Bookkeeper vs. CPA: Understanding the Key Differences

Small businesses often face an uphill battle when managing financial records. With limited resources, keeping up with bookkeeping tasks and staying compliant with tax regulations is challenging. This is where benefits of hiring a bookkeeper can help. They can relieve the stress of managing your business’s financial records and help you avoid costly mistakes and prepare for tax season. Before you decide to bring on a bookkeeper, it’s helpful to understand the differences between a bookkeeper and a CPA. This article will explore the distinctions between these two financial professionals to help you determine which is right for your small business.  

If you’re looking for accounting services for small businesses, Haven can assist. Our team can help you understand the differences between a bookkeeper and a CPA to determine which is best for your business.

What is Bookkeeping/ Bookkeeper?

Bookkeeping is not just accounting. Bookkeeping refers to the daily recording of:

• Financial transactions 
• Activities

It is a subset of accounting that requires the following jobs to build a financially stable business: 

• Recording financial transactions
• Posting debits and credits
• Producing invoices
• Maintaining and balancing current accounts, historical accounts, and general ledgers
• Completing payroll

Financial Pulse

One of the main components of bookkeeping is managing a general ledger. Bookkeepers are responsible for providing accurate, up-to-date financial information about a business. They’re always taking the pulse of a company. Their reports often go to business owners and managers to help them make decisions. 

Some bookkeepers are involved in strategy development. Bookkeepers may also share some jobs with accountants, such as preparing:

• Annual financial reports 
• Tax returns

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• Benefits of Virtual Bookkeeping

What Is CPA (Certified Public Accountant)?

You may have heard the term CPA thrown around a lot. But what exactly is a Certified Public Accountant? A CPA is an accounting professional who has met state licensing requirements to offer accounting services to the public. These requirements include:

• Passing the CPA exam
• Meeting education and experience requirements
• Committing to ongoing education

CPAs offer a wide variety of accounting services. One essential task for most CPAs is to prepare, maintain, and/or inspect financial records to ensure that the information they represent is accurate and complies with relevant laws and regulations. This can include: 

• Preparing financial statements 
• Organizing financial records 
• Preparing tax returns 
• Providing financial and tax forecasts 
• Preparing documents required by the 
• Securities and Exchange Commission (SEC) 
• Providing auditing and review services

Financial Guidance

Since accountants can usually develop a deep understanding of your finances, they can often help:

• Improve your financial performance
• Set financial goals
• Create a plan to achieve them

Financial Runway

Let your business take flight while Haven manages your financial runway. Built by founders for founders, we handle everything from daily bookkeeping to complex tax filings, R&D credits that put cash back in your pocket, and fractional CFO services. 

Join 400+ startups who've saved millions in tax credits, countless hours of administrative work, and never missed a filing deadline, all while accessing 24/7 Slack support from CPAs who understand the unique challenges of growing businesses. Book a call today to learn how our dedicated team can help you focus on building rather than bookkeeping.

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Bookkeeper vs. CPA: Understanding The Key Differences

As your business grows, professional financial support becomes more critical. Not all financial professionals offer the same services or have the same qualifications. Understanding the key differences between a bookkeeper and a Certified Public Accountant (CPA) can help you decide which is right for your needs.

Education

The first significant distinction lies in:

• Education 
• Certification

Bookkeepers typically do not need a formal degree, although many hold a certificate in:

• Accounting
• Bookkeeping
• Related field

Credential Requirements

Some may also pursue voluntary certifications, such as the Certified Bookkeeper (CB) credential through the American Institute of Professional Bookkeepers (AIPB), but these are not required to practice.

CPAs must meet strict educational and professional standards. In most states, this includes:

• Completing at least 150 college credit hours (usually more than a bachelor’s degree)
• Passing the Uniform CPA Exam
• Meeting experience requirements before being licensed

Ongoing Learning

CPAs must also complete continuing education regularly to maintain their license. This difference in education reflects the scope and depth of the services each professional can provide.

Specialization

Bookkeepers focus on the day-to-day financial operations of a business. Their tasks include:

• Recording income and expenses
• Reconciling bank and credit card accounts
• Issuing invoices and managing accounts receivable
• Processing payroll
• Maintaining financial records

They play a crucial role in keeping your financial data current and accurate.

Advanced Services

CPAs offer more advanced financial services. They are qualified to:

• Prepare and file complex tax returns
• Conduct audits
• Offer financial and tax planning advice
• Guide business structure and compliance
• Represent clients in front of the IRS

Bookkeepers maintain your financial data, while CPAs interpret that data for:

• Decision-making 
• Compliance

Regulations

A state or national licensing body does not regulate bookkeepers. While they are expected to follow generally accepted accounting principles (GAAP), there is no legal oversight unless they hold a voluntary certification.

State boards of accountancy license CPAs. They are legally bound to follow ethical and professional standards, and failure to comply can result in disciplinary action, including losing their license. This added regulation ensures higher accountability and trust, especially when dealing with sensitive matters like taxes or audits.

Fees

Fees are another key difference between bookkeepers and CPAs.

Bookkeepers usually charge lower hourly rates or monthly retainers. Their ongoing and consistent services make them cost-effective for managing regular financial tasks.

CPAs charge more per hour or engagement, reflecting:

• Their advanced training 
• The complexity of their work

Strategic Savings

Hiring a CPA for tasks like tax planning or entity selection can save money in the long run by helping you:

• Take advantage of deductions
• Avoid penalties
• Stay compliant with tax laws

Accountability and Support

Both roles offer value but differ in the support type they provide.

Bookkeepers work closely and consistently with your business. They’re often the first to spot discrepancies or trends in your finances and can provide ongoing support to keep your records accurate and up to date.

While highly trained, CPAs may be engaged for specific projects like tax preparation or financial consulting. They may not offer the same regular, hands-on involvement as a bookkeeper unless retained under a longer-term advisory arrangement.

Does Your Business Need A Bookkeeper Or CPA?

If you're self-employed or running a small business, you're likely managing a lot independently, including your finances. But as your business grows, so does the complexity of your financial responsibilities. Outsourcing your financial tasks is helpful and necessary.

So, should you hire a bookkeeper or a Certified Public Accountant (CPA)? The answer depends on the type of support you need.

When to Hire a Bookkeeper

A bookkeeper is best suited for handling your day-to-day financial operations. This includes:

• Recording income and expenses
• Performing bank and credit card reconciliations
• Managing accounts receivable and payable
• Preparing basic financial reports (like profit and loss statements)

Bookkeepers usually charge a monthly retainer, which can be more cost-effective than hiring a CPA if your needs are primarily transactional and administrative.

Scaling Support

Many business owners start by using bookkeeping software (like QuickBooks or Xero) to manage their finances themselves. 74% of small businesses use bookkeeping software to help track their activities and perform monthly reconciliations.

But once your transaction volume increases or you’re spending too much time on bookkeeping tasks, outsourcing to a professional bookkeeper can free you up to focus on growing the business.

When to Hire a CPA

A CPA is more appropriate when your needs go beyond basic bookkeeping. CPAs offer:

• Tax preparation and filing
• Business structure advice
• Tax planning strategies
• Financial audits
• Help with loan applications or investment readiness

CPAs generally charge a higher hourly rate than bookkeepers but may offer fixed fees for specific services, such as filing annual tax returns or providing financial statements for lenders.

Strategic Onboarding

Many small business owners choose to consult a CPA before hiring a bookkeeper. Early in your business journey, a CPA can provide essential advice on choosing the right business entity (like LLC vs. S Corp), correctly setting up your accounting systems, and helping you stay compliant with tax laws.

You don’t always need a CPA and a bookkeeper, at least not simultaneously. A CPA can help lay the groundwork if you're just starting out. As your business grows and your daily financial tasks become too time-consuming, a bookkeeper can step in to manage the workload.

Collaborative Approach

Many businesses eventually use both, with the bookkeeper handling daily operations and the CPA overseeing higher-level financial strategy and compliance.

Related Reading

• Best Bookkeeping Services
• Bookkeeping Services for Startups
• Pros and Cons of Outsourcing Accounting Services
• Best Outsourced Bookkeeping Services
• Organizing Small Business Bookkeeping
• Bookkeeping Services List
• Bookkeeping Packages for Small Business
• Best Accountant for Small Business

Book a Call to Learn More About our Accounting Services (Trusted by 400+ Startups)

When it comes to bookkeeping vs. CPA, it’s essential to understand the distinct roles these financial professionals play in your business. A bookkeeper manages your day-to-day financial transactions, while a CPA handles your tax filings and financial reporting. 

At Haven, we offer both bookkeeping and CPA services to ensure your financials are in order from the ground up. Our team will manage your financial runway so you can focus on helping your business take flight.