Who Does What? Understanding Bookkeepers, Accountants, CPAs, and Tax Pros
Introduction: The Fog of Financial Titles
If you’re a small business owner, odds are you've encountered a mix of financial professionals offering their services: bookkeepers, accountants, CPAs, and tax preparers. The terminology alone can be confusing. Who does what? Who should you hire? And where does tax preparation fit in?
This guide breaks down the differences in simple terms. Knowing who to hire—and when—can save you time, money, and stress.
Bookkeeper: The Day-to-Day Organizer
Role: A bookkeeper handles the routine recording and organizing of your financial transactions.
Core Duties:
Recording income and expenses
Categorizing transactions
Reconciling bank and credit card statements
Managing accounts payable and receivable
Keeping financial records up to date
Purpose: Bookkeeping is the foundation of your financial house. Without clean books, everything else—including tax prep and financial analysis—falls apart.
Credentials: No formal certification is legally required, though many bookkeepers pursue training and certifications such as QuickBooks ProAdvisor or membership in organizations like AIPB.
When to Hire: You need accurate, current financial data to run your business, especially if you're struggling with organization or falling behind on recordkeeping.
Accountant: The Analyzer and Interpreter
Role: An accountant uses the data from bookkeeping to analyze your financial health and guide decision-making.
Core Duties:
Preparing financial statements (Profit & Loss, Balance Sheet, etc.)
Interpreting financial trends
Creating budgets and forecasts
Supporting tax planning
Purpose: Accountants transform raw numbers into insights. They help you understand what the numbers mean and how to act on them.
Credentials: Some accountants hold a degree in accounting or finance, but not all are certified. They may or may not provide tax services, depending on their training.
When to Hire: You're ready for deeper analysis, strategic planning, or want to understand why your cash flow is tight even when sales are up.
CPA (Certified Public Accountant): The Licensed Expert
Role: A CPA is a licensed accountant who has passed a rigorous state exam and met experience and education requirements.
Core Duties:
All accountant tasks, plus:
Filing complex tax returns
Representing you before the IRS
Performing audits and attestation services
Advising on high-level strategy, compliance, and structure
Purpose: CPAs bring authority, specialization, and accountability. They're essential for tax planning, audits, and high-level financial guidance.
Credentials: CPA licenses are issued by state boards. Maintaining the license requires continuing education and adherence to a strict code of ethics.
When to Hire: You need tax expertise, help with compliance, or you're undergoing an audit. Also smart to bring in a CPA when applying for loans or restructuring your business.
Where Does Tax Preparation Fit In?
Bookkeeper: May assist by organizing records or generating reports, but typically doesn’t prepare returns.
Accountant: May offer basic tax prep services for simple returns.
CPA: Specializes in tax strategy and complex filings. Ideal for businesses with employees, significant revenue, or multi-state operations.
Tax Preparer: Some professionals focus only on tax prep. They might not be accountants or CPAs but are often registered with the IRS. Suitable for very simple needs.
Final Thoughts: Hire for the Need, Not the Title
You don’t always need a CPA. Sometimes a skilled bookkeeper is all it takes to get back on track. Other times, you need layered support: a bookkeeper to maintain the books, an accountant to interpret the data, and a CPA to oversee tax planning.
Start by identifying your pain points.
Are you behind on reconciling your bank accounts?
Are you unsure why you're profitable but always low on cash?
Are you dreading tax season with messy records?
Each role plays a part. And when aligned correctly, they give you clarity, control, and confidence over your business finances.
Next Step: If you're a small business owner unsure of where to start, begin by hiring a bookkeeper to get your records in order. Everything else builds from there.