Bookkeeping, Accounting, and CPAs - Aren’t They All the Same?
May 07, 2021
We tend to toss around these terms interchangeably, but there is a drastic difference between these three positions and how they impact your business. When it comes to your business, taxes, and money, you need to understand who to contact, their specialty, and how they will work with you and for you.
Although bookkeepers and accounting professionals can prepare financial statements or tax returns, there are considerable differences in education and expertise between the professions. These are essential to understand if you rely on them to guide your business decisions in tax and finance matters.
Let us start with a Bookkeeper. A bookkeeper maintains records of a company's financial transactions daily, also known as a ledger. The job does not require a college degree, although many bookkeepers have some form of a college education. They may be in charge of accounts payable, accounts receivable, and in some cases, inventory. In smaller companies, they may oversee the payroll function. Bookkeepers need to understand numbers and generally use computer software such as Quick Books to track their finances. They can pay your business's sales taxes but cannot give any tax advice.
An Accountant usually manages more complex tasks like analyzing financial data. They typically have a Bachelor's degree, but not necessarily in accounting. Accountants utilize the financial data to manage financial projections and offer advice for improvement in the form of reports and insights.
Some accountants perform tax preparation, business planning, and analysis for an organization. While an accountant can perform tax prep, they cannot represent clients in a tax audit or other matters as they have no standing with the IRS and cannot sign a client's tax form.
A CPA is an accountant that has passed the state's examination requirements to be certified in the state. Each state has its rigorous requirements that CPAs must meet. CPAs review financial statements (usually prepared by an accountant) and prepare tax returns for individuals and businesses. They can also represent clients during an IRS audit and file reports with the Securities and Exchange Commission (SEC). Of course, the CPA's goal is to avoid an audit, but they will represent you at conferences, hearings, or meetings if one becomes necessary.
Unlike bookkeeping or accounting, a CPA must have a Bachelor's degree. While in college, future CPAs must complete courses in accounting and business-related subjects then apply to take the CPA exam. The qualifications to take the exam include 12 months of general accounting experience supervised by a CPA and hundreds of hours of attest experience.
Like other highly regarded professions such as lawyers and doctors, CPAs must maintain their credentials by attending continuing professional education programs to keep their license current in the state.
While all three professions require continuing education, CPAs invest the most time to keep their license current:
- Practicing Attorneys must complete 25 hours of continuing education every three years.
- Physicians and surgeons must complete at least 50 hours of approved continuing medical education every two years.
- CPAs must complete 80 hours of continuing professional education every two years and must have a minimum of 20 hours completed during each of the two-year license renewal periods.
So when should I hire CM CPA?
CPAs are highly educated professionals with broader experience and expertise compared to bookkeepers or accountants. To find out more about our services here at Cambaliza McGee LLP, check out our industry page or services page.
If you're seeking a sparse relationship and minimal guidance, we're likely not the answer. However, if you're seeking accredited assistance from professionals who care about the success of your business, Cambaliza McGee LLP is here for you.
From an income tax services standpoint, we are a good fit if you're looking for a more consultative and planning approach. Expanding businesses often outgrow the capabilities of their current financial representatives, which is where our company can step in.
From an attest services standpoint, we are the ones for you if you're looking for a trusted business advisor who will guide you through every phase of your business's life cycle.
Federal and state tax laws are complex and ever-changing. When it comes to your business, you need to partner with a professional who will understand your company and your goals in order to advise you on important financial matters and provide solid guidance on your investments and taxes.
If you're looking to grow and manage your business with professionals who have taken the time to understand your business and goals, contact us here at Cambaliza McGee LLP. Our CPAs are well-trained to advise you on your journey to success.