Bookkeeper, CPA, CFO - Which Do I Need?

Bookkeeper, CPA, CFO - Which Do I Need?

Accounting and finance people are often (correctly) accused of overuse of jargon and technical terms. Sometimes I think it is an effort to keep the secrets of the trade hidden so clients don’t figure out how easy some of the services are to perform. So is it any wonder why people are confused about which role they need when it comes time to hire someone to help them?

There are many different titles in the accounting and finance department, but today we will look at three common roles people need at various times in their business’s life. A quick note: the term “accountant” is used loosely and has different meanings depending on who you ask. My definition is someone who has at least a Bachelor’s degree in accounting, but does not necessarily hold any kind of licensure, such as being a CPA. If someone tells you that you need an accountant, be sure to ask them more specifically what functions they think you need, and that will help you route to the correct person.

For the purposes of this article, we are going to segment these professionals into three categories - bookkeeper, Certified Public Accountant (CPA), and Chief Financial Officer (CFO).


No one who starts a business dreams about sending out invoices, processing payroll and cutting expense reimbursement checks. However, the reality is that these are a normal part of a growing business’s needs. Bookkeepers are responsible for handling the processes and record keeping associated with the day to day accounting operations of your business. There is a large list of functions that they can perform, but here are some of the most common:

  • Recording transactions in your accounting system
  • Processing (but not approving) payroll
  • Preparing expense reimbursement checks
  • Creating invoices
  • Entering vendor bills
  • Filing and organization of transaction support documents
  • Preparing 1099s and W2s for management review
  • Reconciling bank and credit card accounts

I know a lot of you frequent readers might have spotted an issue here. What about the separation of duties and the control environment? It seems odd that one person should have so much responsibility centralized in one role. You’re right, of course. The reality is that a proper control environment requires having enough people in your organization to separate duties among. In a small company, the separation of duties is the most frequently ignored control because there aren’t enough people to spread the duties across. That should underscore advice I have given previously and will give again - check references for the people you trust with your finances. Rushing into a relationship is not the right move here. You want to establish they are trustworthy and competent well in advance of letting them touch your books.

Certified Public Accountant (CPA)

When most people say “accountants”, I imagine that they are in fact referring to Certified Public Accountants, or CPAs for short. CPAs are people who have received at least a Bachelor’s degree in accounting and who have also passed the CPA licensure exam required by the American Institute of Certified Public Accountants. There are strict moral and legal requirements for becoming and remaining a CPA, but that does not mean there aren’t bad apples. Anyone familiar with WorldCom or Enron knows that neither fraud could have been committed without the help of some crooked CPA firms. That said, on the whole I would offer that CPAs are a solid bunch as the potential loss of their entire career hangs on their day to day actions. As with the other categories, a great CPA is not always the cheapest one you can find. Depending on the complexity of your situation, it might be worth the extra money paid in fees to save yourself time or money in the long run. Here are some of the more common functions of a CPA or CPA firm:

  • Anything under the bookkeeper section (but probably not as cost-effective)
  • Filing Federal and State tax returns
  • Tax planning
  • Audit financial statements
  • Design control environment
  • Risk mitigation
  • Forensic accounting

Not all firms are created equal, and some may specialize in one or more of the areas above. Find one that can meet your needs today, but that also has a clear vision of the future of your company and how they can continue to support you as it grows.

Chief Financial Officer (CFO)

People often ask me the difference between finance and accounting, and I like to think of it as two sides of the same coin. Both fields are interested in the financial data of the company, but use it differently. Accounting is historical. Its primary objective is to record the financial data of the company and use it to assess how well the company performed in those prior periods. Finance is forward-looking. It takes the accounting data, as well as other economic or business operations data and uses it to model out how the company will perform in the future based on the strategy the company has laid out.

You can think of it as a virtuous cycle - the management team lays out a strategy for the company, the operations teams put that strategy into effect and that creates data, the accounting team records that data, the finance team uses those records and other data to project whether the strategy will continue to be successful, and the management team tweaks the strategy based on that analysis. This process continues on and on throughout a company’s life. So where exactly do CFOs come into the picture? The CFO is responsible for the entire accounting and finance function of the business. Their role is managerial and strategic, although a good CFO will roll up their sleeves and get into the weeds if needed. Here are some of the most common items the CFO is responsible for:

  • Preparing financial statements for the board of directors or other management
  • Crafting strategies for cash flow and profitability improvements
  • Creating an accurate financial model
  • Maintaining a strong control environment inside the company
  • Developing relationships with third-party financial partners (investors, banks, etc.)
  • Communicating the financial implications of the company’s strategy to the rest of the management team
  • Being a strong moral compass for the company’s employees; especially with regard to their fiduciary duties to the company

One final note - please do not choose the cheapest option you find for these roles because they are the cheapest. There are many talented people who price their services fairly, so don’t overpay either, but bragging about cheap accounting help is in the same category as bragging about the deal you got on some dental work or a new tattoo. You want to optimize for quality, not price. A good bookkeeper, CPA or CFO will likely save you money in the long run, so don’t just examine their fees as a cost center to be managed.

For answers to questions you have about this or related topics, schedule your free consultation today.