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The Expert Files: Find the Right Tax Guru For You

2 minutes Read

Acct-Bookeeper-CPA-2At a certain point, for many small businesses, it can become overwhelming to tackle everything—from sales and marketing to distribution and accounting—by yourself. But neglecting any duties can be dangerous. Sales may drop if you cut back on marketing; your cash flow may become erratic if you get behind on invoicing; vendors might call looking for a payment you forgot; or worse, your local tax agency could start leveraging fines or interest if you miss a tax payment.

You may realize that you need some financial help. But how do you get accounting services that are the right size and affordable?

There are three basic choices: bookkeepers, accountants, and Certified Public Accountants (or CPAs). Knowing the difference between the three will help you make the right decision.

The Bookkeeper

Bookkeepers can record your day-to-day financial transactions. With your guidance, they can create invoices and enter receivables and payables. They may key punch hours into a payroll system. But generally, it’s accountants and CPAs who have the financial education and knowledge to make decisions about how to book something or allocate it to the right department.

Some bookkeepers can provide more advanced services, however, and can run payroll or send tax deposits to the proper authorities.

The Accountant

An accountant can handle everything a bookkeeper can do, and a lot more. They can set up and manage your financial reporting system, generate financial statements, manage your cash flow, file your company taxes, help secure loans and leases, set up and manage retirement accounts, and provide financial analysis and planning for all aspects of the business.

In larger businesses, they often take the information entered by bookkeepers and—after preparing complex entries like expense accruals or adjusting entries—generate and present profit and loss (P&L), balance sheets, and statements of cash flow to management.

An accountant—who can be employed by you, works as an independent contractor, or operates from an accounting firm—usually has the business knowledge to help you remain in compliance with rules and to provide strategic planning.

Most accountants have a four-year degree in accounting and have met the educational requirements to sit for the Certified Public Accountant exam, but choose not to because they don’t want to become auditors or prepare individual tax returns or work in public accounting.


Certified Public Accountants, or CPAs, are accountants that have taken a state’s CPA licensure exam. This allows them to offer audit and attest services publicly for businesses that need audited statements for bank loans or fundraising. They also prepare IRS tax returns for individuals and businesses.

Many small business owners believe they need a bookkeeper and a CPA because of the licensing requirement. Often a more efficient and affordable way is to hire an accountant, either directly as a full-time employee if your company is big enough, or on an hourly basis as an independent contractor. 

So, which expert should you hire?

Accountants operate on site and have first-hand knowledge of your business and, many times, your industry type or group. They can be a valuable member of your management team and help you identify opportunities and make short- and long-term decisions.

Some banks, investors, or lenders require that you provide them with audited financial statements. This is the exclusive realm of CPAs.

In summary, you’ll need a bookkeeper when data entry begins to take up too much of your time, or takes up too much of your accountant’s time, or becomes too complicated for you to handle. Remember, however, a bookkeeper won’t be able to help you run your business or offer strategic decision-making.

Many business owners recognize when they need financial help but have difficulty giving up any control of their company, or they worry about revealing their firm’s true financial picture. However, all of these financial professionals can help your company grow to the next stage in your business’s life.



Photo credit: kurhan/

IMPORTANT INFORMATION: This is not investment, tax, or legal advice. Should you have questions, please consult your own attorney, tax accountant, or other appropriate expert having expertise in the area of your question or before making important decisions in these areas.