When looking for someone to handle your business’s financials, many entrepreneurs automatically assume they need to hire a CPA (Certified Public Accountant). However, depending on your needs, a bookkeeper or Enrolled Agent (EA) may be the more appropriate and cost-effective choice.

There are many common misconceptions about the roles of CPAs, EAs, and bookkeepers, especially when it comes to their responsibilities and qualifications. While both play essential roles in financial management, they each offer different types of support. 

What is the difference?

A bookkeeper is responsible for the daily financial transactions of a business. This includes data entry, managing accounts payable and receivable, and maintaining accurate records. Bookkeepers are not required to have formal certifications; however, many have training or experience in accounting software and business finance.

A CPA is a licensed professional who has passed the Uniform CPA exam and met additional state-specific requirements. CPAs are qualified to perform tax preparation, audits, financial analysis, and strategic financial planning.

An Enrolled Agent (EA) is a federally authorized tax practitioner empowered by the U.S Department of the Treasury. EAs must pass a comprehensive IRS exam covering individual and business tax returns or have relevant experience as a former IRS employee. While they do not perform audits or in-depth financial planning like CPAs, EAs specialize in tax preparation and representation before the IRS.

Roles and Responsibilities

CPA (Certified Public Accountant)

·       Preparing and filing complete tax returns

·       Conducting audits and ensuring regulatory compliance

·       Providing in-depth financial analysis

·       Offering strategic financial planning and business advice

·       Interpreting and analyzing financial data

Bookkeepers

·       Maintaining accurate financial records

·       Recording daily business transactions

·       Managing accounts payable and receivable

·       Reconciling bank statements

·       Preparing basic financial reports

EA (Enrolled Agent)

·       Preparing individual and business tax returns

·       Representing clients before the IRS in audits, collections, and appeals

·       Advising on tax planning and compliance

·       Staying up to date with constantly changing tax laws

·       Working with individuals, small businesses, and corporations on tax matters

Do You Need a CPA, Bookkeeper, or an EA?

When to Hire a CPA or EA:

If your business needs support with tax strategy, IRS representation, audits, or complex financial decisions, then a CPA might be the right fit. However, it is important to know that you don’t always need a CPA to handle these tasks, especially when it comes to taxes. A licensed Enrolled Agent (EA) can provide many of the same services, especially in tax preparation, tax planning, and IRS-related matters.

When to Hire a Bookkeeper:

If your business needs help with day-to-day financial tasks such as entering transactions, managing payroll, or organizing financial records, a bookkeeper is the right fit. Bookkeepers are ideal for small businesses or startups that need consistent but basic financial oversight.

CPAs, Bookkeepers, and EAs are crucial to maintaining financial health for your business. Understanding the differences between them ensures that you hire the right professional for your business’s needs.