-in-hand with Certified Public Accountants (CPAs). But they fill different roles, so we thought we’d break it down for y’all here!
What’s In a Name?
A CPA and a bookkeeper are both accounting professionals. A CPA is certified (it’s right there in the name!) and has to complete continuing education and keep up with tax codes. A bookkeeper is trained but not certified by the state in the same way.
A bookkeeper is responsible for maintaining an organized record of all financial transactions (think tiny details). The CPA uses these details to figure out and file your income taxes (big picture) details.
A CPA could do your bookkeeping, but a bookkeeper shouldn’t do your income taxes.
Things Bookkeepers Do
According to the IRS, you MUST have a record keeping system. If you hire a bookkeeper, they are responsible for helping you maintain this system. In most cases, this is something like Quickbooks.
The first and most important job is to reconcile your accounts. This is essentially comparing what you see in Quickbooks to what is reflected in your bank accounts and credit card statements. Reconciling your accounts monthly will verify that all of this information is aligned properly. This is the thing spreadsheets can’t do.
Sales tax is also something your bookkeeper can help you calculate and file. This is COMPLETELY different from income tax.
Finally, bookkeepers can help you read and understand your numbers, so you know where your money is coming from and where it is going.
Things CPAs Do
First and foremost, CPAs file your Federal and State income tax. They look at the reports from your record keeping system (AKA QUICKBOOKS) and help determine your tax liability. If you’re an LLC, S-Corp, or Sole Prop, they’ll combine this with the rest of your household tax information.
CPAs should be well versed in current tax deductions and tax laws. These change all the time, which is why you really have to have a CPA.
CPAs make sure that you’re following the rules! They have the answers to your more complicated tax questions, and they keep you in compliance.
Last but not least: CPAs can SAVE YOU MONEY!!! They can help you find tax deductions that you haven’t even thought of, and they can help you plan for the future of your business.
What do you need?
If you’re reading this, you most likely have your own creative small business and might be wondering if you need a Bookkeeper, a CPA, or both.
If you’re just starting out, you can prolly learn to do your own books. (Wait. What? Is a great teacher). It’s a lot more doable than most folks think it is!
Once you get going, outsourcing your bookkeeping will make your life so much easier. It will free up the brain space that is much better spent on bringing your next big idea to life!
But the truth is: EVERYONE NEEDS A CPA! If you do your own bookkeeping, or if you hire one, you need a CPA to do your taxes. You just do!!!!