Although the terms “bookkeeper,” “accountant,” and “CPA” are used interchangeably, there are notable differences between the three. Bookkeepers, accountants, and CPAs may share common goals, but their scope of work and the tasks they perform are not the same.
Bookkeepers A bookkeeper is an accounting professional responsible for processing and recording the financial transactions of an organization on a day-to-day basis. In other words, a bookkeeper keeps track of the money coming into and out of a business in a consistent way. They maintain a comprehensive record of sales, purchases, expenses, payroll, payment of bills, and other financial transactions. A bookkeeper maintains the financial records of an organization by performing the following tasks. – Record financial transactions – Send and manage sales invoices – Manage & pay debt due to vendors – Manage bank feeds & reconciliations – Prepare financial statements – Payroll & human resource functions
Accountants An accountant is primarily responsible for summarizing and interpreting the financial transactions recorded by the bookkeeper and communicates financial insights based on that information. Accountants handle financial documents like balance sheets, profit-and-loss statements, statement of equity, and cash flow statements. Accountants can perform bookkeeping functions, but they take it to a higher level and use the financial information to derive insights on a business’ performance and communicate the information to the leadership. In simple terms, bookkeepers record financial transactions; accountants turn it into usable information for purposes of planning. Generally, an accountant performs the following duties: – Summarize, interpret, and communicate financail statements – Use bookkeeping information to analyze and interpret the data – Oversee how accounting data is stored, managed, and updated – Generate standard business reports and statements for tax purposes – Assist and prepare data for company audits – Oversee the work of a bookkeeper
CPAs Certified public accountants (CPAs) are professionals who have passed rigorous CPA exams and have fulfilled the statutory education and work experience requirements. CPAs have additional level of credibility and expertise. CPAs are responsible for preparing and reviewing financial statements, analyzing financial reports, auditing, preparing tax returns, and representing businesses before the IRS for audits. CPAs also handle financial matters related to financial planning, investment planning, and retirement planning. All states require certified public accountants to pass a qualifying CPA exam set up by the American Institute of Certified Public Accountants to become licensed. The major difference between a regular accountant and a CPA is that only CPAs can audit financial statements.