What is the difference between a bookkeeper and a Certified Public Accountant?

Posted on 29/11/2022

Bookkeeper and CPA: Common people sometimes struggle to understand the precise distinctions between bookkeepers, accountants, and CPAs (Certified Public Accountants). Accounting business frequently swaps the terms instead. While they all manage the funds and strive for the same objective, the range of work that each of these specialists does differs greatly.

In addition to the nature of the task, there is a distinction in their professional position. Every financial transaction made by a corporation is recorded by the bookkeeper. Accountants analyze financial transactions in greater detail, and CPAs are state-approved accountants.

Many business accounting services teams must include bookkeepers, accountants, and CPAs. They carry out a variety of financial-related jobs that assist businesses in tracking crucial financial information and creating reports. It could be easier for you to choose the position that best suits your talents, interests, skills, and experience if you are aware of the distinctions between these professions. Are you looking for a reliable accounting and bookkeeping service online? Velan is here to take care of company accounts at an affordable cost.

We define bookkeepers, accountants, and CPAs in this blog, highlight ways in which they differ from one another, and offer some advice on how to decide which career path to take. Bookkeepers and Certified Public Accountants (CPAs) both work in accounting for small business owners. The main distinction between a bookkeeper and a CPA in this context is found in their respective roles, pay scales, and levels of professionalism. A bookkeeper’s primary duty is to keep an ordered record of all financial transactions, whereas a CPA’s primary duty is to offer financial advice.

Main Functions: Bookkeeper vs. Accountant vs. CPA

Bookkeeper’s Job Duties

Who are the bookkeepers? To balance and maintain all financial accounts relating to an individual, corporation, or organization is the basic and uncomplicated task of this person. The main way that bookkeepers assist others is by maintaining an ordered log of all daily and monthly transactions. A bookkeeper is just what you need if you require someone with attention to detail who can handle the finer points of your financial data. Your bookkeeper can help you avoid fines, manage deductions, avoid CRA audits, and save you money by keeping all of your information organized and in order. Bookkeepers carry out a number of tasks that are relevant to most businesses kinds.

  • Purchases and sales are tracked by bookkeepers.
  • They match up financial records, such as bank statements.
  • Accounts payable and accounts receivable are tracked by bookkeepers so that the firm is aware of how much it owes and how much its clients owe it.
  • They settle the invoices for accounts payable.
  • The payroll system is processed and maintained by them.

Typically, bookkeepers have some college experience but no formal education. Some bookkeepers merely have a high school diploma. The median annual salary is about $39,240. Bookkeepers maintain a company’s records, which helps managers make smart business decisions.

Managers examine a company’s bookkeeping records to assess its financial health. The precise and speedy organization abilities of bookkeepers also assist accountants and CPAs in carrying out their duties more effectively.

Always bear in mind that the bookkeeper’s primary responsibility is to maintain financial accounts and records; it does not include any analysis. Additionally, bookkeepers do not often earn large incomes as CPAs do. They often work for small enterprises or corporations. Depending on their requirements and budget, businesses may engage bookkeepers on a contract basis or full-time.

What Are CPAs (Certified Public Accountants)?

How to find a CPA? A CPA adds another layer of authority and knowledge. An accountant who has passed certain exams and complied with all other legal and licensing criteria of a state in order to be certified by that state is known as a CPA.

CPAs produce and examine financial statements in addition to preparing and signing tax returns for individuals and corporations. They also represent clients before the IRS during audits and other processes. The national professional organization for CPAs is called the American Institute of Certified Public Accountants (AICPA).

To administer this test and provide the license, the AICPA works in tandem with the National Association of State Boards of Accountancy (NASBA). After receiving their license, CPAs must maintain it by fulfilling the Continuing Professional Education (CPE) requirements every one to three years, in accordance with the state board’s rules.

In the accounting sector, the CPA credential is one of the most prestigious, respected, and sought-after credentials. A difficult path must be taken in order to obtain a CPA license. A CPA differs from a bookkeeper or any other accountant since they have this license. A CPA’s scope of work goes beyond keeping accounting records, unlike a bookkeeper. It involves the following:

  • Examining financial documents
  • Getting financial reporting ready
  • Carrying out an audit
  • Filing and preparing tax returns
  • Aiding in the making of business decisions

A CPA’s primary responsibility is to preserve and keep a close eye on the financial records of businesses, public entities, and private citizens. Compared to conventional accountants, CPAs are more reliable and skilled. They support households, corporations, and people in managing their money and achieving their financial objectives.

Comparison of Bookkeepers vs CPAs:

A bookkeeper’s job description, educational requirements, professional standing, and pay are very different from those of a CPA. There are some notable variances

Parameters

Bookkeeper

CPA

Definition

Professionals are in charge of keeping track of the money coming into and going out of the company.

 

Accounting professionals with State Board licenses who passed the Uniform CPA test and have the necessary training and work experience.

 

National Professional Association

AIPB/NACPB AICPA

Professional job status

Low Status

High Status

Businesses that they serve

  • Schools and colleges
  • Healthcare businesses
  • Government institutions
  • Retail outlets
  • NGOs
  • Small- to medium-sized businesses (SMBs)
  • Large companies
  •  The public accounting industry
  • Government institutions
  • The Non-Governmental Sector (NGO)

Licensing and Certification Requirements

AIPB and NACPB’s Certified Bookkeeper (CB) Certification is available but not mandatory for practice CPA license mandatory to practice as a CPA

Abilities needed

Basic knowledge of math and computers Higher level reasoning abilities (analysis, interpretation, and evaluation)

Hire for

 Routine recordkeeping

  • Financial consulting to handle complex business transactions.
  • Preparing and filing a tax return

Basic Requirements

Minimum High-School Diploma
  • An undergraduate degree (150 credit hours)
  • One to two jobs (May vary as per the jurisdiction)
  • Pass the CPA exam uniform

Accountant

Since many of an accountant’s responsibilities are similar to those of a bookkeeper, accounting may initially appear to be comparable to bookkeeping. Despite the fact that accountants may also function as bookkeepers, accounting is a considerably more nuanced and analytical profession.

They examine the financial information to provide financial estimates and advice on financial factors that influence the expansion of the business. Their regular duties include:

  • Advising on taxes
  • Financial statement preparation
  • Determining tax obligations
  • Submitting tax returns
  • Ensuring that bookkeeping procedures follow the standards
  • Identifying accounting inconsistencies
  • Making and evaluating budgets
  • Working together with auditors

Businesses may use data and insights from accounting to connect various financial metrics. Due to this, organizations are in a better position to identify both profitable and underperforming regions. It is in charge of converting the data from ledgers into statements that aid firms in better planning and achieving their long-term objectives. Accountants are frequently consulted by decision-makers for assistance with budget forecasting, determining tax liabilities, and filing taxes.

Which Accounting Expert Is Right For Outsourced Accounting Services?

Every outsourced accounting service or person must maintain their financial records and handle their books. To do this, you must employ a bookkeeper (either full-time or on a contract basis), whose primary responsibility is to keep an organized record of all transactions and balance the accounts.

In other words, a bookkeeper will manage payroll, produce reports, pay bills, and reconcile accounts in addition to doing all the other “busy” jobs. An accountant is your best bet if you require a more comprehensive understanding of these reports and data. In order to assist you to increase cash flow and achieve your future objectives, he will handle your taxes.

But if your company dealings are complex and you require a CPA rather than an accountant, do so. The fact that only a certified public accountant (CPA) has the power to represent you if the IRS comes to knock on your door is another decisive factor.

Advice on deciding whether to pursue a career as a bookkeeper, accountant, or CPA

You can use the following advice to choose one of these positions to apply for:

  • Analyze your timetable

Determine if you have time to continue school and additional training or if you must start a job immediately. With little training, you may become a bookkeeper. However, as an accountant, you might discover additional chances and promotions if you have the time to complete a degree. You may increase your employment prospects and financial potential by studying for and passing the CPA test with more time invested.

  • Decide how comfortable you are with responsibility.

All bookkeepers, accountants, and CPAs are responsible for ensuring that they retain and record accurate data. However, bookkeepers have the least liability because they don’t deal with audits or tax data. All accountants are held accountable for more rigorous financial data, and CPAs are permitted to work with information covered by federal and state tax laws. You might be able to choose the position you want to pursue by being aware of the potential risks associated with each job.

  • Think about your chosen employment duties.

These accounting roles have various responsibilities and skill requirements. Accounting and CPA roles may include more challenging financial obligations, whereas bookkeeping positions need more administrative work. You must utilize math in order to succeed in bookkeeping, accounting, and CPA roles, but accounting and CPAs may do so more frequently than bookkeepers. Knowing the difference could make it easier for you to select a position that fits your needs and expectations while also matching your skills.

Hire bookkeepers and CPAs to handle your company’s financial needs

The business world is evolving quickly, and businesses need excellent financial accounting services to comply with rules like licensing and taxation that keep them operating. Most transactions involving partners or financial institutions must be supported by transparent and reliable financial statements.

Velan is a specialist who assesses the company’s accounting requirements to determine when or if a bookkeeper or a CPA should be hired.

Our Bookkeeping Experts are here to help.

Topics: CPA Bookkeeping