A good client of mine whenever he gets a call while we meet, he says to the caller, I can’t talk right now, I have a meeting with my Bookkeeper. First, I did not pay much attention to what he said, when this happen several times, I decided to have a talk with my client to explain the difference in duties and responsibilities of the bookkeeper, accountant and the CPA. He understood and never called me a Bookkeeper again, he always says with pride, I have a meeting with my CPA.

I wanted to write this blog to explain to business owners the roles, duties and responsibilities of Bookkeepers, Accountants and CPA in helping small and medium size business with their financial activities. It is amazing that lots of business owners don’t know the difference and they expect more than their employees is capable for.

Bookkeeper’s duties:

  • Check disbursements – write checks and pay bills.
  • Billing, issue invoices to customers and follow up until the payment is received.
  • Collect customer payments, prepare and record deposits to bank accounts.
  • Keep employees’ records, hours worked and pay.
  • Prepare payroll and calculate hours worked or send hours to Accountant to process payroll.
  • In small businesses, bookkeepers answer the phone, take massages, respond to customer and prospect questions, resolve customer complaints and respond to telemarketer’s sales calls.
  • Responsible for outgoing mail and sorting incoming mail.

Accountant’s responsibilities:
In small businesses, an accountant may perform all of the above Bookkeeper duties in addition to the following:

  • Record recurring and none recurring journal entries.
  • Reconcile bank accounts, record and confirm withdrawals and charges, investigate differences.
  • Enquire to outstanding, uncashed checks.
  • Enquire and investigate missing deposits from bank statements.
  • Record credit card transactions and reconcile to credit card statement accounts.
  • Record loan payments and reconcile loan balances to books.
  • Process payroll and pay payroll taxes.
  • Timely, calculate and pay sales taxes due.

CPA’s responsibilities:
CPA has the expertise to identify errors and deficiencies of work performed by Bookkeepers and Accountants. Quite often, it is not cost efficient for a small business to hire an accountant so they retain a CPA to perform the above Accountant and Bookkeeper’s duties in addition to the following:

  • Review bank reconciliations and inquire about unusual items.
  • Review Accounts Receivable and investigate old outstanding accounts, and bad debts
  • Review and reconcile beginning and ending inventory to client’s records.
  • Record fixed asset additions and sales.
  • Review depreciation expenses and reconcile to books.
  • Review Accounts Payable and investigate unpaid bills.
  • Review Credit card accounts and reconciliations to statements.
  • Adjust and record payroll liabilities, ascertain that all payroll taxes are paid and accounted for.
  • Adjust sales tax liabilities and ascertain that the proper amount of taxes are calculated and paid timely.
  • Determine if the owners are taking a reasonable salary, proper taxes are withheld and recorded.
  • Properly document, record and reclassify officer loans to business.
  • Ascertain that equity accounts are reconciled to tax returns and prior issued financial statements.
  • Ascertain that federal and state income tax liabilities are properly accounted for and timely paid.
  • Prepare financial statements and discuss its outcome with owners.
  • Prepare and timely file business income or corporate tax returns.
  • Respond to owner’s questions, provide consultation in accounting, financial, taxes and business matters.

The volume of work performed by the Bookkeepers is much larger than that of the Accountant and the CPA. A Bookkeeper can spend few hours in everyday processes and prepare several hundred sales invoices. An Accountants and a CPA can spend hours investigating one item in the client’s books.

Bookkeepers, Accountants and CPA’s play an important part in business success and their roles and responsibilities can’t be underestimated.

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