52. Bookkeeper vs Accountant vs CPA vs CFO
September 6, 2019
This episode is brought to you by my bookkeeping strategy sessions. When it comes to your bookkeeping, you’re probably in one of three areas. Doing it yourself, outsourcing some or all of your bookkeeping to a professional or understanding what the reports mean and making better business decisions from that information. Each of these stages comes with different struggles and questions. I can help with all three. Bring your questions, and I’ll bring some solutions. To book one of these sessions, email me at firstname.lastname@example.org. Now, on with the show.
Welcome back to the podcast!
In this episode I want to break down the difference between a bookkeeper, an accountant, a CPA and a CFO.
When you’re looking for help with your finances, these are the typical roles that you will see advertised and what people call themselves. Some businesses have all four, some have one or two, it all depends on what you can afford and what you need to move your business forward. Also, know that when you’re thinking about these roles for your business, all of these can be contracted out. You don’t have to have someone on staff filling these roles to get great results.
Let’s start with a bookkeeper. A bookkeeper’s main responsibility is keeping up with the books and recording income and expenses in their proper category. This can be someone who doesn’t have a degree and just has experience and knows what their doing or someone with an accounting degree who likes the bookkeeping work. Either way, it’s important to know there is no barrier to entry to become a bookkeeper meaning that in the US anyone can decide they want to do this. I’m apart of several bookkeeping groups on facebook and every day I see people say that they want to be a bookkeeper and ask how they can get started. Truthfully, they don’t need a degree. They just need experience. Be careful when you’re hiring this role because you don’t want someone with zero experience and no mentor or person they are working under. You want someone who knows what they’re doing and preferably has experience with you type of business whether it’s a service-based or product-based business. The downside to anyone being allowed to be a bookkeeper is they don’t always know the financial statements and what goes where. They know how to record the information, but they don’t understand the difference between the reports and aren’t as familiar with them. Not all. Definitely not all of them are like this, but a lot are, in my experience. If you want someone who can explain the reports and analyze them with you then you’ll want to have additional help beyond this.
An accountant is someone who has an accounting degree. This person knows more than a bookkeeper and can record more difficult entries. Often times, you see these people as a staff accountant or something similar in their job title. These people are more familiar with financial statements and can provide more insight than a bookkeeper could on your business.
A CPA is someone who has passed the certified public accountant exam. It’s a four part exam and to quality in most states you need a bachelors in accounting and sometimes a masters as well as job experience working for a CPA. This is considered to be the top ‘achievement’ an accountant can earn and often people who are working at a firm will be trying to get this certification. A CPA can file your taxes, although not all of them do. This person is great to have available to file your taxes each year and to provide any insight on ways you can save money on your taxes.
A CFO is a Chief Financial Officer. In a large company, this person is responsible for all financial oversight.
- Cash flow
- Company liabilities
- Company performance
- Department supervision
- Financial relationships
- Finance or Raising Capital
- Financial obligations
- Record control
- Shareholder relations
- Budget and expense control
I got that list from an article online that I will link in the blog post. It’s very comprehensive! https://www.bizmanualz.com/be-a-better-boss/what-are-the-top-ten-cfo-responsibilities.html
So that person is really the right hand of the CEO when it comes to all things finance. Most small businesses don’t, but you can outsource this role! You can have someone who reviews your company’s financial standing each month, gives them advice, coordinates with the other roles that are involved whether that’s a bookkeeper or a CPA and break down your goals and work through them on the finance side with you.
I wanted to share that information with you because a lot of small business owners that I talk to don’t always know the difference between the roles or they think that they just need a CPA and wonder why the CPA isn’t doing what a CFO does. Well, it’s because they know their role! And a bookkeeper isn’t going to file your taxes because they aren’t qualified, and they don’t know how to.
If you’re looking to add to your team, keep in mind these roles and who would be a best fit.
I’d be honored to work with you. To get started, email me at email@example.com with the problem you’re having and we can discuss the best way to get to a solution.
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So until next time, go, make it happen.