Bookkeeper vs Accountant: Which One Does Your Business Need?

A bookkeeper records and organizes your day-to-day transactions, and an accountant generally reviews those records, prepares financial reports and applies tax and accounting rules to them.

One way to picture it: the bookkeeper builds the record of what happened, and the accountant helps you understand and use it.  Both work with the same numbers, and in a small business, one person or office often does some of each.

The titles are used loosely, so the job matters more than the label.  Ask what a person will actually do for you, and what training and credentials stand behind the work.

It can also help to think about timing.  Many owners start by needing a bookkeeper, because the first problem is getting the records in order.  Later, when the books are steady, questions shift toward pricing, growth, borrowing and taxes, and those call for more analysis.  The mix of help you need can change from year to year, and that is normal.

A CPA is a certified public accountant, a person who has met a state's requirements for that credential, while "accountant" on its own is a broad term anyone may use.

Not every accountant is a CPA, and not everyone who prepares tax returns is either one.  If a particular credential matters to you, ask about it directly and confirm it with the state board that issues it.  A credential is not the only measure of good work, but it is a fair thing to ask about.

Some tasks, such as audits of financial statements, are limited to certain professionals under the law.  Most small businesses do not need those services.  What they usually need is accurate books and a preparer who understands their tax return.

The bookkeeper produces the records, and the tax preparer uses them to complete your return, so each does better when the other is in the loop.

Clean records shorten the work at tax time, because there are fewer questions and fewer estimates.  At year end, the preparer will often ask for reports such as those described in profit and loss and balance sheet basics.

Tell your tax preparer how the books are kept, including whether you use the cash or accrual method, since that affects how the return is prepared.

A useful check before tax season is to ask three questions of your own books: do the bank balances match, are the income and expense categories sensible, and can every large entry be explained.  If the answer to any of them is no, fixing it early is far easier than sorting it out under a filing deadline.