Bookkeepers VS Accountants (CPA's) - What's The Difference?

Bookkeepers VS Accountants (CPA’s) - What’s the difference?

It can be very confusing when you hear the terms bookkeeper and accountant used interchangeably, but they are different professionals and both essential to your business.

You don’t want one-stop-shop service when it comes to bookkeeping and filing your taxes. They are two, very different things and require two very different professionals. Think of it in terms of a doctor and a nurse - they both provide you medical care, have complementary roles, but different areas of expertise.

The bookkeeper bridges the gap between you and your tax accountant. You work with the experts and then let the experts work together.

Tax accountant fees are on the rise due to a shortage of them, so having a good bookkeeper saves money. Your bookkeeper will communicate with your tax accountant and hand off clean, accurate books for them to work from.

Keep in mind that there are dangers to hiring the same firm for your bookkeeping and taxes. For starters, the risk of human error is higher, and more importantly, it can create a conflict of interest. It’s important to have another set of eyes, from a different firm, to ensure accountability. Think of it as checks and balances.

COMPLIMENTARY ROLES

Bookkeeper’s role: Managing the business financials day-to-day so you can understand exactly what is coming in and going out of your business, equipping you to make strategic decisions that will increase profits.

Tax Accountant's role: Using the financial data prepared by the bookkeeper for tax planning, tax preparation, and tax strategy ensuring that you, as the business owner, are not overpaying or underpaying in taxes, and keeping you out of trouble with the IRS.

QUESTIONS TO ASK WHEN HIRING A BOOKKEEPER

1. Ask what software they use and why? Will you be charged for software?

2. How do they work with CPAs and tax preparers? At the end of the year, the bookkeeper finalizes reports to hand off to a CPA.

3. How many clients have they worked with in the boutique industry? The boutique industry has unique aspects.

4. Ask what info they need from you? Will they need your answers to how to categorize expenses etc? Will they need your bank statements?

5. What are their response times? Will there usually be a 24-48 hour or earlier response from your bookkeeping team?

6. Ask who you will be working with? Your own dedicated bookkeeper? Your Success Team member? How does it work? What will be the form of communication? Email, text, phone, etc?

7. When are reports finalized and delivered?

8. What other services do they provide? Know how you can grow with the support of the bookkeeping company. Ideally you can stay with your bookkeeper and not have to leave to get other services, so you know you’re getting accurate numbers for the other services.

9. Your investment. What will you be charged for and based on what?

QUESTIONS TO ASK WHEN HIRING A TAX ACCOUNTANT

1. What is your philosophy in business? You need to have a relationship in which you can talk about things and grow with them.

2. What happens when I'm confused about something? How fast can I book an appointment with you? Some people are booked weeks

in advance.

3. What happens when something goes wrong? Do you guarantee

your work?

4. What happens when I get a letter in the mail for payroll, sales tax, bookkeeping or income tax? What's the process? You will need real support around this.

5. Do you have anyone who checks your work before sending to the IRS?

Need to outsource your bookkeeping? Get a free estimate today and let’s chat! We love supporting small business owners as they build a legacy.