There are a few different professionals that business owners can turn to for financial help, but two of the most common are bookkeepers and accountants. Here is a breakdown of the differences between bookkeepers and accountants so you can make the best decision for your company. Does your business need a bookkeeper or an accountant? How is a CPA different from an accountant? Which one does your business require? Find out now.
What is a Bookkeeper?
Bookkeepers are responsible for recording and keeping track of all the financial transactions made by a business. This includes sales, purchases, receipts, and payments. Bookkeepers also prepare financial statements, reconcile bank accounts, and track inventory levels.
What is an Accountant?
Accountants, on the other hand, provide more strategic advice. They use the information provided by bookkeepers to help business owners make decisions about where to invest their money and how to save on taxes. Accountants also help businesses with budgeting and forecasting. They may also provide guidance on mergers and acquisitions or other major financial decisions.
Do You Need an Accountant or a Bookkeeper?
If you just need someone to keep track of your finances and prepare financial statements, then bookkeeping may be all you need. However, if you are looking for someone to provide strategic advice and help you make major financial decisions, then an accountant is a better choice. Essentially, bookkeepers are there for daily financial support, accountants are there for long-term financial support. If you’re looking to set your business up for seamless expandability, working with an accountant from the beginning is a wise choice. They can advise you regarding business loans, assist you in applying for one, and answer any complicated questions that arise along the way. If you involve an accountant very early in your business’s lifetime, they can guide you in choosing the proper business structure as well.
Is a CPA Different From an Accountant?
A CPA is an accountant, but not all accountants are CPAs. To become a CPA, you must pass the Uniform CPA Examination, be licensed by a state board of accountancy, and meet other requirements established by the American Institute of CPAs (AICPA). Therefore a CPA is better qualified to complete accounting duties, and is recognized as an expert in their industry.
Should You Hire a CPA?
If you’re looking for either bookkeeping, accounting, or both—a CPA is your answer. A CPA has the most qualifications to handle your financial records and guide you through the growth of your business. A CPA will work to minimize your tax liability and keep you informed on any tax break opportunities available to you. Should problems arise come tax season, a CPA can represent you before the IRS. Hiring a CPA offers peace of mind from knowing your finances are in responsible hands.
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