In the world of finance and business, the terms bookkeeper, accountant, CPA, CFO, and tax attorney are sometimes used interchangeably—but each actually plays a distinct role. From keeping track of daily transactions to providing legal advice in tax disputes, these roles are essential to a business’s financial health. Knowing the differences between them can help business owners decide which services they need at different stages of growth.
The guide below outlines each role’s main responsibilities, along with the skills and certification required.
We will delve into each of these in more detail and provide tips on when it might be beneficial to seek outside help to manage different areas of your business.
Bookkeeper
Primary Role
A bookkeeper manages the day-to-day financial records, handling tasks like recording transactions, reconciling accounts, and processing payroll. They categorize expenses and income, track invoices and bills, and prepare basic financial reports.
Skills and Certification
Detailed knowledge of financial software (e.g., QuickBooks), organizational skills, and a basic understanding of accounting principles are a must for bookkeepers.
Bookkeepers don’t need certification, but some choose to complete courses and pass a national exam to become Certified Bookkeepers. Many also become certified in the financial software they use. For example, several of our team members are QuickBooks Certified ProAdvisors, meaning they have deep expertise in QuickBooks and know how to leverage it effectively for your business.
When to Hire a Bookkeeper
In the early stages of business, a bookkeeper can step in when the volume of transactions becomes too large to manage. They can help with tracking expenses, invoices, and bank reconciliation. Many small businesses benefit from having support with daily financial management and transaction tracking.
Accountant
Primary Role
An accountant prepares and interprets financial data, provides insights based on financial records, and helps with tax preparation. Their primary role is to ensure financial accuracy and compliance, offering a deeper analysis of a business’s financial health.
Skills and Certification
Analytical thinking, proficiency in accounting software, and in-depth knowledge of accounting principles are important skills for accountants. While it isn’t required, many accountants have a bachelor’s degree in accounting. Some may go on to become Certified Public Accountants (CPAs), a separate role we’ll explore in more detail soon.
When to Hire an Accountant
When tasks like preparing financial statements, gathering information for tax returns, and staying compliant start getting complicated, it might be time to seek extra support. As your business grows, budgeting, financial projections, and strategic planning become key; an accountant can help you make sense of financial data for better decision-making.
Certified Public Accountant (CPA)
Primary Role
CPAs are licensed accountants who specialize in high-level accounting and provide assurance services such as financial audits. They also handle income tax planning and preparation in accordance with regulations and laws.
Skills and Certification
State licensing requirements for CPAs can vary, but the minimum standards include completing 150 semester units of college education, passing the Uniform Certified Public Accountant exam, and gaining one year of accounting-related experience. Additionally, to maintain their license and stay updated on regulations, CPAs must complete continuing professional education (CPE) credits each year.
When to Hire a CPA
If you need routine tax preparation, financial reporting, or general tax planning, a CPA is a great choice. They can also manage independent audits and offer advice on tax-saving strategies.
Chief Financial Officer (CFO)
Primary Role
CFOs are responsible for overseeing a company’s financial strategy and high-level financial planning. Their responsibilities include managing financial forecasting, budgeting, and reporting. They make strategic financial decisions that align with the company’s goals and handle investor relations. Additionally, CFOs often supervise the accounting and finance teams.
Skills and Certification
Most CFOs have at least a bachelor’s degree, and many also hold a Masters of Business Administration (MBA). In addition, they need strong leadership skills, expertise in strategic planning and risk management, and advanced financial knowledge.
When to Hire a CFO
Consider hiring a CFO if your business requires comprehensive strategies in areas like capital management, risk management, and financial decision-making. If you’re looking for investor funding or preparing for mergers, acquisition or IPOs, a CFO can provide invaluable support. Larger or rapidly growing businesses, in particular, benefit from strategic financial leadership.
Sometimes companies aren’t ready to hire a full-time CFO, making a fractional CFO a great alternative. A fractional CFO provides the expertise and strategic guidance your business needs without the commitment of a full-time hire. This option allows companies to benefit from high-level financial leadership while managing costs, making it a perfect solution for startups or smaller businesses looking to scale. Megan and the MBS team love helping businesses design a plan to get them to the next level.
Tax Attorney
Primary Role
A tax attorney provides legal representation and advice on tax-related matters, specializing in complex tax laws. They may represent clients during tax disputes, such as IRS audits. They may also provide guidance on tax planning and tax regulations, and handle cases involving tax litigation or criminal tax issues.
Skills and Certification
A tax attorney holds a law degree and passed the bar exam. Many also pursue an advanced degree, such as an LLM in taxation, to specialize further in this area of law. To succeed, a tax attorney must possess strong expertise in legal and tax law, excellent research skills, and the ability to represent clients effectively.
When to Hire a Tax Attorney
If you’re facing complex legal tax issues, such as tax disputes, IRS investigations, or intricate estate planning, a tax attorney is well-equipped to assist you. They are especially valuable if you need representation in tax court, ensuring that your rights are protected and that you have expert advocacy. Additionally, tax attorneys possess in-depth knowledge of tax law, providing tailored advice for your specific situation.
At MBS, we provide bookkeeping, accounting and fractional CFO services designed to help you reclaim your time and focus on growing your business. Just imagine yourself spending less time on daily financial tasks and more time doing what you love. Contact us today, and let’s work together to find the balance that will support your success!