Guide
Bookkeeper or accountant? Most small businesses need both, in that order.
The short answer, what each one actually does, what a bookkeeper should hand your CPA in January, and how to tell when you have outgrown doing it yourself.
The one-paragraph answer
A bookkeeper records what happened: every transaction, every month, reconciled to the bank. An accountant, in practice a CPA for most small businesses, interprets what happened and files the return. You need the bookkeeper every month and the CPA a few times a year. Hiring the CPA to do the bookkeeping costs three to five times as much per hour and the CPA usually does not want the job. Hiring a bookkeeper to do the tax return is not allowed, and a good one will say so.
What a bookkeeper does
| Every month | Reconciles every bank, card and loan account to the statement; categorises transactions; matches receipts; closes the month and sends you a summary. |
|---|---|
| Every payday | Runs payroll, deposits withholding, keeps the unemployment insurance account current, reports new hires. |
| Every quarter | Files the Utah withholding return (TC-941E), the Workforce Services wage report and the sales tax return on TAP. |
| Every January | Issues W-2s and 1099s, closes the year, and hands the CPA a reconciled file with a cover note. |
| When asked | Tells you what the numbers say in plain English: margin, cash, who owes you, what is coming due. |
What a CPA does
Prepares and signs the income tax return for the business and usually for the owner. Advises on entity structure, on whether to buy the truck this year or next, on what a sale or a second location does to your tax bill. Represents you if the IRS or the Tax Commission has questions. Signs audited or reviewed financial statements if a lender asks for them.
What a CPA does not want to do, and is expensive at, is reconcile your bank account. A CPA who receives a shoebox in February either sends it back, charges bookkeeping hours at tax-season rates, or guesses. None of those is good for you.
What the January handoff looks like
The file we hand a CPA has every account reconciled through December 31, a profit and loss statement and balance sheet for the year, the supporting schedules (fixed assets, loans, owner draws, payroll totals that tie to the W-2s), copies of every quarterly filing, and a one-page cover note: what we found, what we assumed, what still needs a decision. CPAs who receive it tell us the return takes them a fraction of the time, and that shows up in their bill.
When you need a CPA, and we will say so
Summit & Pine is a bookkeeping and payroll firm. We do not prepare income tax returns or give tax advice, and we do not pretend to. When a question is a CPA question (entity choice, a large purchase, a sale, an audit letter) we say so and, if you do not have a CPA, introduce you to one of the three Salt Lake firms we hand files to every January. The relationship works because each side does the job it is actually good at.
Signs you have outgrown doing it yourself
- The books are more than two months behind, or you are not sure.
- You have employees and you are the one running payroll from a spreadsheet.
- The CPA's year-end note started with "before I can begin".
- You cannot say, today, what your margin was last month.
- A lender, a landlord or a buyer asked for financials and you had nothing to send.