What’s the Difference Between a CPA, Accountant, and Bookkeeper?

Bookkeeper vs. CPA vs. Accountant

Before we get into their differences, let's first cover what each of these professionals does...

What is a Bookkeeper?

Years ago, a bookkeeper literally kept business accounts in a hard-copy ledger. Modern bookkeepers are more likely to use software, but the goal is the same—to keep track of the money moving in and out of the business. If the company is small, the owner may be able to handle the work, but bookkeepers have the experience to do it quicker and usually more accurately...

Bookkeepers perform several functions that apply to most types of businesses:

• Record purchases and sales
• Reconcile financial documents, such as bank statements
• Track accounts payable and accounts receivable
• Pay the accounts payable bills
• Process and maintain the payroll system...

Bookkeepers typically have some college, but no degree. Some bookkeepers only have a high-school education. Median pay is around $39,240 a year. Median pay is the point at which half of bookkeepers earn more, and half earn less...

What is an Accountant?

Accountants have at least a bachelor's degree, although it doesn't have to be in accounting. Their median pay is $69,350 a year. A company could pay an accountant to keep the ledger, but it's cheaper to hire a bookkeeper and save an accountant for higher-level services. Accountants can review business finances and give management a big-picture perspective. The bookkeeper records data; accountants turn it into usable information for business planning...

Accountant duties include:

• Tax advice and tax planning
• Financial projections for the business's future
• Oversight and recommendations regarding company spending
• Reviewing the books maintained by a bookkeeper to ensure accuracy...

What is a CPA?

A Certified Public Accountant (CPA) is a licensed professional specializing in taxes and other financial reports. They typically have advanced accounting knowledge and experience that allows them to provide more sophisticated tax advice than bookkeepers or regular accountants can. CPAs may also offer auditing services or help with strategic planning...

A CPA makes 10 to 15 percent higher income than an accountant who is not certified. The standards for becoming a CPA are stringent. In North Carolina, for example, you need a bachelor's degree with at least 30 hours of accounting-related courses or 20 hours of graduate accounting courses...

On top of that, accountants must pass their state licensing exam to become certified. The exam lasts 14 hours, and half the test takers fail a section on the first try. To keep their license, CPAs need 40 hours of added professional education every year...

The difference between a CPA and a regular accountant is that only CPAs can write an audited financial statement. Companies that sell shares on the stock market have to provide audited statements so investors can judge the worth of the stock. Smaller companies that don't sell shares may get along fine with an accountant who is not a CPA...

Bookkeeper vs. CPA: 5 Top Differences

So—what are the five top differences between these roles? Let’s get into those next...

1. Education

CPAs and accountants tend to have more specific and advanced education requirements than bookkeepers do. For example, to become a CPA, individuals must have at least 150 hours of college-level accounting credits and pass an exam to obtain their certification. Bookkeepers, meanwhile, may only need a high school diploma or certificate in accounting or related fields...

2. Specialization

Bookkeepers are experts in managing day-to-day finances like payroll and expenses. In contrast, accountants specialize in reviewing business finances and planning, while CPAs focus more on taxes and strategic planning...

With that in mind, if you're looking for someone primarily to help with your taxes or provide financial consulting services, then a CPA is the better option. For daily bookkeeping and financial record-keeping, a bookkeeper is suitable. For an overarching financial strategy, an accountant is ideal...

3. Regulations

CPAs are certified professionals who must adhere to regulations set by their state's board of accountancy. This includes abiding by ethics standards and completing continuing education courses. Accountants do not need certification, but higher education is required. Bookkeepers generally do not have any regulatory requirements beyond basic accounting principles...

4. Fees

The fees charged by CPAs tend to be higher than those charged by accountants and bookkeepers because of their additional expertise and qualifications. However, it's important to factor in the potential savings from deducting taxes accurately or taking advantage of available tax credits when determining the most cost-effective option for your business...

5. Accountability

Regarding accountability, bookkeepers are more likely to take ownership of their work and can provide ongoing support if issues arise. Accountants may offer oversight and strategic advice but not as much one-on-one assistance. CPAs can provide complex advice but may not offer ongoing support the way bookkeepers typically do...

What’s Right for Me: Bookkeeper vs. CPA vs. Accountant

We’ve covered only five of the many major differences between bookkeepers, accountants, and CPAs. Ultimately, your choice should come down to what kind of help you need for your business and whether the fees associated with each professional are within your budget. Weigh both options' pros and cons, consider which offers the better value for money, and decide what's right for you...

If you’re looking for the best value for money accounting and bookkeeping services, Stellar offers the most cost-effective solutions. Many startups are choosing to engage external accountants to scale their operations efficiently...

Ready to streamline your finances? Book a call with Stellar today and see how we can help you save time, money, and stress...

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