Accounting vs. Bookkeeping. CPA vs. Bookkeeper. What’s the Difference?

We’ve all probably heard about the accounting and finance field in some form. If you’re a new business owner, you’ve probably heard the terms ‘accountant’, ‘CPA’, and ‘bookkeeper’ thrown around. But what do they mean? And what’s the difference?

Believe it or not, there actually is a difference between accounting and bookkeeping, and there is a difference between an accountant/CPA and a bookkeeper. Let’s start with bookkeeping and bookkeepers.

As discussed in our previous blog post, bookkeeping is the process of recording and managing the financial transactions a business makes. A bookkeeper is an accounting professional who is responsible for recording and managing these financial transactions. There are different levels to bookkeeping and what a bookkeeper can do, like receipt management, cash-flow monitoring, accounts payable and accounts receivable management, financial statement preparation, and more. However, bookkeepers are limited in their scope of practice. Although there are no official regulations to the bookkeeping field, there are certain services a bookkeeper should never provide without the proper qualifications.

Accounting is the process of recording, summarizing, interpreting, analyzing, and reporting a business’s financial transactions to provide an accurate depiction of a business’s financial activity and financial health. Accountants build upon the information and data they receive from a bookkeeper. With this financial information, they can prepare a business’s taxes, ensure they are compliant with accounting standards so that the business can pass an audit by the IRS, and provide future financial planning for the business. An accountant can hold a license called the CPA, Certified Public Accountant, license. This license shows that an accountant is knowledgeable in their field and can provide specific services like assisting with complex taxes or assisting with a business audit.

If you’re a business owner trying to determine if you need a bookkeeper or an accountant, you likely need both. Not all accountants provide bookkeeping services, and as we explained above, bookkeepers cannot provide the same services an accountant can. With help from both professionals, you can take control of your business finances and ensure future growth.

If you’re on the fence about hiring a bookkeeper for your business, reach out to us to schedule a meeting to discuss your bookkeeping concerns and needs.