10 Jul Bookkeeper, Accountant and CPA what is the difference?
It is important to understand the difference in what many people believe are the same function. While bookkeeping and accounting are both essential business functions, there is an important distinction. Bookkeeping is responsible for the recording of financial transactions. Accounting is responsible for interpreting, classifying, analyzing, reporting and summarizing financial data.
Both bookkeepers and accountants work with financial data and so many people think that these titles are used interchangeably. Developing a basic understanding of accounting will qualify you for a job in bookkeeping. In small companies, the job functions of bookkeepers and accountants are often performed by one or two people with varying degree of experience and education. To ensure accuracy, accountants often serve as advisers for bookkeepers and review their work. Bookkeepers record and classify financial transactions, laying the groundwork for accountants to analyze the financial data. The biggest difference between accounting and bookkeeping is that accounting involves interpreting and analyzing data and bookkeeping does not.
Accountants have no standing with the IRS in the matter of signing tax returns or representing clients during tax audits etc. A Certified Public Accountant (CPA) is different than an accountant. In fact, anyone who does any type of accounting function – even someone without a degree – can call themselves an accountant. A CPA, however, is someone who has earned a professional designation through a combination of education, experience and licensing. Licensing, is done by state, district and county Boards of Accountancy. Only after licensing may the person use the designation and present themselves as a CPA.
