Bookkeeper? Accountant? CPA? What is the Difference?

The terms "bookkeeper," "accountant," and "CPA" are often used interchangeably. But they are not the same. These three professionals are very different in their scope of work, the tasks they perform, and their licensing and professional status and their standing with the Internal Revenue Service.

What Bookkeepers Do

A bookkeeper is someone who works for a company to keep the financial books.

Most bookkeepers these days use accounting software like QuickBooks for this task. A bookkeeper is responsible for accurately recording transactions, including accounts receivable, accounts payable, inventory, payroll and providing reports on a monthly, quarterly, and annual basis.

What Accountants Do

Accountants are a level up from bookkeepers. They can (but usually don't) perform bookkeeping functions, but usually, they prepare detailed financial statements, perform audits of the books of public companies, and they may prepare reports for tax purposes. But an accountant is classified by the IRS as an "unenrolled preparer," which means he or she has no standing with the IRS in the matter of signing tax returns or representing clients during tax audits and other matters before the IRS.

Only CPAs, tax attorneys, and Enrolled Agents are able to represent a taxpayer before the IRS.

What Certified Public Accountants (CPAs) Do

A CPA has an additional level of credibility and expertise. A CPA is an accountant who has passed certain examinations and met all other statutory and licensing requirements of a state to be certified by that state.

In addition to preparing and reviewing financial statements, CPAs also prepare tax returns for businesses and individuals, sign tax returns, and represent taxpayers before the IRS for audits and other matters. The American Institute of Certified Public Accountants (AICPA) is the national professional association for CPAs.

Every company, even one as small as mine, needs someone to keep track of the books. Whether you hire an employee or a contractor, you will need a bookkeeper. That bookkeeper might work for an accountant or a CPA.

Call us today to discuss your immediate or future needs!  Jodie Fish, Manager of the Bookkeeping company can be reached at jodie@azbookkeeping.net or feel free to call her at (480) 203-2100. We also offer tax solutions as well as payroll for officers of S-corps.  If interested, please contact our tax department at info@njfishcpa.com or 480-857-3048.