The Difference Between Bookkeepers, Accountants, and CPAs

The terms bookkeeper, accountant, and CPA are often used interchangeably and frequently cause confusion to those not in the financial industry. Whether you’re hiring an employee or an outside consultant, it’s important to understand the difference between bookkeepers, accountants, and CPAs so you get the appropriate level of knowledge and experience—at the appropriate cost—for your business.

Bookkeeper Roles and Responsibilities

Bookkeepers take care of the day-to-day or week-to-week record keeping for an organization. The duties bookkeepers most regularly perform are:

1. invoicing

2. collecting payments

3. paying bills

4. reconciling bank and credit card statements

5. entering payroll

6. reporting on cash

More experienced bookkeepers may also make journal entries, prepare internal financial statements and cash flow reports, and assist with budgeting.

The title of “bookkeeper” is not regulated. The person identifying themselves as a bookkeeper may or may not have a degree in accounting, or any other advanced degree. They may or may not have a bookkeeping certification. The skills and expertise from one bookkeeper to another will vary—some may have continued their education and skills to become a trusted advisor and expert, while others limit their professional services to basic data entry.

Difference Between Accountants and Bookkeepers

Accountants usually have a four-year accounting degree or a general business degree with a focus on accounting. In addition to basic bookkeeping knowledge, they can also prepare and explain forecasts, business trends, and other higher level financial reports. They may also offer services such as:

1. auditing

2. financial planning

3. tax planning

4. business consulting

They can prepare local, state, and federal tax returns and create required financial reports for outside use, such as profit and loss statements and balance sheets for banking institutions.

Because accountants meet more stringent educational and certification requirements, they typically demand a higher rate than a bookkeeper.

Bookkeepers can be accountants if they meet the criteria for the title.

Accountants may or may not have additional designations or certifications, such as CPA or Enrolled Agent (EA).

CPAs vs. Accountants

The title of CPA (Certified Public Accountant) is regulated and as such has more stringent criteria associated with the designation. CPAs have continued their education past their four-year degree, and have passed comprehensive exams on tax, regulation, financial reporting, audit, economic, ethics, and business.

They are required to complete a certain number of continuing education hours every year, and prior to obtaining their license, must have worked under another CPA for a specified length of time. Thus, a CPA typically commands a higher rate than a regular accountant.

Because of their advanced training and certification, CPAs may:

1. offer strategic financial advice

2. prepare more complex tax returns

3. perform audits

4. assist in obtaining financing from financial institutions

Bookkeeping and Accounting Services in NH and MA

As discussed, bookkeepers may or may not be accountants, and accountants may or may not be CPAs. To be successful, businesses need to manage both bookkeeping and accounting tasks and know how to hire the right professional for their needs.

The professionals at Fournier Accounting and Bookkeeping Services can help you find the right accounting or bookkeeping professional for your NH or MA business. In fact, we serve clients throughout the US. Contact us today!

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