2018-08-01 11:40:14 Accounting & Taxes English Look inside to find out if you need a bookkeeper or an accountant for your business, what the differences are, and what to look out for... https://quickbooks.intuit.com/r/us_qrc/uploads/2018/08/Bookkeeper_vs._Accountant_featured.jpg https://quickbooks.intuit.com/r/accounting-taxes/whats-the-difference-between-a-bookkeeper-and-an-accountant/ Bookkeeper vs. Accountant: The Who, What, Where and When.

Bookkeepers and accountants: What do they do and when do you need one?

5 min read

You probably wouldn’t play a pick-up game of basketball without keeping score, but that’s exactly what many business owners do when they’re getting started with a new business. At the very least, knowing the score for your business means tracking your net income and staying on top of your cash flow. To do that, you may need to hire a bookkeeper or accountant.

What do bookkeepers and accountants do?

  • Bookkeepers record transactions in a company’s set of financial records or books. They may also assist with invoicing customers, paying bills, and managing payroll, including payroll tax reporting.
  • Accountants classify, analyze, and interpret the transactions in those books to make sure everything is in agreement with the principles of accounting. They create financial statements and other reports that give business owners insight into the performance of their businesses. Accountants may also provide tax services, audit, and attestation services, and a variety of other advisory services for businesses and individuals, including assisting with cash flow and long-term strategy.
  • Certified Public Accountants (CPAs) are accountants who passed a rigorous test covering tax, accounting, auditing, and general business concepts. They have also satisfied the educational and experience requirements to be licensed by their state boards of accountancy.

What are the requirements to become a bookkeeper?

Here in the United States, no education or licensing is required for someone to call themselves a bookkeeper. This differs from other countries, where a special certification or license is required to work as a bookkeeper.

Some bookkeepers get their start by buying accounting software and learning as they go; others have more formal training in bookkeeping and some even start out by helping keep the books for their employer, often on top of other job responsibilities. Many have taken classes in bookkeeping or accounting, and most develop a keen business sense as they work with their clients.

What are the requirements to become an accountant?

As with bookkeepers, there are no requirements in the United States for someone to call themselves an accountant. Most accountants have a college degree in accounting or finance. A college degree is required to become a CPA.

Many accountants get their start by working in a public accounting firm after college, and then move into the accounting department at a business. Some start working at a business right after college. Many other accountants spend their careers at public accounting firms.

When do I need a bookkeeper or an accountant?

Many small business owners initially use the balance in their bank account as a means of keeping the score for their business. Others may get started with a spreadsheet, but as your business grows, those methods become unmanageable.

Today’s accounting software makes it easier than ever for small business owners to manage all their own bookkeeping – and many small business owners in our QuickBooks community do a phenomenal job. You can learn about the basics of accounting here.

Yet, most business owners didn’t start a business because they love bookkeeping, so they hire a bookkeeper to help them out. Maybe that bookkeeper will just check the transactions as you continue to do the bulk of the work and make sure everything is recorded correctly. Or, maybe the bookkeeper will take over everything, including payroll. Many accounting firms offer bookkeeping services in addition to tax, audit, and advisory services.

Most often, the first time a small business owner calls upon an accountant is when it’s time to file a tax return. In the United States, there are no regulations or educational requirements for working as a tax preparer (are you seeing a pattern here?). While anyone can prepare your tax return, popular choices are CPAs and enrolled agents (EA).

Enrolled agents are authorized by the federal government to represent taxpayers before the IRS. They pass a rigorous three-part exam, but unlike the CPA exam, the EA exam only covers federal taxes. Many EAs are also bookkeepers or accountants.

The most important reason to choose a CPA or an EA to do your tax return is that either of them can represent you before the IRS in case of an audit or any other tax issues. CPAs and EAs are also required to adhere to ethical and professional standards, and to keep up with changes in tax laws with ongoing continuing professional education.

Another reason you might seek out an accountant is that your bank or investors want to see financial statements that have been prepared by a CPA.

The roles are blurring

In the pre-computer days, the roles of bookkeepers and accountants were clearly defined. Bookkeepers manually recorded the transactions of a company, then summarized those transactions to create a trial balance. The accountants would then take those summarized transactions and use them to create financial statements.

With today’s accounting technology, the lines blur. Accounting systems interface with banks and other software to import data directly from the source, which means bookkeepers don’t need to enter those transactions manually. Financial statements can be produced from accounting software by clicking a button.

This means that some bookkeepers offer business advisory services in addition to bookkeeping. And, on the other side, some accountants also offer bookkeeping services in addition to the higher-level services they provide.

Some accountants and bookkeepers specialize in integrating apps and accounting software to create a custom, automated business environment that means business owners can spend more time doing the work of their business, and less time on the back-office operations.

Of course, the best reason to hire a bookkeeper or accountant is to enhance your odds of success by having a coach in your corner. A great bookkeeper or accountant can help you with cash flow issues, long-term strategy, and resolving business issues before they become fatal. To get started, our QuickBooks ProAdvisor community is full of terrific advisors who can do more than just help you keep the score for your business.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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