Bookkeeper vs. CPA: Which Do You Need?All Articles
Just because you’re a small business owner doesn’t mean you have to perform every job your business needs forever! And as experience tells us, most entrepreneurs dread the monotony of accounting. So, maybe you’ve finally decided your time and money is better spent on what you excel at, and that you should leave the number crunching for someone else. The question is, who should that someone else be – a CPA or a bookkeeper?
The question may seem daunting, but it’s not nearly as complicated as it sounds. The decision basically boils down to how complex the accounting needs to be. Bookkeepers are best used for simple accounting functions like day-day transactions, run payroll, make payments for business expenses, send out invoices and collect payments, as well as monitor bank account activity. Some bookkeepers will even prepare financial statements for internal business use. With that said, it’s important to know your bookkeeper’s background, as an education in accounting is not required in order to call oneself a bookkeeper.
But when the going gets really rough, we recommend turning to a CPA for help. CPAs can help businesses obtain loans, file a tax return and help with tax planning, as well as offer general strategic financial advice. Obtaining a CPA is a rigorous process which requires passing multiple exams on tax, regulation, financial reporting, audit, economics, and ethics, but it’s still important to do a thorough background check before you spend the money on a CPA.
What all of this means, is that you must divide to conquer. CPAs are expensive, so it’s best to use their services for truly difficult accounting issues. We recommend hiring a bookkeeper who can manage the day-day finances of your business and who can work well with a CPA when needed, or look for professional bookkeeping firms who can lend a hand.