In our experience CPAs typically do not work extensively within accounting software packages. They will have limited knowledge for example of how QuickBooks handles transactions.
Some Columbus CPAs provide bookkeeping services. Small business owners are often unsure whether to have their CPA also be their bookkeeper or whether they should keep them separate.
In this article, we discuss the pros and cons of both approaches and describe where we fit within those options.
First, Some Definitions:
CPA
A CPA is a Certified Public Accountant. As such, they can provide a wide range of financial services. Most often they act as high-level consultants providing financial advice on many accounting issues. Primarily this focuses on finding ways to minimize a business’s TAX liability. To be a CPA means they must be conversant and up to date with TAX law.
CPA firms vary a lot in the services they provide. From processing individual and business TAX returns, outsourced chief financial officer (CFO) services to basic bookkeeping and accountancy.
Bookkeeper
Bookkeeping is an accounting specialty. Bookkeepers are usually involved with the day-to-day running of a business. Their expertise is in managing daily transactions in your accounting software. Bookkeepers are usually the person that will gather all the right business data to be sent to your CPA so the CPA can submit an accurate TAX return.
Columbus Bookkeeper vs. CPA?
Should Your Columbus Bookkeeper Be Separate to Your CPA?
At Columbus Bookkeeping & Accounting Services we can help you understand the quality of your CPA’s services. We can help you determine whether you are paying a fair rate for their services. We can help you find an alternative if you are not.
To answer this, it is necessary to distinguish the firm from the individual. In most cases, the CPAs themselves will not also provide bookkeeping services.
A Columbus CPA firm on the other hand may provide bookkeeping services anyway. They will do this through a separate person. That person providing bookkeeping services may be an employee or a subcontractor to the CPA firm.
Columbus Bookkeeper vs. CPA? – In most cases therefore the bookkeeper will be a separate person from the individual who is the CPA. CPAs will rarely have the time or inclination to provide basic bookkeeping services.
CPAs will become extremely busy at certain times of the year when TAX returns are due. Getting a CPA to help you with a bookkeeping task during those times will therefore be almost impossible.
Usually whether to have a separate bookkeeper and CPA and also whether to hire a bookkeeper as an employee or from a separate firm will come down to cost, availability, expertise.
Another factor can be whether the business owner wants the ability to change CPA or bookkeeper independently should the need arise.
CPAs and bookkeepers are specialists in their own field of expertise. Most small businesses need both, to properly manage their accounting.
Columbus Bookkeeping & Accounting Services
At Columbus Bookkeeping & Accounting Services we provide an advanced bookkeeping service.
At the core, we are experienced in how to properly record transactions along with the management of receivables and payables. We also guide our clients in proper record-keeping and receipt handling in the event of an IRS audit. We also help clients to understand their business’s financial status and make informed decisions based on accurate data.
We work together with our client’s existing CPA. CPA costs for small businesses are often mitigated in this process. Costs are saved when the bookkeeper makes sure the CPA has all the right detailed information the first time. The CPA can then process the business’s TAX return quickly and efficiently.
In cases where a client does not already have a CPA, we help them interview and find the ideal CPA for their business type.
Can I rely on my CPA to minimize my tax liability?
In-house or Outsourced Bookkeeper?
An average W-2 bookkeeper in-house employee in Columbus will enter day-to-day transactions but have little or no knowledge of general tax laws or year-end tax reporting requirements. This is one of the things that set Columbus Bookkeeping & Accounting Services apart from a typical in-house bookkeeper.
Our advanced bookkeepers scrutinize daily transactions to ensure they are entered in conjunction with proper Generally Accepted Accounting Principles (GAAP) and are easily understandable by the company’s CPA.
We work with your CPA to ensure transactions are being recorded the way they want to see them for annual tax reporting.
This can be beneficial for our clients as it often reduces their CPA bills for annual tax preparation. Submitting accurate and correct company files to a CPA significantly reduces CPA bills. Working this way also adds value to our client’s financial reporting activity. This is because the data is recorded in line with tax laws and shows more accurate net profits.
QuickBooks Accounting Software – Hands-On
Bookkeeping is an accounting specialty. Bookkeepers are usually involved with the day-to-day running of a business. Their expertise is in managing daily transactions in your accounting software. Bookkeepers are usually the person that will gather all the right business data to be sent to your CPA so the CPA can submit an accurate TAX return.
In our experience CPAs typically do not work extensively within accounting software packages. They will have limited knowledge for example of how QuickBooks handles transactions.
Columbus Bookkeeper vs. CPA – CPAs work primarily with journal entries at year-end to close out specific accounts. For this reason, we believe it is essential that a small business employs an advanced bookkeeper. A bookkeeper who has an extensive background in the use of their accounting software.
An advanced bookkeeper must have a good understanding of how to properly report income and expenses.
Example #1 – Long Term Loans
A good example might be long-term loans. Take an auto loan as an example. The average bookkeeper may report the loan payment as a single amount in QuickBooks when it should be broken down by interest and principal using an amortization schedule. It is essential that principal and interest are reported accurately.
Example #2 – Expenses vs. Owner’s Draws
Another example could be expenses vs. owner’s draws. Expenses that are misapplied as an owner’s draw will negatively affect net income. An advanced bookkeeper will know if a specific charge on the company credit card is a tax-deductible expense as opposed to an owner’s draw. This is also true for reimbursable business expenses. An advanced bookkeeper would know if an expense was reimbursable or not based on the purchase.
Getting all this right up front increases the likelihood that taxes will be managed correctly. The CPAs time is not then wasted with unnecessary back and forth.
Not all Columbus CPAs are Equal
Just because an individual is a qualified CPA does not guarantee that they are good at their job. Some CPA firms are great and some less so. Some CPA firms are good at handling multi-state TAX issues, some are not. Some CPAs work well with certain types of businesses, less so with others.
At Columbus Bookkeeping & Accounting Services we can help you understand the quality of your CPA’s services. We can help you determine whether you are paying a fair rate for their services. We can help you find an alternative if you are not.