I am a partner in both a tax services company, USTaxAid Services and a bookkeeping company, http://www.CashFlowAccounting.com .
When someone comes to us for services, they sometimes get confused on who does what and if they have in-house bookkeeping support, what extra needs to be done.
So, let’s break it down:
A bookkeeper takes activities and turns them into a report. Often a business owner or in-house staff can write checks and make deposits, but they need help getting the accounting set up correctly in the beginning, checking how the deposits and checks were posted, making adjusting journal entries and reconciling the bank account.
Even if you have a person to do all of that, it’s often good to have an outside party do the bank reconciliation to provide some separation of duty. That reduces employee theft issues.
A CFO (chief financial officer) takes those reports and turns them into activities. They interpret the results of what you’ve been doing to determine what you should do more of and what you should do less of.
Our company Cash Flow Accounting provides both bookkeeping services and CFO services for our clients.
Bookkeepers will also calculate your sales tax, file those reports and handle payroll calculations and reports.
Your CPA does income tax planning, strategy implementation and income tax return preparation. There are also CPAs who specialize in real estate, small business, multi-state issues, specific industries and audits.
If you get your CPA to do bookkeeping, you’ll pay too much in fees. If you get your bookkeeper to prepare your tax returns, you’re likely to also pay too much, this time in taxes, penalties and interest. And starting this next year, only CPAs, tax attorneys, EA and specially licensed tax preparers can file your returns.
Get the right person for the right job and above all else, don’t try to do-it-yourself when your time and expertise is better spent somewhere else…like making your business grow.