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Accounting, Bookkeeping

Bookkeepers and CPA’s – Do I Really Need Both?

February 15, 2019, Author: Bradford Batten

A very common question we get as bookkeepers is “Why do I need a bookkeeper and a CPA?  Aren’t CPA’s supposed to be really good at bookkeeping?”


The assumption in this question is, both professions fulfill the same function; a CPA is just a really good bookkeeper who also does taxes.  The truth is many CPAs do not have a bookkeeping background.  A clearer comparison would be that of an electric guitar and a cello.  Both are stringed instruments. But while both luthiers will understand the principles of how each instrument works, they require very different skill sets in order to create a masterful electric guitar or cello.

The short answer is, your bookkeeper and CPA fill very different roles.  Both professions deal primarily with accounting, GAAP and the accounting equation.  Where they start to differ is how they use the information on your balance sheet and income statement.

When it’s time for your CPA to prepare your taxes, they will examine the trial balance, balance sheet. Everything has to tie ties out nicely before preparing the tax return.  Because of how the balance sheet and income statement relate to each other is, if the balances on the balance sheet tie out to source documentation properly, the income state will have captured all of the businesses income and expenses.

What bookkeepers job is: 1) Ensure that all income and expense is recorded correctly, 2) make sure that the balance sheet and income statement are presented in a way so that the business owner can see his various income streams. She can see where all of her expenses are going, make prudent business planning decisions.  Throughout the year, she ties out the balance sheet and looks for stability and predictability in her expenses.  So by the end of the year, he can give the CPA an accurate set of books from which to prepare the best possible tax return.

In summary, the CPA ensures that the balance sheet and trial balances are correct and reasonable according to GAAP and IRS guidelines. From there he works with his client, creating an advantageous tax strategy.  He wants make sure the client is able to make prudent, day to day decisions for her business.