Owners use the three titles interchangeably, and the people selling the services rarely correct them. But a bookkeeper, an accountant, and a CPA do different work, carry different credentials, and cost very different amounts. Paying a CPA to categorize bank transactions is expensive; asking a bookkeeper to defend you in an audit is impossible.
Here is what each one does, what they are legally allowed to do, and which one your business needs right now.
What each one actually does
A bookkeeper records what happened. They categorize every transaction, reconcile bank and credit card accounts against statements, enter bills and invoices, track what customers owe and what you owe vendors, record payroll, and close each month so the Profit and Loss and Balance Sheet reflect reality. Good bookkeeping is a recurring, disciplined process, not an event. It is the foundation every other financial job stands on.
An accountant interprets what the bookkeeper recorded. Accountants adjust the books for things that do not show up in a bank feed, such as depreciation, accruals, and prepaid expenses, prepare financial statements, build budgets and forecasts, and advise on decisions like whether to buy or lease equipment or how to price a new service line. Many accountants also prepare tax returns.
A CPA, a Certified Public Accountant, is an accountant who holds a state license. The license is what lets a CPA do things nobody else can: sign audited or reviewed financial statements, and represent you before the IRS without limitation. Most small businesses use a CPA for tax strategy, year-end return preparation, and the occasional letter a bank or investor requires.
Which titles are licensed, and why it matters
Bookkeeper is not a licensed title. Anyone can call themselves one, which is why experience, references, and a clear process matter more than the label. Voluntary certifications exist, and they signal effort, but no state requires one.
Accountant is generally not a licensed title either. Most accountants hold an accounting degree, but the word on its own does not guarantee a credential. Ask what the person is actually qualified to sign.
CPA is licensed by each state's board of accountancy. Earning it requires an education threshold, passing the Uniform CPA Examination, and supervised experience, plus continuing education to keep it. If you ever need audited statements, an attest opinion, or someone to stand in front of the IRS for you, only a CPA, an enrolled agent, or an attorney can do that without restriction. An enrolled agent, or EA, is a tax specialist licensed by the IRS itself. EAs can represent you in tax matters and prepare returns, but they cannot sign audits.
Which one your business needs at each stage
Just started, few transactions, no employees. You need bookkeeping done monthly, even if it is light, and a tax preparer at year end. The mistake is letting it slide for a year and then paying someone to reconstruct it.
Growing, with payroll, inventory, or invoices on terms. You need a real monthly close, which means a bookkeeper, and a CPA or EA for tax planning rather than just filing. This is the stage where quarterly estimated taxes, entity elections such as S corporation status, and owner pay decisions start to move real money, and those are accountant questions.
Established, seeking financing, or taking on partners. Add accounting work beyond the close: budgets, cash flow forecasts, and financial statements a lender will accept. If a bank or investor requires reviewed or audited statements, that is CPA-only work, and it is far cheaper when the underlying books are already clean.
At every stage the order is the same. Bookkeeping comes first, and everything else is built on it. A CPA handed messy books spends billable hours fixing them before any advice can start, which is the most expensive possible way to get your bookkeeping done.
How the roles fit together
The arrangement that works for most small businesses is a monthly bookkeeper who closes the books and delivers the statements, and a CPA who receives those statements at year end, makes any adjusting entries, and files the return. Each does the part they are good at, and you are not paying licensed rates for data entry. Keep them talking to each other: the CPA's year-end adjustments should be posted back into the books so January starts from the right numbers.
The bookkeeping half of that arrangement is what Evolv Bookkeeping does. It is $199 per month flat: every account reconciled, every transaction categorized, and your P&L and Balance Sheet delivered by day 2 of the following month, with 1099 prep at year end so your CPA gets a clean package. If the books are behind, catch-up is $199 for each month behind, finished within 2 days and guaranteed in writing. No contracts, cancel anytime. Get an instant quote from our homepage.