Managing the finances of a business can be stressful and overwhelming, especially when you’re unsure of who to turn to for guidance. You may find yourself asking if you should hire a bookkeeper, tax accountant, or a CPA? While each one performs their own unique role in your financial well-being, you can save money, time, and stress by understanding the differences.
Bookkeepers: Day-to-Day Financial Organizer
Daily financial tasks are managed by bookkeepers to help your business run efficiently by performing the following tasks.
- Record income and expenses
- Categorize transactions
- Reconcile accounts
- Send invoices and record payments
- Manage payroll
- Generate financials – monthly, quarterly, annually
- Keep books up to date
How to know when to hire – while at first it may be cost-effective to be your own bookkeeper, in the long run, you may benefit from a bookkeeper if you find yourself stressed out during tax season, financial records are behind or chaotic, or you find yourself spending more time bookkeeping than growing your business.
Tax Accountants: Tax Strategy Specialist
Tax compliance and planning are the areas of expertise for a tax accountant. Here are some tasks a tax accountant performs.
- Prepare and file personal and business tax returns
- Develop tax-savings strategies
- Ensure IRS and state compliance
- Assist in minimizing tax burdens
- Advise on business structure and deductions for tax efficiency
- Representative before tax authorities
How to know when to hire a tax accountant – a tax accountant may be beneficial if you want to prevent costly mistakes, legally reduce taxes, or want guidance on deductions and estimated tax payments.
Certified Public Accountant or CPA: Expert Strategic Financial Advisor
In addition to all the tasks a bookkeeper and tax accountant perform, a CPA is a licensed professional with broader capabilities.
- Prepare certified financial statements
- Perform audits and reviews
- Conduct advanced tax planning
- Provide growth and structure advisory services
- Representative for IRS and state issues
- Offer high-level financial guidance
How to know when to hire a CPA – it may benefit you to hire a CPA if you have multiple businesses, want long-term financial planning, have complex taxes, or need certified financial reports for investors.
There is a high possibility you may need a bookkeeper, tax accountant, and a CPA. The bookkeeper will assist in keeping your financials accurate and up to date, while a tax accountant will maintain tax efficiency and compliance, and a CPA will provide certified reporting and advanced strategies. While you may benefit from one, they can simultaneously assist in keeping your business financially healthy as well as compliant and organized.
There are several elements to consider when choosing the right financial professional for your business, such as scope, structure, objectives, and more. If you are unsure, start with a bookkeeper to assist with daily activities, then add a tax accountant to help with tax savings and compliance, if you believe complex tax insight and certified reports would benefit your business, consult and hire a CPA.