Your Bookkeeper and CPA Have Different Jobs - And You Need Both
There's a common misconception among small business owners:
"I have a CPA, so I don't need a bookkeeper."
I understand why people think this.
Your CPA handles your taxes, so it may seem logical that they handle everything related to your books.
But bookkeeping and tax preparation are two different jobs.
And having both professionals working together can make your business financially stronger.
What does a bookkeeper do?
A bookkeeper is responsible for keeping your financial records organized, current, and accurate.
That can include:
Categorizing income and expenses
Reconciling bank and credit card accounts
Maintaining your accounting records
Adding and updating fixed asset purchases
Recording transactions
Reviewing financial statements
Cleaning up bookkeeping errors
Keeping your books current throughout the year
Helping collect W9's & preparing 1099's
A/R & A/P transactions
Invoicing
The goal is to make sure your accounting records accurately reflect what is happening in your business.
What does a CPA do?
Your CPA or tax professional generally uses your financial information to prepare tax returns and provide tax-related services.
But here's an important distinction:
Your CPA needs accurate financial information in order to do their job effectively.
If your books are messy, incomplete, or inaccurate, your tax professional is starting with bad information.
Think of it like this
Your bookkeeper helps maintain the financial records.
Your CPA uses those records for tax and accounting purposes.
They're different roles, but they work together.
Your bookkeeper isn't replacing your CPA.
Your CPA isn't replacing your bookkeeper.
You need the right professional for each job.
Why waiting until tax season can be a problem
Imagine you discover in March that your business had a major bookkeeping error from the previous year.
Maybe expenses were categorized incorrectly.
Maybe a loan wasn't recorded properly.
Maybe several months of transactions were never reconciled.
Now you're trying to fix an entire year's worth of bookkeeping while your tax return is also being prepared.
That's stressful for you - and it can create additional work for your tax professional.
Keeping your books current throughout the year makes tax preparation much easier.
Your books should help you during the year, too
This is the part I think business owners sometimes overlook.
Bookkeeping isn't only about taxes.
Wouldn't it be helpful to know in July that your business is spending significantly more on a particular expense than it did last year?
Wouldn't you want to know if your profit margin is shrinking?
Wouldn't you want to know whether you can afford to hire another employee?
Wouldn't it be helpful to have accurate financial statements when you're talking to a lender?
Those decisions happen during the year.
That's why monthly bookkeeping matters.
Your financial statements are a business tool
A Balance Sheet and Profit & Loss aren't just documents to hand over at tax time.
They're tools that can help you understand your business.
When your books are accurate and current, you can make decisions based on information instead of guesses.
And that's exactly what I want for my clients.
I don't want you to dread opening QuickBooks.
I want you to know that the numbers you're looking at are reliable.
If your CPA is taking care of your taxes but your bookkeeping has fallen behind, you don't necessarily need to choose between the two.
You may simply need a bookkeeper, too.
