Most small business owners know they need a CPA to file their taxes, but lots of people don’t really know what a bookkeeper can do for them.

What is the difference between an accountant and a bookkeeper?

A CPA and an Enrolled Agent handles Tax Accounting, which keeps you in compliance with tax law and helps you pay the least amount of tax as is legal by making sure you are getting all the deductions you can.

A Bookkeeper handles Management Accounting, which involves entering data and producing reports that give you up to date information to make day-to-day decisions.  

A third type of accounting, Financial Accounting, often done by a CFO, produces annual reports – mainly for external stakeholders.

It is true that some bookkeepers do tax preparation and some CPAs do bookkeeping – but it is really to your advantage to have these duties separated in order to get the most value.

Wait, there is more than one kind of accountant?

Oh yes!  Who knew, right?

Enrolled agents, certified public accountants, and tax attorneys can all file taxes for you and represent you in audits, payment/collection issues, and appeals.

A certified public accountant, or CPA, has studied accounting in school and passed the CPA exam. CPAs are required to continue education, so you can rely on them to be up to date with latest info and trends.

An Enrolled Agent also passes a tax prep exam, but does not need the years of schooling that a CPA does. A good EA can get you what you need, usually at a slightly lower cost than a CPA.

As for bookkeepers, there are Certified Bookkeepers who have also passed exams and received certifications for bookkeeping as well as certifications for use with various accounting software programs like QuickBooks and Xero.