{"id":22541,"date":"2023-04-01T05:45:57","date_gmt":"2023-04-01T05:45:57","guid":{"rendered":"https:\/\/envoice.eu\/?p=22541"},"modified":"2024-01-31T11:43:39","modified_gmt":"2024-01-31T11:43:39","slug":"bookkeeper-vs-cpa-what-are-the-main-differences","status":"publish","type":"post","link":"https:\/\/envoice.eu\/en\/blog\/bookkeeper-vs-cpa-what-are-the-main-differences\/","title":{"rendered":"Bookkeeper vs. CPA &#8211; What are the Main Differences?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Entrepreneurs know that finances are integral to running a company.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As soon as you start your business activities, you need money. Money to get your company off the ground, purchase materials and employ the right people.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">And equally as important is <\/span><i><span style=\"font-weight: 400;\">recording each financial transaction so you can keep track of money going out and coming in.<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">However, most people don\u2019t have a background in accounting and need to outsource this business function. The type of accountant you need will largely depend on what stage of growth your company is in.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this article, we\u2019ll discuss the main differences between a CPA (Certified Public Accountant) and a Bookkeeper. And help you decide which one is better suited to your business.<\/span><\/p>\n<h2 style=\"text-align: center;\"><span style=\"font-weight: 400;\">What is Bookkeeping?<\/span><\/h2>\n<figure id=\"attachment_22544\" aria-describedby=\"caption-attachment-22544\" style=\"width: 800px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-22544 size-full\" src=\"https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-1.jpg\" alt=\"computing receipts at work\" width=\"800\" height=\"533\" srcset=\"https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-1.jpg 800w, https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-1-300x200.jpg 300w, https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-1-768x512.jpg 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><figcaption id=\"caption-attachment-22544\" class=\"wp-caption-text\">Source: Pexels<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">For you to understand each professional better, we will first define Bookkeeping by answering the question: \u201cWhat is Bookkeeping?\u201d<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Bookkeeping is an accounting process of tracking and recording the financial transactions of a business on a regular basis.\u00a0<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">A Bookkeeper appointed in your organization would be responsible for the following:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Recording daily sales transactions<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Reconciling bank accounts<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Posting transactions to the appropriate journals\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Generating business invoices<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Making payments on business accounts\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Recording bank deposits<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Preparing reports and supporting financial statements such as income statements<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Providing tax advice such as deductions and preparing tax returns<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Reconcile bank statements every month\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Based on these journals and entries, financial records can be compiled and used for greater financial processes, including calculating tax liability and determining whether the business is profitable enough for continuity or investment.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In short, in order to apply for any loans, calculate tax liability and even discontinue the business activities, you would need this set of records as proof.<\/span><\/p>\n<p><b><i>Further Reading<\/i><\/b><i><span style=\"font-weight: 400;\">: <\/span><\/i><a href=\"https:\/\/envoice.eu\/en\/blog\/how-to-automate-your-bookkeeping-an-actionable-guide\/\" target=\"_blank\" rel=\"noopener\"><i><span style=\"font-weight: 400;\">How to Automate Your Bookkeeping \u2013 An Actionable Guide<\/span><\/i><\/a><\/p>\n<figure id=\"attachment_22546\" aria-describedby=\"caption-attachment-22546\" style=\"width: 800px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-22546 size-full\" src=\"https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-2.jpg\" alt=\"person counting cash money\" width=\"800\" height=\"533\" srcset=\"https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-2.jpg 800w, https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-2-300x200.jpg 300w, https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-2-768x512.jpg 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><figcaption id=\"caption-attachment-22546\" class=\"wp-caption-text\">Source: Pexels<\/figcaption><\/figure>\n<h2 style=\"text-align: center;\"><span style=\"font-weight: 400;\">Who can qualify as a bookkeeper?<\/span><\/h2>\n<p><i><span style=\"font-weight: 400;\">The minimum qualification for a bookkeeper is a high school diploma.<\/span><\/i><span style=\"font-weight: 400;\"> Although you do not need a formal certification, a background in numbers or admin would be to your advantage.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, even though formal post-school training is required, you should still hire a trained professional. Also, who you hire would depend on the size of the business and the type of business you run.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For the quality and accuracy of your business\u2019s financial records, it is advisable to find an individual with at least a bookkeeping certificate or a licensed bookkeeper.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A licensed bookkeeper is a certified individual registered with either the <\/span><b>American Institute of Professional Bookkeepers (AIPB)<\/b><span style=\"font-weight: 400;\"> or the <\/span><b>National Association of Certified Public Bookkeepers (NACPB).<\/b><span style=\"font-weight: 400;\"> This licensing gives the bookkeeper credibility and a competitive advantage over other unlicensed bookkeepers.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Also, a licensed bookkeeper is required to engage in ongoing education in order to keep their registration. This way, you can rest assured that your accounts are in the hands of a capable individual.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Even though you might have a licensed bookkeeper within your organization, you still need an external party for further analysis of your financial records.<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is because a licensed bookkeeper is only qualified to maintain financial records. Further analysis should be done by a certified individual registered with the relevant accounting professional body, such as a Certified Public Accountant (CPA).\u00a0<\/span><\/p>\n<figure id=\"attachment_22548\" aria-describedby=\"caption-attachment-22548\" style=\"width: 800px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-22548 size-full\" src=\"https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-3.jpg\" alt=\"Cup of coffee on certificate \" width=\"800\" height=\"533\" srcset=\"https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-3.jpg 800w, https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-3-300x200.jpg 300w, https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-3-768x512.jpg 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><figcaption id=\"caption-attachment-22548\" class=\"wp-caption-text\">Source: Pexels<\/figcaption><\/figure>\n<h2 style=\"text-align: center;\"><span style=\"font-weight: 400;\">What is a Certified Public Accountant (CPA)?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A CPA is <\/span><i><span style=\"font-weight: 400;\">a licensed professional who attains their designation by completing a formal accounting qualification and undergoing training in accounting disciplines such as Tax, Auditing and Ethics.<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">To be accredited, they must write qualifying board examinations conducted by the American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA).\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To keep their designation, CPAs are bound to undergo continuous training and education every 1 &#8211; 3 years to ensure adherence to prescribed policies by the board.<\/span><\/p>\n<h2 style=\"text-align: center;\"><span style=\"font-weight: 400;\">What is the role of a Certified Public Accountant (CPA)?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The role of a CPA in a business is to focus on the overall financial well-being of a business.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Both the organization and its stakeholders trust a CPA to give an objective opinion about the state of a business\u2019s financial affairs. Their scope of work goes beyond bookkeeping and their duties involve:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Business financial consulting<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Preparing for and conducting audits<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Analyzing financial data and statements<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Preparing and calculating business tax liability<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Interact with the Internal Revenue Service when necessary<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Providing financial planning advice<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Maintaining financial records to ensure adherence to financial regulations<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Financing opportunities<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Because the work done by a bookkeeper does not cover the entire scope of the financial affairs of a business, it is important to have a CPA. They provide a much clearer understanding of what direction a company can take.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A CPA\u2019s report and review of the business&#8217;s financial status can provide a detailed guide when there is a need for expansion and growth. Using budgets and financial risk management, they can provide a report detailing the room for growth.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These financial reports tell how much capital you need for additional activities and whether enough funds would be available for payroll and operating expenses. This would also give insight into whether additional business activities would be profitable.\u00a0<\/span><\/p>\n<figure id=\"attachment_22550\" aria-describedby=\"caption-attachment-22550\" style=\"width: 800px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-22550 size-full\" src=\"https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-4.jpg\" alt=\"accountants at work\" width=\"800\" height=\"533\" srcset=\"https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-4.jpg 800w, https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-4-300x200.jpg 300w, https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-4-768x512.jpg 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><figcaption id=\"caption-attachment-22550\" class=\"wp-caption-text\">Source: Pexels<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">In the position of a public company, a CPA\u2019s role is to act as a neutral party between the business\u2019s management and its stakeholders. A CPA would conduct audits and analyze financial statements to safeguard the business against risks such as fraud and mismanagement of funds.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Again, because management always needs to report on the company&#8217;s financial performance, it would be necessary to study whether what is reported on the financial statements is true. The CPA does this.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The response provided by the CPA concerning the financial affairs would determine if the business can have more capital investment from the shareholders or even request additional funding from other sources such as banks.<\/span><\/p>\n<p><b><i>Further Reading:<\/i><\/b> <a href=\"https:\/\/envoice.eu\/en\/blog\/cpa-for-small-business-when-should-you-get-one\/\" target=\"_blank\" rel=\"noopener\"><i><span style=\"font-weight: 400;\">A CPA for small business &#8211; When should you get one?<\/span><\/i><\/a><\/p>\n<h2 style=\"text-align: center;\"><span style=\"font-weight: 400;\">What is a CPA\u2019s role outside the business environment?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A CPA is also accountable to the government under which the business operates. Businesses are required by law to pay taxes and comply with a set of financial regulations.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">CPAs study the company\u2019s financial performance and help the business calculate its tax liability and what needs to be paid to or recovered from the government. The reason the CPA can only do this is that they are the neutral party to represent the business and give an objective opinion.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Again, a business\u2019s management may overstate its expenses and understate its profits in order to pay less tax than it should. This is where the CPA features to protect both the government and its stakeholders and ensure compliance with the financial regulations.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In some instances, a business may not be performing well. It would need to be evaluated by a CPA to see whether they could be rescued from a financial crisis or need to cease business operations. The CPA\u2019s reports will contain their analysis and suggest the best course of action.\u00a0<\/span><\/p>\n<h2 style=\"text-align: center;\"><span style=\"font-weight: 400;\">What distinguishes a Bookkeeper from a CPA?<\/span><\/h2>\n<figure id=\"attachment_22552\" aria-describedby=\"caption-attachment-22552\" style=\"width: 800px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-22552 size-full\" src=\"https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-5.jpg\" alt=\"tax return form\" width=\"800\" height=\"533\" srcset=\"https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-5.jpg 800w, https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-5-300x200.jpg 300w, https:\/\/envoice.eu\/wp-content\/uploads\/2023\/04\/bookkeeper-vs-cpa-what-are-the-main-differences-5-768x512.jpg 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><figcaption id=\"caption-attachment-22552\" class=\"wp-caption-text\">Source: Pexels<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">Let\u2019s now summarize the differences between a CPA and a Bookkeeper:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The level of education of a CPA is much higher and involves extensive training regulated by the accreditation board. Whereas a bookkeeper can only possess numerical skills or a high school diploma.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The skills and requirements to become a CPA make them eligible for higher pay than a Bookkeeper.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A CPA does not necessarily work with daily accounting transactions but focuses on the business&#8217;s long-term objectives by overseeing financial records maintained by a Bookkeeper.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A bookkeeper\u2019s responsibility is only towards the business and its customers, whereas a CPA\u2019s responsibility goes well beyond the company by involving the shareholders and the government.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Although this hardly happens because of how qualified a CPA is, a CPA can perform bookkeeping duties such as recording sales or payments.\u00a0 But a Bookkeeper cannot take over CPA functions due to regulations.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The need for a Bookkeeper\u2019s services may cease when business activities stop. Still, a CPA is needed to carry out all post-closure operations, such as valuation and unbundling of the business portfolio.\u00a0<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: center;\"><span style=\"font-weight: 400;\">Conclusion<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">By now, you would have seen that these two functions can co-exist. A bookkeeper and CPA can record and manage your finances side-by-side.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A bookkeeper will create financial records needed by a CPA to make an informed choice about the overall financial position of a business.<\/span><\/p>\n<p><b>Hiring a CPA contributes to the overall financial well-being of the business, and hiring a Bookkeeper ensures consistency in recording financial activities.\u00a0<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Depending on the size of your business, you may not need to have your records evaluated by a CPA. But the need for a Bookkeeper for the day-to-day financial functions is vital.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Innovative accounting software, such as Envoice\u2019s <\/span><\/i><a href=\"https:\/\/envoice.eu\/en\/products\/extract\/\" target=\"_blank\" rel=\"noopener\"><i><span style=\"font-weight: 400;\">Smart Extract<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">, saves time by eliminating manual data entry. All the key information from your invoices and receipts is extracted instantly.\u00a0<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Entrepreneurs know that finances are integral to running a company. As soon as you start your business activities, you need money. Money to get your company off the ground, purchase materials and employ the right people. And equally as important is recording each financial transaction so you can keep track of money going out and [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":22542,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[15],"tags":[],"class_list":["post-22541","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accounting"],"acf":[],"_links":{"self":[{"href":"https:\/\/envoice.eu\/en\/wp-json\/wp\/v2\/posts\/22541","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/envoice.eu\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/envoice.eu\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/envoice.eu\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/envoice.eu\/en\/wp-json\/wp\/v2\/comments?post=22541"}],"version-history":[{"count":3,"href":"https:\/\/envoice.eu\/en\/wp-json\/wp\/v2\/posts\/22541\/revisions"}],"predecessor-version":[{"id":24574,"href":"https:\/\/envoice.eu\/en\/wp-json\/wp\/v2\/posts\/22541\/revisions\/24574"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/envoice.eu\/en\/wp-json\/wp\/v2\/media\/22542"}],"wp:attachment":[{"href":"https:\/\/envoice.eu\/en\/wp-json\/wp\/v2\/media?parent=22541"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/envoice.eu\/en\/wp-json\/wp\/v2\/categories?post=22541"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/envoice.eu\/en\/wp-json\/wp\/v2\/tags?post=22541"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}