A bookkeeper records and reconciles your daily transactions. An accountant interprets those records, prepares financial statements, and advises on what they mean. A CPA is an accountant who holds a state license, which allows the CPA to audit financial statements and represent you before the IRS. Most small businesses need a bookkeeper every month, an accountant or CPA at tax time, and higher-level financial guidance as they grow.
Bookkeeper, accountant, and CPA compared
| Bookkeeper | Accountant | CPA | |
|---|---|---|---|
| Main job | Records and reconciles transactions | Prepares and interprets financial statements | Audits, attests, files taxes, and advises |
| Looks at | What happened this week and this month | What the numbers mean | Compliance, tax, and assurance |
| License required | No | No | Yes, issued by a state board |
| Typical training | Experience and optional certification | Accounting degree | 150 college credit hours, the four-part CPA Exam, and supervised experience |
| Can issue an audit or review opinion | No | No | Yes |
| Can represent you before the IRS | No | Only if also an Enrolled Agent | Yes |
| How often you use them | Weekly or monthly | Monthly or quarterly | Annually, or when a lender or investor requires it |
What a bookkeeper does
A bookkeeper keeps the financial record of the business complete and accurate. The work is detailed and continuous, and everything else in your finances depends on it.
- Records and categorizes every transaction
- Reconciles bank, credit card, and loan accounts
- Sends invoices and records customer payments
- Enters and schedules vendor bills
- Records payroll and sales tax
- Produces the monthly Profit and Loss statement and Balance Sheet
No license is required to work as a bookkeeper. Many hold a credential such as Certified Bookkeeper from the American Institute of Professional Bookkeepers or QuickBooks ProAdvisor certification.
What an accountant does
An accountant takes the bookkeeper’s records and turns them into information you can act on. Accountants adjust entries for accruals and depreciation, prepare financial statements that follow accounting standards, analyze trends, and prepare budgets. Most accountants hold a bachelor’s degree in accounting. An accountant who is not a CPA cannot sign an audit opinion.
What a CPA does
A Certified Public Accountant is licensed by a state board of accountancy. In Nevada, that is the Nevada State Board of Accountancy. To earn the license, a candidate completes 150 semester hours of college education, passes the Uniform CPA Examination, and meets an experience requirement. CPAs must complete continuing education to keep the license.
Only a CPA can perform an audit or a review of financial statements, which lenders, investors, grant makers, and buyers often require. CPAs, Enrolled Agents, and attorneys are the three professionals with unlimited rights to represent taxpayers before the IRS.
Which one does your business need?
| Your situation | Who to hire |
|---|---|
| You are behind on recording transactions or your accounts are not reconciled | Bookkeeper |
| Your QuickBooks file has errors or duplicate entries | Bookkeeper with cleanup experience |
| You need monthly financial statements you can rely on | Bookkeeper, with accountant review |
| You need a business tax return filed | CPA or Enrolled Agent |
| A bank or investor asks for reviewed or audited statements | CPA |
| You received an IRS notice | CPA, Enrolled Agent, or tax attorney |
| You want a budget, forecast, or pricing analysis | Accountant or fractional CFO |
| You plan to sell the business in the next few years | Fractional CFO and CPA together |
How the three work together
In a well-run small business, the roles form a chain. The bookkeeper keeps the records current all year. The accountant or a fractional CFO reviews the results each month and helps the owner make decisions. At year end, the CPA receives clean books and files the tax return in less time, which usually lowers the tax preparation bill.
Problems appear when a link is missing. A CPA who receives disorganized books in March has to spend billable hours on cleanup, and the owner has gone a full year without reliable numbers.
Five signs you have the wrong level of help
- Your tax preparer asks for the same corrections every year.
- Your financial statements arrive more than three weeks after month end.
- You pay CPA rates for data entry.
- Nobody can explain why profit went up while cash went down.
- A lender asked a question about your numbers and no one could answer it.
Questions to ask before you hire
- Which accounting software do you work in, and are you certified in it?
- Who will do the work each month, and who checks it?
- When will I receive my financial statements?
- Will you explain the results to me, or only send the reports?
- How do you coordinate with my tax preparer?
Common questions
No. A bookkeeper records and reconciles transactions. An accountant uses those records to prepare financial statements, analyze results, and advise the owner. Many small firms provide both services.
You need a CPA when you require an audit or review, and many owners use a CPA or Enrolled Agent for tax returns. Day-to-day bookkeeping and monthly reporting do not require a CPA.
A bookkeeper prepares the records a tax return is built on. The return itself is usually prepared by a CPA, an Enrolled Agent, or another credentialed tax preparer.
A CPA is licensed by a state and can perform audits and a wide range of accounting work. An Enrolled Agent is licensed by the IRS and specializes in tax. Both can represent taxpayers before the IRS.
A fractional CFO becomes useful when the owner faces decisions about pricing, hiring, borrowing, expansion, or a future sale and needs forecasts and analysis beyond monthly statements.
Sunderland Valley Enterprises provides bookkeeping, accounting, and fractional CFO services, and coordinates with your CPA or tax preparer so the return is built on accurate books.
Have a question about your own numbers?
30 minutes, no cost, and you will speak with Jackie directly.
Prefer to write? Send a message or call (702) 704-5816.