A CPA is a certified public accountant. Certified public accountants are actually licensed, which means that not every accountant is a CPA. Every state has its own requirements for maintaining a CPA license, though there is an exam that they all must pass, and it’s typically required that a CPA has a bachelor’s degree and at least two years of experience. Many people end up using CPA and bookkeeper interchangeably, but it’s important to note that these are not the same thing. Here is how to tell the difference.
The Key Differences
Let’s clear up the terminology here. Bookkeepers tend to work with short-term finances, whereas accountants are usually called in for longer-term finances. Think of it this way: a bookkeeper may work with day-to-day expenses that contribute to daily operations. A CPA, on the other hand, may work with tax returns and long-term financial planning. If a bookkeeper does their job correctly, it makes a CPA’s job much easier down the road. Having your accounting work organized and ready to go through makes it easier for a CPA to do your taxes when the time comes.
Do You Need Both?
Most businesses end up using a CPA but not a bookkeeper. This is because basic bookkeeping is fairly easy to do on your own these days. With software like Quickbooks being so readily available, most small business owners lack the resources or need to hire a dedicated bookkeeper. Instead, they choose to record their own finances with their free time. Software like this has made it easier than ever to record your own finances, but you still likely want to turn all of those records over to an accountant a few times a year. They can then check for errors, help with tax documents, and even advise you on major financial decisions.
Determining Your Needs
If you have a tight budget, you may be considering forgoing a CPA altogether. To determine whether or not you really need a CPA, think of a cost-benefit analysis. Asking a CPA for their monthly retainer fees or hourly rates, then determining how long it’d take you to do that work on your own, is a good way of figuring out whether or not a CPA is really worth it for you. If you end up making accounting mistakes on your own, you could end up paying fines for tax mistakes, which could end up being more costly than it would’ve been to just hire a professional in the first place.
Contact Bowman & Company Today
Bowman & Company CPA, PC provides all of our individual and small business customers with experienced, accurate, and affordable financial services. Our financial services are aimed at decreasing your taxes and increasing your net worth through responsible, timely, and accurate recordkeeping. We offer our services to clients throughout the Washington, D.C. metropolitan area including Maryland and Baltimore County, Columbia, and Howard County. For more information on our offerings, contact us online or call us at (410) 381-8121. You can also find us on Twitter, Linkedin, Facebook, and Youtube.