Who Needs More than a Bookkeeper?

I spend a fair amount of time reading blog posts and community forums about accounting.  (Yes, exciting, I know, but I fully embrace my nerdiness.) One topic that I've seen come up a few times from business owners is that they don't see why they would need to outsource additional financial professionals if they already have an inexpensive bookkeeper.

I thought maybe it would be good to write about the different types of accounting professionals that are out there and why each type should be able to do for you... and why you might need more than one.

Data Entry Specialist.

Ok, so this isn’t actually an accounting professional. This is a glorified typist. (I’m not dinging typists, by the way, as I used to be one as a teenager way back in the 80s… you know, when they used to have typewriters.)

Data Entry Specialists take information from one place and type it into another place. This is literally data entry in its purest form and requires no knowledge of accounting, and as such, you shouldn’t expect accurate books prepared by this person. The only reason I even include this position here is that I have literally had clients at previous jobs tell me that they shouldn’t have to pay a bookkeeper more than $10 per hour because they can hire anyone to type stuff into QuickBooks. Yes, you can. And you can also pay the government and your CPA thousands of dollars in taxes, penalties, and advisory fees when your business returns are filed using garbage information. Just sayin’.

Something else about this position… it’s dying a slow death. Anyone using cloud accounting systems like Xero, QuickBooks Online, etc. has experience with how data is pulled automatically from banks and into the accounting packages. And information that lives in one system gets pushed or pulled into the accounting system as well via “add-ons.” It’s all about data management, not data entry. Hundreds, if not thousands, of software companies are trying to get to “zero entry.” That’s not good news for a data entry specialist.

Bookkeeper / Full-Charge Bookkeeper.

A bookkeeper is someone who presumably has at least some basic accounting knowledge. A bookkeeper is exactly what it sounds like… the person who keeps the books. They make sure all the transactions are entered and reconciled to the bank, credit card, and loan statements. They process bills (accounts payable) and invoices (accounts receivable), and if they are “full-charge” they’ll even record depreciation, payroll, and other more advanced accounting transactions. Basically, if there is, was, or will be money involved, the bookkeeper records it.

From a business owner’s perspective, the biggest problem with bookkeepers here in the United States is that the profession is completely unregulated. My 15 year old son can hang out a shingle, and (woo hoo!) he’s now a bookkeeper. Good for him; bad for you.

Some bookkeepers have accounting degrees, and others are self-taught. Some may have certifications through the American Institute of Professional Bookkeepers (AIPB), and others may not. Some people hold themselves out as bookkeepers if they know how to navigate QuickBooks or Xero even if they don’t actually have any accounting knowledge (which I believe is dangerous and puts them back on the level with Data Entry Specialists, but that’s a whole other Oprah).

And some are total rock stars and can run circles around CPAs with their hands-on knowledge of the inner workings of a business, its books, and the general ledger software they use.

The point is that without a referral from someone you trust or your own basic knowledge on the matter, you really don’t know what you’re going to get.


Controllers (aka Comptroller, but that term is pretty antiquated, in my opinion) are typically Certified Public Accountants.

Becoming a CPA is a big deal. It typically requires 150 semester hours of instruction which is 30 hours more than a typical four-year bachelor’s degree, even more hours of business instruction, and passing a painful series of tests: audit and attestation, financial accounting and reporting, regulation, and business environment and concepts. In short, CPAs are damn serious about being accountants. There are no quick shingles here, and even the newbiest CPA will know a lot that can help out a business owner.

Controllers oversee the quality of your books, perhaps record more complex transactions, and can help you understand your financials. They usually don’t have their hands in your books everyday but rather help to direct and oversee the lower level accountants who do. They can also help with budgeting, projections, and other types of financial analysis.

These people are your boots on the ground, day-to-day, week-to-week, understand-what’s-going-on-in-your-business-regularly people. They are lightly strategic, but they are highly tactical, and they help you execute your plans for the business.

Chief Financial Officer (CFO).

CFOs are often, but not always, CPAs. However, CPAs are particularly well-suited to provide these services. Regardless of their credentials, successful CFOs have a strong understanding of accounting underpinned by strength as a business strategist. They think like someone on the Board of Directors.

CFOs provide high-level strategic guidance. In addition to helping with budgets and projections, they can also dive deeply into issues regarding financing, loans, inventory turnover, cash flow, and other types of financial analysis.

CFOs cannot do their job effectively without clean and accurate financials, and yet, they are not typically involved in the daily operational activities necessary to produce them.

Tax Advisor.

Ask any CPA, and they will tell you stories about how everyone and their Aunt Tilly thinks that because they are a CPA, they do taxes. They don’t. Some do, but not all.

It’s like saying, “Hey, you’re a doctor… can you please remove this tumor from my head?” Umm… you probably don’t want your general practitioner performing brain surgery. They don’t all do that, you know.

Also, you don’t have to be a CPA to be a tax preparer. Enrolled Agents can get the job done for you. Oh, and be careful, there are oodles of tax preparers who have no more than six weeks of training before setting up shop. Again, this is another area that’s pretty unregulated (but they are actively working on changing that, so stay tuned).

Regardless, you will want to get yourself a skilled and reputable tax advisor. Their strength lies in three things: 1) minimizing your tax liability, 2) keeping you compliant with the law, and 3) helping you structure your business properly to achieve #1 and 2.

Some tax advisors may also be able to help with interpreting your financial statements for you, but keep in mind that most of these people are insanely busy roughly twice a year… at the same time that you decided to bring in your shoebox of receipts so you could get advice and get your tax returns done. They are typically manically busy and hopped up on coffee with very little sleep. And if you extended your tax returns, your data is anywhere between nine months and a year-and-a-half stale at that point. That’s not a good business planning strategy.

Bringing It All Together.

As any entrepreneur knows, running a business is an endless series of cogs that all need to fit together to create a well-running organization. Just in terms of the financial picture, you need someone to gather the data, make sure it’s recorded properly, and then turn that data into compliance for the government as well as solid interpretation for management so the owners can make good decisions.

It’s difficult to find all of these skills in one place, and in our opinion, the most successful accounting firms are those who specialize so they can rock at one thing instead of being mediocre at many.

As a business owner, think about the specific challenges you have. If you’re confident in how you’re capturing financial data but need someone to help you interpret the data and develop a financial strategy, you may need to find a virtual CFO. If your books are in shambles, perhaps you need an accounting department (both bookkeeper and controller). Or if you have solid books that you understand but need to get compliant with the government, a tax advisor is the way to go.

Most businesses can get by with just one or two of these professionals when they’re just starting out, but as the business grows, its needs will grow as well.

The trick as a business owner is knowing that you need to ask the right person the right questions.



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