The terms "bookkeeper," "accountant," and "Certified Public Accountant (CPA)" are not synonymous. Each represents a specific level of capability and licensing.
A bookkeeper is an accounting professional who works for a company (either as an employee or a contractor) to keep the financial books. Most bookkeepers these days use accounting software like QuickBooks for this task. A bookkeeper is responsible for accurately recording transactions, including accounts receivable, accounts payable, inventory, and (sometimes) payroll and providing reports on a monthly, quarterly, and annual basis.
Accountants are a level up in terms of responsibility from bookkeepers. They can (but usually don’t) perform bookkeeping functions, but usually they prepare detailed financial reports, they perform audits of the books of public companies, and they may prepare reports for tax purposes. An accountant is classified by the IRS as an unenrolled preparer, which means he or she has no standing with the IRS in the matter of signing tax returns or representing clients at tax audits and other matters before the IRS. Only CPAs, tax attorneys, and enrolled agents are able to represent a taxpayer before the IRS.
You can certainly have an accountant prepare your business tax return, but understand that this individual cannot legally sign your return and submit for you, nor can he or she assist you with an audit or go to an audit for you or to tax court.
Certified Public Accountants (CPAs)
A CPA has an additional level of credibility and expertise. A CPA is an accountant who has passed certain examinations and met all other statutory and licensing requirements of a state to be certified by that state. In addition to preparing and reviewing financial statements, CPAs also prepare tax returns for businesses and individuals, sign tax returns, and represent taxpayers before the IRS for audits and other matters. The American Institute of Certified Public Accountants (AICPA) is the national professional association for CPAs.
Which Accounting Professional Do You Need?
Every company needs someone to keep track of the books. Whether you hire an employee or a contractor, you will need a bookkeeper. That bookkeeper might work for an accountant or a CPA.
You also must have someone to help you review your financial reports and help you make decisions on finances and taxes. You are not required to get a CPA, but remember that an accountant who is not a licensed practicing CPA cannot sign your business tax return or represent you before the IRS.