What is the difference between a bookkeeper and an accountant? Who should I hire?

You've decided to hire someone to help with the books, but where do you start?  Many times the title of "bookkeeper" and "accountant" are used interchangeably because - lets face it - its confusing who does what!  Which is right for your business?

What is the difference between a bookkeeper and an accountant?

A bookkeeper, quite literally, keeps the books.  They are the paying bills, recording transactions, reconciling accounts, running reports, etc..  To be a bookkeeper or Certified Bookkeeper, you do not need a college degree, although some bookkeepers do have a 2 year associates degree or a 4 year college degree.

An accountant focuses on financial reporting, process improvement, business analysis, and often is a business advisor.  Accountants have 4 year degrees.  To be a Certified Public Accountant, you now need 150 college hours (the equivalent of a 5 year degree), to pass the 4 part CPA exam, pass the ethics exam, and meet certain experience requirements that vary by state.

As I'm sure you can guess, bookkeepers without a degree are the least expensive, while CPAs are generally the most costly.  Which level you need, depends on several factors.

Who should I hire?

This depends on your business. Is it complex?  Do you have several employees?  Do you require customized financial reporting?  In general, be weary of hiring a bookkeeper without some amount of formal accounting education.  Although they may have the necessary skills to complete the day-to-day tasks, that person typically lacks the broader perspective. 

A good option is to have an experienced bookkeeper to keep up the books on a regular basis and have a CPA that periodically works in tandem with the bookkeeper.  The CPA (sometimes you may hear them referred to as an outsourced CFO or controller) can offer customized solutions, innovative reporting, forecasting, improve processes, monitor costs, and can act as a financial advisor for your business.

Above all, you need to hire a bookkeeper and/or accountant with integrity.  This is the most important quality and the hardest to judge.  Try to get referrals from other business owners on who they use and who they trust and check references!