There is a great deal of difference between a bookkeeper and a Certified Public Accountant (CPA). A good bookkeeper is a treasure, but they are often limited in their capabilities, skills, and experience. They generally specialize in entering correct information into the accounting software, bank accounts, invoicing systems used in your business. They can be good at keeping track of all the numbers and giving you reports to analyze, but they won’t help you plan and run your business.
What a bookkeeper generally can’t do is set up your accounting systems from scratch. They also can’t advise you on what form your business should take - S-Corp, LLC, or C-Corp. A bookkeeper is also not going to help you with business strategy, analyzing market data, preparing financial statements, doing your taxes, or finding all the tax deductions you might have under existing regulations. They also won’t help you with human resources issues such as managing hourly employees and tracking their pay and benefits versus salaried and exempt employees. Analyzing your Profit and Loss, Cash Flow, and other reports are not something the bookkeeper can help with, either. Of course, where a CPA is most often used is to prepare taxes. In addition to a CPA’s training, education, and certification, they stay current on changes in tax laws and can represent you to tax agencies in any proceeding. These are all things that a CPA can provide. A CPA does come at a cost compared to a bookkeeper but as the saying goes, you get what you pay for!
Which Do You Need?
As a small business owner, you need bookkeepers AND a CPA! You will need a full-time bookkeeper before you need a full-time CPA, but you can mix their services and utilize contract CPA services. For instance, your bookkeeper will be full-time and take care of the daily accounting issues. Your CPA will be on call, as needed. You will use them heavily at startup for advice and for setting up your systems to turn over to the bookkeeper. As you get your business running, the CPA will only come in to consult, check on how operations are going, and to help you analyze your business and provide advice on tax issues as requested. After you’ve grown a bit, you may hire a full-time CPA - but only when you are large enough and have enough revenue to support them.
You may want to save money, stick with a bookkeeper, and handle your own taxes. But there are hazards to doing it all on your own. You may not be able to keep up with the data, you will spend a lot of time doing it yourself instead of taking care of other aspects of your business, and you may make mistakes. But you don’t need a full-time CPA, either. You should consider hiring a contract accounting firm like Des Moines Accountants. These firms can provide your business with part-time CPA services, as needed, so you can control the time they work and the money you spend. The money you save by contacting Des Moines Accountants or CustomOne CFO & Controllers to help eliminate mistakes and refine your business operations could easily pay for the services and increase your profits!
Tax software or a CPA for your business?