Startups often approach us confused about their accounting and finance needs. One of the most common concerns is whether they need to hire an individual who has a CPA qualification right off the bat. They also wonder how far they can go with a bookkeeper only and whether their bookkeeper should have a CPA too.
In this post, we’ll address these questions in detail. Let’s discuss bookkeepers’ and CPAs’ varying responsibilities and qualifications and whether you can merge their roles.
CPAs and Bookkeepers – The Differences
The responsibilities of a bookkeeper and a certified accountant are inherently different. A bookkeeper is in charge of maintaining ledgers, recording transactions and cash flow, and keeping all such records updated.
Bookkeeping is an entry-level position for a firm that merely wants a record of money moving in and out of it. Consequently, bookkeepers do not need to be Certified Public Accountants, and neither are they under any obligation to maintain records per GAAP standards. CPA qualifications are necessary for professionals higher up in the hierarchy, like Financial Controllers and CFOs.
Below, we’ll take you through some major differences between CPAs and Bookkeepers.
1. Roles : Bookkeepers are only qualified to enter data correctly, so they do not have other roles. Certified public accountants, in contrast, can take on a number of roles in a firm based on their experiences, like CFOs and Controllers.
2. Education and Experience : Individuals with high school diplomas who are skilled in math and computers can easily learn and perform bookkeeping. Consequently, you can hire a bookkeeper with one year or even less of experience.
Certified Public Accountants need to think beyond math: they need strategic and analytical skills. A CPA requires a Bachelor’s degree and has to pass the unified CPA exam. The experience firms require varies per the position they seek to fulfill, but CPAs need a minimum of 1-2 years. Usually, companies hire a Controller with a minimum of 10 years of experience to direct a bookkeeper.
Responsibilities of a Bookkeeper
Bookkeepers are your silent soldiers who do all the legwork involved in data entries. They record payrolls, invoices, debits and credits, transactions, etc. Whereas they can not ensure such entries are per GAAP standards, ensuring the completeness and accuracy of data falls under their responsibilities. Alongside this, they have to look out for discrepancies in records and report them.
Bookkeepers essentially
● Record sales and purchases
● Maintain day book, supplier ledger, customer ledger, and general ledger and ensure all data entries are in the correct book
● Handle payrolls
● Generate invoices
● Process Accounts Payable and Accounts Receivable
But where a bookkeeper will record, a CPA will set the direction, make policies, analyze the records, and build strategies for financial growth.
Responsibilities of Certified Public Accountants
CPAs are licensed accountants who have passed standard examinations and possess experience and education to back their qualifications up. They do not maintain records, but instead, they oversee them. CPAs can conduct audits as well.
In essence, CPAs are responsible to
● Build accounting policies and lay out methods for bookkeepers to follow
● Evaluate financial records to prepare and file tax returns and create budget reports
● Advise on financial management and devise relevant strategies
● Forecast profits
● Analyze financial transactions and prepare reports
● Brief the senior personnel about the company’s financial position
What If Your Business Can’t Afford a CPA?
You may be wondering if you can skip hiring a CPA altogether. If you’re the only individual relying on your financial statements and maintaining them for the sake of taxes, technical errors won’t cost you. But as you grow, you will require the expertise of Certified Public Accountants to provide strategies, consultation, and directions. This is especially true if you have an audit or are moving toward an IPO, as keeping your records compliant with GAAP, in this case, is critical.
It’s hard for companies in their initial stages to hire both a bookkeeper and a CPA. And neither is fit to do the job of the other: a bookkeeper can only record, and you’ll merely be working inefficiently if you expect your CPA to record transactions instead of focusing on strategic work. The most efficient to proceed is by getting an outsourced accounting team.
Outsourcing Accounts to Cut Costs
If you have no accounting knowledge, you need a CPA, and outsourcing is the most cost-efficient way to get one. It’ll cost you less than having an in-house licensed accountant.
If you haven’t hired a bookkeeper yet, outsourcing all of your accounting operations is an even more efficacious approach in terms of cost and expertise. This can include a customized package of bookkeeper, controller, and CFO services and cost you around the same as hiring one controller, or even less! We at Trusteer specialize in this area.
Let Trusteer Help
At Trusteer, we adopt a flexible, customizable, client-centric approach.
We have finance and accounting personnel with years of experience to back them up, and we realize that hiring such seasoned experts full-time is costly for businesses. So, we offer packages that contain fractions of CFO-Controller-Bookkeeping work. You can gradually opt out of each component as you grow and hire in-house teams, and we’ll fully support you in the transition. Between the cost savings and the guaranteed expertise, you’re in for a package you will not regret purchasing.
Contact us today for your finance and accounting needs!