CPA vs Bookkeeper

Difference Between CPA and Bookkeeper

Both Certified Public Accountants (CPAs) and bookkeepers are accounting professionals. In the context of CPA vs bookkeeper, the primary difference between the two lies in their job responsibilities, salary, and professional stature. While a CPA’s key role is to provide financial advice, a bookkeeper is mainly responsible for maintaining an organized record of all financial transactions. 

A bookkeeper keeps a history of every financial transaction in the accounting books. A CPA analyzes these books and offers appropriate financial advice. Thus, a bookkeeper and CPA complement each other to ensure that a company maintains a sound financial position in the long run.  

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CPA vs Bookkeeper Comparative Table

The role, educational requirement, professional standing, and salary of a bookkeeper vary considerably to that of a CPA. The following table outlines some significant differences.

ParticularsCPAsBookkeepers
DefinitionState Board-licensed accounting experts who have passed the Uniform CPA examCPA ExamThe CPA Exam assesses accounting professionals not just on their financial knowledge, but also on their ability to review and seek out key abilities.read more and possess the required education and work experience.Professionals are responsible for maintaining a record of money moving in and out of business.
National Professional AssociationAICPAAIPB/NACPB
Job ResponsibilitiesPreparing, examining, and analyzing financial records
Drafting financial reports
Representing clients in legal issues with IRS
Building accounting proceduresAccounting ProceduresThe accounting procedure is the process of standardized nature that performs a specific accounting function designed to incorporate better risk management policies to complete these functions efficiently. It includes billings, invoices to suppliers, bank reconciliation, requiring comprehensive and streamlined procedures.read more and policies
Conducting detailed audits from time-to-time
Preparing financial budgets
Estimating profit marginsProfit MarginsProfit Margin is a metric that the management, financial analysts, & investors use to measure the profitability of a business relative to its sales. It is determined as the ratio of Generated Profit Amount to the Generated Revenue Amount. read more
Preparing and filing tax returns Overseeing accounting transactions 
Posting financial transactions in appropriate accounts
Utilizing BookkeepingBookkeepingBookkeeping is the day to day recording of financial transactions such as purchases, sales, receipts, and payments, and it is the first step in the accounting process. It can be prepared in two ways: single-entry and double-entry; however, the double-entry approach is more widely used and recognized in most countries.read more spreadsheets, databases, and software
Observing and reporting any differences found in the records
Maintaining the general ledgerGeneral LedgerA general ledger is a book of accounts that records the everyday business transactions in separate ledger accounts. The entries made in a ledger can be verified by getting a NIL balance on summing up all the ledger account amounts in the trial balance.read more and journals
Receiving and recording vouchers, cash, and checks
Arranging bank deposits
Ensuring accuracy in reporting and postings figures
Generating income statementsIncome StatementsThe income statement is one of the company's financial reports that summarizes all of the company's revenues and expenses over time in order to determine the company's profit or loss and measure its business activity over time based on user requirements.read more, balance sheetsBalance SheetsA balance sheet is one of the financial statements of a company that presents the shareholders' equity, liabilities, and assets of the company at a specific point in time. It is based on the accounting equation that states that the sum of the total liabilities and the owner's capital equals the total assets of the company.read more, and other financial reports
Hire forFinancial consulting to handle complex business transactionsBusiness TransactionsA business transaction is the exchange of goods or services for cash with third parties (such as customers, vendors, etc.). The goods involved have monetary and tangible economic value, which may be recorded and presented in the company's financial statements.read more 
Preparing and filing tax return
Routine recordkeepingRecordkeepingRecordkeeping is a basic accounting stage that teaches us how to keep track of monetary business transactions with the goal of keeping a permanent record of all transactions, knowing the correct picture of assets-liabilities, profits and losses, etc., keeping control of expenses with the goal of minimizing expenses, and having important information for legal and tax purposes.read more
Basic RequirementsA Bachelor’s Degree (150 credit hours)
1-2 work experience (May vary as per the jurisdiction)
Pass Uniform CPA Exam
Minimum high-school diploma
Skills requiredHigher order thinking skills (analysis, interpretation, and evaluation)Basic math and computing skills
Licensing and Certification requirementCPA license mandatory to practice as a CPAAIPB and NACPB’s Certified Bookkeeper (CB) Certification available but not mandatory for practice
Average annual salary$60,000 -$160,000$42,410
Industries they work forLarge corporations
Public accounting firms
Government agencies
Non-Governmental Organizations (NGOs)
Universities & colleges
Healthcare firms
Government agencies
Retail stores
NGOs
Small and medium sized businesses (SMBs)
Professional job statusHigh statusLow status

What is a CPA?

CPAs are licensed accounting professionals who have passed the Uniform CPA exam conducted by the American Institute for Certified Public Accountants (AICPA) and fulfilled the education and experience requirements set by the state boards.

The AICPA coordinates with the National Association of State Boards of Accountancy (NASBA) to conduct this exam and issue the license. Once CPAs get their license, they need to sustain it through accomplishing the Continuing Professional Education (CPE) requirements every 1-3 years, as per their state board policies. 

CPA is considered one of the most credible, reputed, and sought-after certification in the accounting industry. One has to undertake an arduous journey to earn a CPA license. This license is what distinguishes a CPA from a bookkeeper or any other accountant.

Unlike a bookkeeper, a CPA’s scope of work extends beyond maintaining accounting records. It involves the following:

  • Analyzing financial records
  • Preparing financial reports
  • Conducting audit
  • Preparing and filing tax returns
  • Assisting business decision making
  • Financial consulting

Let’s use an analogy to explain the concept of CPA vs bookkeeper. By analogy, a bookkeeper can be thought of as a college professor, while a CPA as a Dean. Although a professor has subject-specific knowledge, a Dean is better trained, knowledgeable, and skilled to handle all responsibilities of a college. Just like college deans, CPAs are competent in handling all financial aspects of an entity.

CPAs enjoy higher earning potential, global exposure, better job opportunities, and more respect in general compared to that of a bookkeeper. With their extensive knowledge and training, CPAs are well-equipped to take up the role of an advisor, strategist, auditorAuditorAn auditor is a professional appointed by an enterprise for an independent analysis of their accounting records and financial statements. An auditor issues a report about the accuracy and reliability of financial statements based on the country's local operating laws.read more, or chief financial officer in any company.

By virtue of holding a license, CPAs are entitled to represent you before the Internal Revenue Service (IRS) in case of any legal trouble. They are also authorized to audit financial statements of publicly traded companiesPublicly Traded CompaniesPublicly Traded Companies, also called Publicly Listed Companies, are the Companies which list their shares on the public stock exchange allowing the trading of shares to the common public. It means that anybody can sell or buy these companies’ shares from the open market.read more and file a report with the U.S. Securities and Exchange Commission (SEC). 

What is a Bookkeeper?

Bookkeepers are professionals who maintain a company’s ledgerLedgerLedger in Accounting, also called the Second Book of Entry, is a book that summarizes all the journal entries in the form of debits & credits to use for future reference & create financial statements. read more. They ensure that all financial transactions are recorded accurately on a daily basis. From traditionally handling the hard-copy ledger to using modern accounting softwareAccounting SoftwareWave Accounting Software, Akaunting Software, Slick Pie Accounting Software, GnuCash Accounting Software, xTuplePostBoks Accounting Software, Inv24 Accounting and Inventory Software, and NCH Express Accounts Accounting Software are among the best accounting softwares available.read more now, bookkeepers have undoubtedly come a long way in managing a business’s financial records. 

Also known as bookkeeping clerks, bookkeepers perform the following functions:

  • Track cash, sales, and purchases of a company
  • Post entries in appropriate accounts
  • Manage employee payroll 
  • Prepare financial statements
  • Reconcile bank statements
  • Handle receivable and payable accounts
  • Generate invoices

As bookkeepers keep a company’s records updated, it assists managers to make effective business decisions. Managers evaluate a company’s financial situation by reviewing its bookkeeping records. Bookkeepers’ accurate and quick organizing skills also help accountants and CPAs to perform their tasks more efficiently.

While comparing the role of CPA vs bookkeeper, always remember that the latter is only responsible for maintaining financial books and records, not analyzing them. Also, unlike a CPA, bookkeepers do not command high salaries. They usually work for small companies or businesses. Companies hire bookkeepers on a contract or full-time based on their needs and budget. 

Please note that it is not mandatory to have a bachelor’s degree in bookkeeping to take up this job. Employers hire candidates possessing a postsecondary education with coursework in accounting or even a high school diploma at times.  Bookkeepers can also get certified by the American Institute of Professional Bookkeepers (AIPB) or the National Association of Certified Public Bookkeepers (NACPB).

CPA vs Bookkeeper Example

Suppose you own an international travel agency named Wanderlust. To manage your accounts, you hire Anna as a bookkeeper and Julie as a CPA.  

Now, Anna’s primary responsibility is to make an excel spreadsheet or use any other digital tool for maintaining a daily ledger. This refers to entering the detail of every penny Wanderlust sends or receives from another entity.  

Also, she is responsible for producing invoices, balance reports, and recording every piece of financial informationFinancial InformationFinancial Information refers to the summarized data of monetary transactions that is helpful to investors in understanding company’s profitability, their assets, and growth prospects. Financial Data about individuals like past Months Bank Statement, Tax return receipts helps banks to understand customer’s credit quality, repayment capacity etc.read more for the company. In case she notices anything unusual or faulty, she can inform the concerned authorities about the same.  

Here comes the role of Julie. Suppose there is a sign of a considerable capital lossCapital LossCapital Loss is a loss when the value of the consideration received from the result of the transfer of capital assets is less than the aggregate value of the cost of acquisition & cost of the improvement. In simpler words, it can be stated as the loss derived from the transfer of capital assets.read more in the reports or the transaction details of Wanderlust varies in specific months. As a CPA, her responsibility is to assess the information, determine the profit factors, and decide areas that need improvement.  

Once she analyzes the records, Julie will hold a meeting with the officials, come up with a strategy to improve the financial position of Wanderlust and offer them suggestions. The suggested changes will help stabilize the company’s monetary condition and yield more profits.   

CPA vs Bookkeeper Infographics

The following infographics illustrate the key differences in the educational requirement, area of expertise, salary, etc. of a bookkeeper and a CPA.

This has been a guide to CPA vs. bookkeeper. Here we discuss the top differences between CPA and bookkeeper with infographics and a comparison table. You may also have a look at the following articles for gaining further knowledge in Basic Accounting –

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