March 27, 2020

Please reload

Recent Posts

The Breakdown of Congress' COVID-19 Emergency Relief Acts

March 31, 2020

1/10
Please reload

Featured Posts

What Type of Accounting Professional Do You Need For Your Business?

May 11, 2018

 

There is a good chance that when your business started you were tracking your income and expenses on a spreadsheet or bank, Amazon, or PayPal statement. But as your business grows, a little voice has been telling you that maybe it would be better to spend more time with your customers and less time with the books, or perhaps the volume of transactions have gotten a little out of hand. The moment has come to hire a professional. But where do you start? Should you hire a bookkeeper or an accountant to keep your financial books? And when it comes to preparing taxes, can you rely on the knowledge of a tax preparer, or is it best to insist on a CPA?

 

Think about the potential growth and complexity of your business. As you grow, you will probably need a broader level of assistance. To help decide which professional is right for your business, here’s a breakdown of the different roles:

 

Bookkeeper. These individuals keep track of the financial records of a business. This makes them responsible for accounts receivable and accounts payable, as well as determining what’s taxable and what’s not. Although this person will probably prepare monthly reports, he or she is strictly a record keeper and does not analyze reports or give tax advice.

 

Accountant. That's right, bookkeepers are not accountants. Accountants are trained to prepare financial statements, perform company audits and prepare reports that can be used for tax purposes. Someone could be an accountant but not a CPA. They may have a degree in accounting, but never pursued their CPA certification. It is also important to understand that an accountant is not an enrolled agent, so he or she is not authorized to sign tax returns or represent the taxpayer during tax audits.

 

Tax Preparer. Tax preparers are trained in tax matters and can bring a tremendous amount of practical experience to the table. Credentialed tax preparers are Enrolled Agents (EA) recognized by the IRS and can represent you with that agency, but they are not CPA's. Quality varies greatly, so you’ll need to do some background checking and perhaps ask for references. 

 

CPA. Certified public accountants must pass a four-part exam that not only tests their knowledge but also their higher-order thinking skills. Prior to taking the exam, these individuals must complete 150 semester hours at a college or university, and they must apprentice with a CPA or CPA firm for about a year. CPAs can prepare business and individual tax returns, sign tax returns and represent their clients before the IRS. A CPA can also offer a broader level of assistance, such as planning, budgeting, and advising on business process. CPA's bring a sophisticated and nuanced set of skills that can prove to be invaluable in the growth of your business and its profitability.

 

Still not sure who to work with? If you need a service—and not advice—a bookkeeper will probably suffice. But when your business starts to get complex, from operating across state lines to dealing with growth and cash flow forecasting, you will need to rely on a professional who can offer advice and answer questions. Email us at inquiry@njcpaccounting.com to find out more.

 

Adapted from an article posted at Manta.

Please reload

Follow Us
Please reload

Search By Tags