CPA vs Bookkeeper: Is a CPA the same as a bookkeeper?

CPA vs Bookkeeper: Is a CPA the same as a bookkeeper?
CPA vs. Bookkeeper: Is a CPA the same as a bookkeeper?

Accounting professionals include both CPAs and bookkeepers. Is a CPA the same as a bookkeeper? No! The main differences between a CPA and a bookkeeper are their job roles, compensation, and professional standing.

While a CPA's primary responsibility is to offer financial advice, a bookkeeper's primary responsibility is to keep records of all financial transactions in a company.

A bookkeeper keeps a record of every financial transaction in the books, while a CPA examines these documents and provides sound financial advice. As a result, a bookkeeper and a CPA work together to ensure that a company's financial position remains stable over time.

CPA vs Bookkeeper: What is the difference between a CPA and a Bookkeeper?

A bookkeeper's responsibilities, educational requirements, professional status, and remuneration differ significantly from that of a CPA. The following are some key differences:

1. Definition

CPAs are State Board-licensed accounting experts with the required education and work experience who have sat and passed the Uniform CPA exam, while bookkeepers are professionals who are responsible for keeping records of cash flow in a business.

2. National Professional Association

CPAs are members of the Association of International Certified Professional Accountants (AICPA), founded by the American Institute of CPAs and The Chartered Institute of Management Accountants. Whereas bookkeepers are professional members of The American Institute of Professional Bookkeepers (AIPB and the National Association of Certified Public Bookkeepers (NACPB).

3. Job Responsibilities

A CPA's responsibilities include preparing, examining, and analyzing financial records, drafting financial reports, representing clients in IRS legal matters, developing accounting procedures and policies, conducting periodic detailed audits, preparing financial budgets, and estimating profit margins.

While bookkeepers are in charge of preparing and filing tax returns, managing accounting transactions, posting financial transactions in appropriate accounts, utilizing bookkeeping spreadsheets, databases, and software, observing and reporting any discrepancies found in the records, maintaining the general ledger and journals, receiving and recording vouchers, cash, and checks, arranging bank deposits, ensuring accuracy in reporting and posting figures, and preparing invoices.

4. Purpose of hire

CPAs are hired for a variety of reasons ranging from financial consulting to handling complex business transactions, preparing and filing tax returns, while bookkeepers are hired to do routine record-keeping.

5. Basic Requirements

The basic requirements for becoming a CPA are a Bachelor’s Degree (150 credit hours), 1-2 years work experience (may vary based on jurisdiction) and must sit for and pass the uniform CPA exam. Whereas the minimum requirement to become a bookkeeper is a high-school diploma. See the list of 6 Free Online Bookkeeping Courses with Certificates

6. Skills required

For a CPA, the skills required to work in an organization are higher order thinking skills (analysis, interpretation, and evaluation). A bookkeeper should be skilled at basic mathematics and computing skills.

7. Licensing and Certification requirement

To work as a CPA, you must have a CPA license. While AIPB and NACPB's Certified Bookkeeper (CB) certification is available for bookkeepers, but not required for practice.

8. Average annual salary

The average annual salary for a CPA is $60,000 -$160,000, while the average annual salary for a bookkeeper is $42,410.

9. Industries they work for

CPAs can work for large companies, public accounting firms, government agencies and departments, Non-Governmental Organizations (NGOs). Whereas a bookkeeper can work for educational institutions, healthcare businesses, government agencies, retail stores, NGOs, small and medium sized businesses (SMBs), etc.

10. Professional job status

A CPA is a high status job, while a bookkeeper is a low status job.

CPA vs. Bookkeeper: What is a CPA?

CPAs are certified public accountants who have passed the Uniform CPA exam administered by the American Institute for Certified Public Accountants (AICPA) and met the state board's education and experience requirements.

To administer the exam and grant the license, the AICPA collaborates with the National Association of State Boards of Accountancy (NASBA). CPAs must maintain their license by completing Continuing Professional Education (CPE) requirements every 1-3 years, as required by their state board standards.

The CPA certificate is regarded as one of the most prestigious, well-respected, and highly sought-after certifications in the accounting field. To obtain a CPA license, one must go through a long and difficult process. A CPA's license distinguishes him or her from a bookkeeper or other accountant.

Unlike a bookkeeper, a CPA's responsibilities go beyond keeping accounting records. It consists of the following:
  1. Analyzing financial records
  2. Preparing financial reports
  3. Auditing
  4. Preparing and filing tax returns
  5. Helping businesses to make decisions
  6. Financial consulting
To explain the difference between a CPA and a bookkeeper, consider the following analogy. A bookkeeper can be compared to a college lecturer, whereas a CPA can be compared to a Dean.

A Dean is better trained, knowledgeable, and skilled to handle all of a college's responsibilities. While a professor has subject-specific knowledge, a Dean is better trained, knowledgeable, and skilled to handle all of a college's responsibilities. CPAs, like college deans, are capable of handling all areas of a company's finances.

When compared to a bookkeeper, CPAs have a larger earning potential, more global exposure, better employment opportunities, and more respect in general. CPAs are well-equipped to work as an advisor, business strategist, auditor, or CFO in any firm, thanks to their considerable knowledge and training.

As licensed accountants, CPAs are authorized to represent you in front of the Internal Revenue Service (IRS) if you have a legal issue. They can also audit publicly traded companies' financial statements and file a report with the U.S. Securities and Exchange Commission (SEC).

CPA vs. Bookkeeper: What is a Bookkeeper?

Bookkeepers are finance professionals who keep the ledger of a company. They are responsible for ensuring that all financial transactions are recorded accurately daily. 

Bookkeepers have gone a long way in keeping a business's financial records, from preparing the hard-copy ledger to using accounting software.

Bookkeepers, also referred to as bookkeeping clerks, perform the following tasks:
  1. Keeping records of a company's cash, sales, and purchases.
  2. Make the necessary entries in the appropriate accounts.
  3. Manage workers' payroll
  4. Prepare financial statements
  5. Bank reconciliation
  6. Organize accounts payable and receivable
  7. Prepares invoices
Since bookkeepers keep a company's records up-to-date, managers may make more informed business decisions based on these records.

Managers examine a company's financial records to assess its financial status. The accuracy and speed with which bookkeepers organize information also help accountants and CPAs in their work.

While we compare the role of CPA vs bookkeeper, keep in mind that the bookkeeper is only responsible for keeping financial records, not analyzing them. 

In addition, unlike a CPA, bookkeepers do not earn a lot of money. They mainly work for small businesses. Depending on their needs and budget allocation, businesses employ bookkeepers on a full-time or a contract basis.

It should be noted that a bachelor's degree in bookkeeping is not required to get employment in a company. Employers sometimes hire applicants who have a postsecondary education with an accounting curriculum or simply a high school diploma.

The American Institute of Professional Bookkeepers (AIPB) and the National Association of Certified Public Bookkeepers (NACPB) are two organizations that offer certification to bookkeepers.

CPA vs Bookkeeper Example

Assume you own Wanderlust, an international travel agency. You engage Michael as a bookkeeper and Julie as a CPA to oversee your accounts.

Michael's major job now is to keep a daily ledger using an excel spreadsheet or any other digital tool. This refers to recording every dime Wanderlust sends or receives from another company.

He's also in charge of preparing invoices, balance accounts, and keeping records of all of the company's financial information. If he observes something weird or wrong, he can report it to the appropriate authorities.

This is Julie's role. Let's say there's an indication of a significant capital loss in the reports, or Wanderlust's transactions vary each month. Her job as a CPA is to analyze data, identify profit drivers, and identify opportunities for improvement.

Julie will meet with the officials after she has reviewed the information, devise a strategy to improve Wanderlust's financial situation, and make recommendations. The suggested improvements will help in the financial stabilization of the company and increase profitability.
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