Episode 10: CPA vs Bookkeeper

In today’s episode, we will be discussing the difference between a CPA and a bookkeeper and whether or not your CPA should also be your bookkeeper. A lot of business owners will hire their CPA to be their controller as well as their tax professional.

Have I had clients that have previously operated this way before coming to HarQuin? Yes! Two of the best reasons they are thankful they made the switch: they saved money and were more confident knowing there were multiple professionals with eyes on their books… checks and balances within their finances.

I imagine that the ease of having one person handling both your books and your taxes plays a big part in why business owners would make that decision? 100% yes. And on the surface it makes sense; It’s one-stop-shopping. Business owners do often cite ease as their main reason for choosing this. You have one person or company seeing your books, and filing your taxes, one bill etc.

It sounds like it would be more efficient; having one person do it all. But one reason that we highly recommend against this practice is the lack of checks and balances. The margin of error is extremely high when the same person producing your financial statements is also filing your income tax returns. Having a second set of professional eyes not only maximizes quality control but also accountability.

When you’re counting your profit at the close of an event, you do so with a staff member, you check one another’s counts, and you’ve both previously confirmed the amount in the draw. Best professional practice, you wouldn’t do it alone.

We have checks and balances within our services at HarQuin. Your bookkeeper does your monthly bookkeeping then they assign a final check. The final check team then goes in and does their review to see if there is anything the bookkeeper may have missed.

Another reason to avoid having your CPA do both is cost. Having a bookkeeper should cost you less than around $70 an hour, while most CPA's charge between $150 to $300 an hour depending on where you live. Hiring a separate bookkeeper could save you thousands of dollars in the long run.

Saving money is always a plus! But, what if you are in a position where you are currently doing your own bookkeeping and feel as though you are unable to afford to hire a professional?

In this case, you may want to consider the cost of a “catch up”. You can ask a bookkeeper to go through your books to simply bring you up-to-date, fix errors, sync you up to real time, and then hand them back over to you.

That sounds like a great option for someone that needs a reset, just to get back on track if they’ve fallen behind, or just a maintenance check.

Absolutely! It’s a great way for you to get that second set of eyes on your numbers.

Okay, so going back to CPA vs. Bookkeeper, my husband and I had a business years ago, and our CPA was also our controller. It was great, he did a great job, no complaints here. We were not, however, utilizing him for monthly reports, or anything of that nature, we were essentially using him for bill pay. If we had wanted him to perform other duties it would have been at an additional cost. I didn’t know it then, but those reports are invaluable in decision making!! They provide you with insightful financial snapshots of your business. I know that studio owners have access to class by class reports and mid season reports through their dance software, which is huge, but I am not sure if they are aware of the full scope of reports that a bookkeeper can run for them.

A lot of studio owners are missing out on the opportunity to have a professional bookkeeper provide them with numbers quickly, in so many different configurations, so many different reports, that they can use as a tool for analysis and growth.

It is even more beneficial if their bookkeeper has experience in their specific industry and can share the trends and successes of other businesses like theirs. Benchmarking reports are a healthy way to see where you stand in comparison to other studios as well.

Benchmarking requires you to have accurate data from year to year, and you will gain a lot of wisdom from looking back and comparing. And there are lots of reports available to you in your accounting software that can be run month to month as well. You can see the dollar amount improved, the percentage improved, you can even do quarter to quarter or week to week.

Can CPA’s provide you with those kinds of reports?

Yes, they can. The question isn’t whether they can do the job for you, but is it ideal to have them do it? Ultimately, in our expert opinion, having another set of professional eyes on your numbers is not only more efficient, it will typically save you money now and in the future. Checks and balances, accountability, keeps things honest.