“I don’t need a bookkeeper. I have a CPA.”
Zoiks!
You know what?? I don’t need a toothbrush, because I have a dentist.
What we have here is a fundamental misunderstanding of the purposes of CPAs, bookkeepers, toothbrushes, and dentists.
You don’t need one OR the other. You need both. (You need all 4, if we’re staying with the dentist analogy.)
Oh, sure, your dentist will brush your teeth twice a year. Likewise, your CPA will make correcting journal entries to your books at tax time.
But your teeth are still a wreck just like your books. It’s not the healthiest choice for your body or for your business.
Additionally, if your teeth are bad enough, your dentist won’t touch them with a 10-foot pole. If your books are bad enough, a CPA won’t go near them either.
In both cases, regular maintenance is important. It keeps you healthy all year long, so you feel your best, and so your repair costs are minimal.
Let’s straighten out the misunderstanding.
What do CPAs do?
CPA: 3 letters, no doubles, all caps
CPAs are Certified Public Accountants. They are licensed professionals who prepare and analyze financial records that are required by the government. They file tax returns and submit records to the required authorities. They are experts on tax regulations.
CPA’s focus: CPAs usually focus on taxes. They will make bare minimum entries into your bookkeeping records to get them to the required status for submitting legal documents and taxes. They will advise you on how to minimize your tax liability and how to plan for the future. Their focus is usually the bottom line and account totals.
CPA’s availability: CPAs have “busy times” around multiple tax seasons each year. They are busy in February, March and April when the 3/15 and 4/15 deadlines loom. They are busy again in August, September, and October when the 9/15 and 10/15 extension deadlines approach. They are busy again in December and January as one year ends and the next one starts.
CPA’s cost: CPAs usually charge by the hour. Mine charges $435/hour, but the range could be anywhere from $150 per hour and up, depending on where you live, the tasks at hand, etc.
Do you need a CPA? I recommend having one. Some businesses will need one several times per year, whereas other businesses will need one annually. There are good CPAs and bad ones. Find one that is responsive, knowledgeable, and fairly priced. You will breathe more easily knowing your taxes are handled, and they are a wonderful resource for financial planning.
What do bookkeepers do?
Bookkeeper: 10 letters, 3 doubles, no caps (no cap! - sorry, kids)
Bookkeepers manage and record day-to-day business transactions so that the ledger is maintained, clean, and accurate. A good bookkeeper will also keep a critical eye on transactions to look for trends and aberrations.
Bookkeeper’s focus: Bookkeepers are into the nitty gritty. They focus on accurate entries, down to the transaction level. Bookkeepers are focused on timely, accurate financial information to help you run your day-to-day business. Because of their routines and attention to detail, they will know your business’s transactions inside and out. They will be familiar with your vendors, the types of receipts they generate, and what you usually purchase from each. They will know your clients and your invoicing methods. They will know your payroll details, POS platform quirks, and inventory habits.
Bookkeeper’s availability: At Ox Boox, we chose NOT to do tax prep and filing. This means we are available consistently year-round, with no “busy seasons.” Some bookkeepers are involved with tax prep and filing, so their ability could be similar to a CPA’s. It’s a good question to ask when shopping around.
Bookkeeper’s cost: At Ox Boox, we charge a flat monthly fee. When we put together a proposal, we do our best to estimate the amount of work that will be required, then we set our price accordingly. That way, our clients don’t worry about picking up the phone (a human will answer), emailing a question, or scheduling a meeting, because there’s no extra charge. Some bookkeepers charge by the hour - another good question to ask when shopping around for a bookkeeper!
Do you need a bookkeeper? I recommend having one. Again, there are good bookkeepers and bad ones. Find one that works in your books 2-3 times per week (not a few times per year). Find one who LISTENS, is responsive and knowledgeable (remember, they are not required to be licensed like CPAs). Ask them how they keep up-to-date with training and tax changes.
What do dentists do?
Well, first the dental hygienist (not a dentist) works hard to polish your teeth a couple of times per year. The dentist bops in for 2-3 minutes to inspect your teeth afterwards, then make repairs as necessary. They charge a lot of money.
What do toothbrushes do?
They make you smile pretty - both because they sometimes have fun characters on them AND because they make your teeth shiny. They also make your breath smell fresh, so you keep more friends. Use a toothbrush a couple of times per day. They cost way less than the repairs required if you don’t use one (am I talking about toothbrushes now or bookkeepers? … seeee??)
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