Guide
Bookkeeper or accountant? What contractors actually need
They are different jobs. Hiring the wrong one is expensive and slow to notice.
Reviewed by Darren Lim, US CPALicence CPA.742536026 min read
Most contractors have a CPA and no bookkeeper, then wonder why they only find out how the year went in March.
The two jobs are genuinely different, and hiring the wrong one for the problem you have is a slow, expensive mistake — slow because it takes a year to notice.
What a bookkeeper does
Bookkeeping is the ongoing work of keeping the record accurate:
- Categorising every transaction as it happens
- Reconciling bank and card accounts to the statements
- Tracking who owes you money and who you owe
- Processing or reconciling payroll
- Closing each month so the numbers stop moving
- Producing monthly reports you can act on
It is continuous, it is operational, and it looks at the recent past so you can do something about the near future.
What a CPA does
A CPA does the specialist and regulated work:
- Preparing and filing tax returns
- Tax planning and entity structure
- Representing you if the IRS has questions
- Attested financial statements — reviews and audits, where a bank or bonding company requires them
- Strategic advice on major decisions
It is periodic, and much of it is work only a licensed CPA can legally perform.
Why the split matters
A CPA works from whatever you hand over. Hand over a clean, closed set of books and they can do good work quickly. Hand over a shoebox and they spend most of their time — at CPA rates — doing bookkeeping.
That is the expensive mistake. You are paying a specialist hourly rate for data entry, getting it once a year instead of monthly, and still not learning anything about your business until it is too late to act.
The other failure mode is having neither, doing it yourself at eleven at night, and finding out in April that a whole category was miscoded all year.
Which do you actually need?
Nearly every contracting business past its first year or two needs both. The question is really about sequence.
You need bookkeeping first if: you cannot say what last month made, your books are behind, tax season is a scramble, you have no idea which jobs are profitable, or your CPA charges you extra every year for "cleanup".
You need more CPA involvement if: you are choosing an entity or considering an S-corp election, planning something large, facing a bonding or financing requirement for reviewed statements, or dealing with a notice from a tax authority.
In practice good bookkeeping makes the CPA cheaper. Their bill is driven substantially by how much mess arrives with the job.
Where the two should meet
The handoff is the part that goes wrong. It should look like this:
- Books closed monthly through the year, so nothing is reconstructed in March
- A clean trial balance and reconciled accounts at year end
- Loans, draws and fixed assets already correct on the balance sheet
- Subcontractor payments tracked and 1099s handled
- One email to the CPA rather than a series of increasingly urgent questions
The year-end checklist is the specific list.
Where we sit
We do the bookkeeping — the monthly work above — and a US CPA reviews and signs every file before it reaches you. Your own CPA still does your taxes and your planning; we make their job small.
If you already have a bookkeeper, the free month is simply a comparison. Same period, done twice, side by side.
Related
How we do this
We build this into your books. Starting with a month that costs you nothing.
We do the monthly work — categorising, reconciling, closing, reporting — and a US CPA reviews and signs it. Your own CPA still handles your taxes; we make their job small and their invoice smaller.
- Every transaction categorized, accounts reconciled, the month closed
- Reviewed and signed by Darren Lim, US CPA — licence CPA.74253602
- The Two-Day Guarantee: Your first month back in two days, or the next month is free.
Paying CPA rates for data entry once a year, and learning how the year went in March, is the most expensive way there is to run books. One month done properly shows you the difference for nothing. No card, no contract, and the month is yours.