Differentiating Bookkeepers, Accountants and CPA's
By: vish ks
Submitted: 2010-02-25 00:46:15 | Word Count: 534
In the accounting world, many people do not know how to differentiate the job of a bookkeeper, accountant and a CPA. We shall take a look at the differences and the points that need to be looked into when you hire some finance personnel. Bookkeeper is only just that, simply a keeper of the books. It helps a lot if the bookkeeper happens to be a meticulous and very organized person. Bookkeeper should be knowledgeable regarding bookkeeping soft wares and bank reconciliations procedures. If your bookkeeper does not have much of an idea, you may not know if you are making or losing money. So how do we find if the bookkeeper is not an ideal ‘keeper’ as we say? When bookkeepers make collection calls, there is an apposite way to handle it. Remember that the bookkeeping person is speaking to your valued customers and he would be really treated as a reflection of your own self.
How do you wish the outside world to make out you and your line of business? Transparency is one thing or factor that assumes greater importance. Otherwise, it might not serve you well as there is a lot much technology around you. To keep a tab on every aspect, see to it that if your bookkeeper is the one that prepares cheques that need to be signed, another person should be the one who is signing the cheques, not the bookkeeper himself. The bank reconciliation statements or documents have to be prepared by a third party. This is particularly designed for your business’s protection. So, it would be prudent to have different people doing the various functions inside your organisation.
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In addition to being knowledgeable about the concepts a bookkeeper knows, the accountant should also know the value and purpose of the financial statements. He should be able to interpret and explain it in a way that makes good sense. The information on the various happenings in your business shall be used by the owner to make his business highly profitable. While endeavouring to choose an accountant, you need to be more careful. This is because the accountant is the person responsible for meeting the various deadlines, making statements regarding payroll & taxes, estimating the payments; and, all these aspects are time sensitive. If the deadlines are not met, you could be on your way to paying big penalties and interest charges. So, care should be taken to find if the accountant is meticulous about the different aspects; otherwise, it can be a real problem for you.
CPA’s are expected to know all the concepts a bookkeeper and an accountant know. He should have the capability to prepare financial statements that can be used by investors, potential buyers, banks or other lending institutions. CPA's are expected to have a pretty good grasp of things both right and wrong in the eyes of the internal revenue service. They understand taxes and financial aspects very well and possess the ability to analyze the financial side of the business.
