How is a bookkeeper different from an accountant?
Which one should you hire to help with your business? Or do you need both?
I’ve touched on the differences between bookkeepers and CPAs before, but now it’s time for a deep dive into what each professional can do for your business.
A bookkeeper and an accountant both bring unique expertise, but they have different viewpoints — and overall goals!
So let’s talk about what you can expect from a bookkeeper and accountant and how to know which one you need for your business.
Let’s get started!
Bookkeeper vs. accountant: Same topic, different focus
Take a step back from finances for a minute and think about your last trip to the dentist. (I know it’s a little strange, but stick with me!) You probably interacted with a dental hygienist who cleaned your teeth, took X-rays, and made notes of any potential problems.
Then, the hygienist called in the dentist, who looked at those trouble spots and diagnosed them. The dentist gave you a complete picture of your overall oral health using all the information that the dental hygienist gathered.
That’s kind of how it works with a bookkeeper and an accountant. Your bookkeeper is like a dental hygienist — they spend time deeply analyzing your books and gathering information about your income and expenses. Your Certified Public Accountant is more like a dentist. They take that detailed information from the bookkeeper and analyze it in the context of your entire financial situation.
Detailed vs. high-level perspective
Another way to think about the difference between your bookkeeper and your CPA is in terms of viewpoint. Your bookkeeper “zooms in” to get an in-depth look at all the aspects of your business finances. An accountant “zooms out” to see how your business contributes to your overall financial picture — which includes your personal finances, your partner’s salary, and the other aspects of your household income.
Analyzing your business finances
A bookkeeper becomes an expert in your business finances. They are in your books every month categorizing transactions, checking bank statements, and creating P&L reports. Your bookkeeper finds business expenses that are legitimately tax-deductible, and they prepare all the documentation you need to hand your CPA when it’s tax time.
Your bookkeeper can help you make wise financial choices for your business. Their monthly, quarterly, and yearly reports are designed to help you see exactly what’s going on in your business so you can decide when it’s time to change your pricing, hire an employee, save for a planned absence, or discontinue an underperforming offer.
Preparing for taxes
A CPA is a tax expert. They live and breathe the tax code, and they can help you figure out how much you really owe the government. Some CPAs also offer help with payroll, wealth management, and company structure (like whether an LLC or S Corporation is better for your business).
For example, my CPA meets with me twice a year and offers personalized tax advice based on my business and my husband’s income. Because I am a business owner and my husband is a W2 employee, our taxes can be complicated. That’s why it’s so important for us to work with a CPA who looks at the whole picture to help us plan our tax strategy.
Even if you don’t have a partner or any other income that complicates your tax situation, it’s still a good idea to work with a CPA. Business taxes are complicated by nature, and you want to get all the deductions you qualify for without making mistakes that could trigger an audit.
Hire the right experts for your business
As an online business owner, you probably need a bookkeeper and a CPA. Unless you want to do all your bookkeeping yourself or you’re a tax expert, hiring these professionals is a smart investment that helps eliminate costly mistakes and frees up your time for more productive tasks.
But remember, even with a good financial team, it’s important that you understand your books. Look through those monthly reports, analyze your revenue and expenses, and find ways to make your business more profitable.
When you’re looking for a CPA or a bookkeeper, find someone who is trustworthy and who understands the unique aspects of running an online business in your industry. I’d recommend a small business CPA rather than one who specializes in big corporations.
Likewise, look for a bookkeeper who knows what it’s like to run an online business and who can offer relevant advice for your industry. Not sure where to look? I’ve got the perfect option for you! 😉
What do you get when you work with me and my team of bookkeepers?
- Transaction management and categorization (we’ll take the tedious stuff OFF your plate!) by the 15th of every month
- A financial summary delivered each month, so you know where your money came from and went!
- Quarterly custom Loom videos to dive deeper into your financial reports, so we can make sure you feel completely confident in knowing your numbers.
- Access to our entire library of digital products!
- Quarterly visual reports, complete with pie charts, bar graphs, and high-level helpful info about your monthly bookkeeping. This makes it easy to see your numbers in a way that works for your brain — and that isn’t a total snooze.
- Voxer access to me, where you can ask clarifying questions about expenses, get help with your reports, and more!
Interested in that kind of support for YOUR creative online business?
Be the first to comment!