Do I need a CPA or a bookkeeper?

CPA vs Bookkeeper: What do I need? Odds are you need both. I consistently get inquiries from folks who are confused about the roles for each and what they need for their business. Here's a quick primer for your business finances:

Tax Filings: This is the big one that causes confusion. To file your annual personal and business tax filing, you will be looking for a CPA. These folks should be up to date on all of the latest tax codes and requirements and should work to get you the best tax outcome possible. If you run payroll, your bookkeeper can do your monthly/quarterly payroll tax filings and payments and they may offer some advice for tax time, but they are not your expert when it comes to your Annual Tax Filing. I always encourage clients to find a CPA who is comfortable in an Advisor role and not just plugging in numbers and spitting out a tax return. You may pay a little more for this, but what you save in tax savings and avoided missteps will be more than worth it.

Day to Day Business Financials: This is where you bookkeeper should shine. A CPA definitely could do your bookkeeping, but their hourly rate is much higher and often they are managing your books from a Tax-Ready perspective. This doesn't necessarily give you good info about your actual business and where money is coming from or going to. A good bookkeeper can help you set up a Chart of Accounts that will keep you tax ready and give you good info about your business. They should also be able to produce and review your financials on a more regular basis, helping you to catch issues or capitalize on opportunities more quickly.

Payroll: Again, your CPA could do this for you, but it is often not your most cost effective option and you may not have immediate access to the data you want to make day to day choices for your business. A bookkeeper is going to be more accessible and cost effective and will also have a more personal relationship with you and your team which can be an advantage.

Big Picture Financial Advice: Looking to buy a building or bring on your first employee? This is where having a bookkeeper & CPA that work as a team is a huge asset. Your CPA is going to have the big picture of your business and personal financial situation. Your bookkeeper should have in depth understanding of the ebbs and flows of your business income and can do some reports and legwork to help you plan.

So, bottom line, it is to your advantage as a small business owner to build a solid team that includes both a bookkeeper and a CPA that are comfortable in that advisor role. Building a team that supports your in building your business is key!