Bookkeepers, Accountants, and CPAs: Defining the Role
CPAs Framingham MA
You will often hear of accountants, CPAs, and bookkeepers used interchangeably. However, that does not mean that they are the same, and their scope of work is quite different. Taking a closer look, you will learn that their licensing, professional status, and task performance from each are completely different.
They all work with businesses and have almost similar functionalities in the business as they all handle financial data. Some businesses, however, choose to employ the three people and give them different roles to monitor the company’s economic growth. However, there are those who are unsure of the difference hire either of the three professions and expect to receive particular services from the person. If you are unsure of what terms to use and what they mean, here is a brief overview of each word and its standing with internal revenue service.
A bookkeeper is a person who puts financial books of an organization. The person can either be an employee or work as a contractor in the company. Bookkeepers are, however, responsible over recording organizational transactions, including inventory, accounts receivable, accounts payable, provide monthly, quarterly, and annual reports, and payroll. However, as a bookkeeper, you must ensure that all the information provided is accurate and precise. Most bookkeepers today use the same software like QuickBooks, which are often used in accounting.
With a bookkeeper, you are sure that you will not have to deal with any business payment. The bookkeeper guarantees to take care of any transactions, including keeping track of what you owe in your credit cards. You can also depend on the person when it comes to monitoring and tracking business growth as they can provide you with sales monthly reports. The bookkeeper can also be your person when it comes to paying sales taxes as well as filling form 1099s and 1096 every end of the year. However, unlike when working with an accountant, the bookkeeper will never share any tax advice or analyze any reports for you.
On the other hand, accountants operate at a higher level compared to the bookkeepers. Accountants can perform the duties of bookkeepers, although they usually don’t do the same. However, they can perform audits on the books, especially in public companies, prepare financial statements, and can also prepare reports for tax purposes.
Accountants are often classified by the IRS as an unenrolled preparer. Therefore, they are not regally authorized to represent clients, during audits, singing tax returns, and other matters before IRS. This is a duty that is only left strictly for tax attorneys, CPA, and enrolled agents.
CPAs (Certified Public Accountants)
CPAs are basically an accountant that is licensed to operate at a particular state. They are often certified after going through a particular examination in the respective state and meet specified requirements for licensing in that state. This level of credibility is what makes CPAs different from regular accountants or bookkeepers.
Their central role is to prepare and review financial statements ion an organization. However, on top of that, they also help in making tax returns for individuals and businesses, represent taxpayers before IRS, sign tax returns, and other matters.
Which Professional Do You Need?
Whether you have a small business or your organization is significant, the need for a person to take care of your financial books is critical. You can choose to hire an employee or involve the services of a contractor to work as a bookkeeper. However, it is essential to ensure that the bookkeeper works for an accountant or a CPA.
Additionally, you will need someone to help review your financial reports and make decisions on taxes and finances. Although I cannot advise you to get a CPA, it is essential to keep in mind that an accountant who is not certified or licensed to practice CPA cannot represent you in the presence of the IRS. This is an essential distinction to most businesses and the main reason as to why they invest in hiring a CPA to give tax advice and review financial books. They also help in preparing and submitting tax returns for both the company and individuals online, hence making it easy for the business owner.
Matters regarding finances are critical for any business development. If you make the wrong decisions while hiring people who handle finances, your business growth will automatically get at risk. Therefore, it is essential for you to perform thorough research and evaluate the type of person you want in your organization.
Also, once you hire a CPA, allow them to execute their services in your favor without restricting their performance. This will guarantee that they will work as hard to ensure you are on the right side with the IRS even when all odds are working against you.