Financial management is the foundation on which every successful business is built. However, managing business finances is not easy on your own.

You have to avail yourself of the expertise of a certified public accountant (CPA) and bookkeeping services.

Many small business owners combine their accounting and bookkeeping operations under one roof. Separating your CPA and bookkeeping services could be the game-changing strategy they didn’t know they needed! 

Imagine having expert strategists on one side, focusing on tax planning and financial insights, while meticulous bookkeepers manage every transaction with unwavering attention to detail.

So, you can unlock new insight, efficiency, and growth levels for your business. 

Let’s check the lucrative benefits of professional bookkeeping and CPA services and discover how they can lead to smarter decisions, better compliance, and a thriving bottom line!

Role of Bookkeeping and CPA in a Business

As a business owner, you are responsible for managing your company’s finances effectively.

This requires accurate bookkeeping practices and compliance with taxation laws, which can get overwhelming on your own.

This is where CPAs and bookkeeping services come into play.

These professionals provide valuable assistance in managing your company’s financial records, ensuring compliance with tax laws, and offering financial advice that can help boost your business’s performance.

​​A bookkeeper records every financial transaction of your business so that reconciliation reports are accurate.

Since their main responsibility is maintaining a ledger, they often use digital bookkeeping software to document financial activities.

They also work on:

• Recording transactions related to business expenses and income

• Reconciling bank and credit card accounts

• Managing payroll data reconciliation

• Reviewing and adjusting the general ledger

• Filing tax reports and processing payments

A CPA is a board-certified accounting professional who has passed the Uniform CPA Exam administered by a state’s Board of Accountancy.

While a bookkeeper builds accurate financial records for the company, a CPA analyzes these records to provide financial advice and maintain compliance.

Their responsibilities may also include:

• Verifying and analyzing financial records

• Conducting financial audits

• Preparing financial records (such as tax returns, income statements, and balance sheets)

• Providing information for forecasts, business trends, and opportunities for growth

• Generating reports based on financial reports

• Assisting business owners in understanding the financial impact of their decisions

By outsourcing bookkeeping services to a partner with expertise in tax regulations, you can rest assured that all necessary taxes are paid accurately and on time while minimizing tax liabilities through appropriate deductions.

The Traditional Approach: Combining Bookkeeping and CPA Services

Bookkeeping and CPA services are essential for businesses of all sizes. By outsourcing these services or hiring dedicated professionals for each area, you can ensure accuracy in financial reporting, compliance with tax laws, and insights into your business’s financial health.

However, most businesses combine bookkeeping and CPA services into one role. This means that one person or firm is responsible for recording financial transactions daily and filing tax returns and other complex financial documents.

While the traditional approach of combining bookkeeping and CPA services may seem convenient, it can create significant drawbacks for your business.

Without separate individuals or firms overseeing each aspect, errors or fraudulent activity may go unnoticed.

Another disadvantage is that using one provider for bookkeeping and CPA services limits your options. If you are dissatisfied with their performance or fees, finding an alternative can be challenging since they manage all aspects of your finances.

Drawbacks of Combining CPA with Bookkeeping

While combining CPA and bookkeeping services may seem like an easy solution for managing your finances, it can actually hinder your business’s growth and success. Here are some drawbacks of combining these services and how separating them can benefit your business.

1. Limited Expertise

One drawback of combining CPA and bookkeeping services is limiting yourself to one individual or firm’s expertise. Entrusting both tasks to the same person or firm may not result in the most accurate and efficient service for your business.

A CPA may be well-versed in tax laws and financial reporting.

Still, they may not have the same knowledge and experience in bookkeeping tasks such as data entry, bank reconciliations, and accounts payable/receivable management. 

Separating your CPA and bookkeeping services allows each professional to focus on their areas of expertise without compromising their quality or efficiency.

This ensures that your financial records are accurate, up-to-date, and ready for the tax season.

2. Conflict of Interest

Another drawback is that there could be a conflict of interest between your CPA’s advisory role and their involvement in day-to-day bookkeeping tasks. As a business owner, you rely on your CPA for unbiased financial advice and guidance. 

However, they may prioritize their main tasks over tedious bookkeeping if they are also responsible for maintaining your books.

By separating your CPA and bookkeeping services, you can delegate them to professionals with expertise and experience to handle them efficiently. 

So, each task receives the necessary attention and expertise. By having dedicated professionals for each role, you can rest assured that these tasks will be handled accurately and effectively.

3. Higher Costs

The convenience factor of having one person or firm handle all your accounting needs comes at a cost – literally.

Combining these services and managing them in-house often means hiring more resources and paying a hefty amount.

Separating these services also helps optimize resources within your business.

You can get more tailored services at competitive rates by outsourcing these services to a one-stop-shop solution with specialized professionals.

You can hire one partner to manage bookkeeping and CPA services or outsource them separately.

This way, you only pay for what you need when you need it. You can opt for hourly or fixed fees depending on your specific requirements.

4. Lack of Checks and Balances

Combining CPA and bookkeeping services also eliminates the need for a separate system of checks and balances within your financial processes.

Without different individuals or teams overseeing different aspects of your finances, there is a higher risk of errors or fraud going undetected.

Separating these roles also adds a layer of checks and balances within a company’s financial management system.

Having separate teams handling bookkeeping and CPA services means an added level of scrutiny when identifying potential errors or discrepancies in financial records. 

This helps maintain transparency and mitigates the risk of fraud or mismanagement.

Plus, there is no conflict of interest regarding financial reporting, as both functions are performed independently by different individuals or teams.

5. Time Constraints

Time is a valuable commodity for small business owners, especially when trying to grow their businesses. Combining CPA and bookkeeping services adds more tasks to one person’s workload, leading to delays in completing critical financial tasks and reports.

Bookkeeping requires meticulous attention to detail and often involves repetitive tasks that must be done regularly to ensure accurate record-keeping.

On the other hand, CPAs need time to analyze data, prepare tax returns, conduct audits, and provide valuable insights into a business’s financial health.

If one person or company is responsible for both roles simultaneously, there is a risk that either task will take precedence over the other due to time constraints.

This could result in delayed tax filings or incomplete financial analysis, negatively impacting a business’s operations.

Another aspect is the opportunity cost of having your CPA spend time on bookkeeping tasks instead of focusing on their core strengths.

By delegating bookkeeping tasks to someone else who specializes in that area, you free up more time for your CPA to focus on providing expert advice for growing your business.

Benefits of Separating Bookkeeping and CPA Services

There are significant benefits to separating bookkeeping and CPA services and outsourcing them to specialized professionals. Firstly, separating them allows for a clear division of tasks between individuals with different skill sets.

By assigning each role to a specialist, you can ensure that all aspects of their financial management are handled accurately and efficiently.

Another advantage of separating CPA services is the ability to tap into their industry-specific expertise. Many CPAs specialize in serving businesses within particular industries, such as healthcare or real estate.

This means they have an in-depth understanding of those sectors and can provide valuable insights into improving profitability and compliance.

✅ 1. More Time and Resources

When one person or team handles your CPA and bookkeeping needs, they often juggle multiple responsibilities at once. However, outsourcing these services to separate professionals or firms ensures that each task receives the necessary time and attention.

Bookkeeping requires meticulous attention to detail, as even minor errors can significantly affect your business’s finances.

By having a dedicated bookkeeper who is solely focused on maintaining accurate records, you reduce the risk of costly mistakes.

Moreover, outsourcing your CPA services means they can focus solely on analyzing financial data and providing valuable insights for decision-making. This includes conducting thorough audits, preparing tax returns, and providing strategic financial planning.

Outsourcing also provides access to advanced technology and tools used by professional bookkeepers and CPAs.

These tools streamline processes and ensure accuracy and compliance with legal regulations. Thus, you save a lot since investing in such resources would incur high costs.

✅ 2. Improved Accuracy in Financial Reporting

By separating your CPA and bookkeeping services, you can significantly improve the accuracy of your financial reporting. Each service plays a distinct role in the financial management process.

Separating these two services allows each function to focus on its core responsibilities without overlapping or conflicting duties. As a result, it enhances the accuracy of both bookkeeping records and CPA-prepared reports.

Moreover, having an external CPA review your books provides an unbiased assessment of your company’s finances.

This reduces the risk of errors or fraudulent activities going unnoticed within your organization by providing an additional layer of checks and balances.

Additionally, outsourcing bookkeeping services frees up valuable time for business owners from tedious administrative tasks associated with managing finances.

This allows them to focus on more critical aspects of running their business while still having access to reliable reports.

✅ 3. Better Tax Planning and Savings Opportunities

One key advantage of separating your CPA and bookkeeping services is the opportunity for better tax planning and savings.

Businesses can take full advantage of any available tax deductions and credits by having a dedicated CPA solely focused on tax strategy.

CPAs are trained professionals who understand constantly changing tax laws and regulations. They can analyze a business’s financial situation and provide tailored advice on minimizing tax liability while maximizing savings opportunities. 

Bookkeepers are also crucial in tax planning since they maintain accurate and organized financial records. CPAs can easily access necessary information when preparing taxes, reducing the risk of errors or missed deductions.

With separate bookkeeping services, CPAs can focus on long-term tax planning rather than just filing annual returns.

By having a holistic view of a business’s finances, CPAs can develop customized strategies that align with their client’s goals and help them save money in the long run.

They can work closely together throughout the year to identify potential areas for savings, such as implementing retirement plans or making strategic investments. 

✅ 4. Increased Productivity

Separating your CPA and bookkeeping services can significantly increase your business’s efficiency and productivity.

Both roles have distinct responsibilities that require specific skill sets, and having separate individuals or teams dedicated to these tasks allows for a more streamlined approach to financial management.

This division also leads to increased accuracy in financial reporting. By entrusting your tax-related tasks solely to a CPA, you can be confident that all filings will be accurate and compliant with current laws.

Similarly, having a dedicated bookkeeper ensures that all financial records are always up-to-date and accurate.

This helps with decision-making and simplifies the process during audits or when preparing financial statements for potential investors or lenders.

With tasks handled by professionals who specialize in their respective fields, business owners can have peace of mind knowing that their financial management is in capable hands.

Streamline Your Business Finances with doola

At doola, we understand that handling bookkeeping and CPA tasks separately can be time-consuming, confusing, and prone to errors.

That’s why we offer comprehensive bookkeeping and CPA services under one roof, making managing your business finances easier.

doola’s bookkeeping services are designed to help you accurately track all your financial transactions.

Our team will record income, expenses, invoices, bank statements, payroll details, and more. With our efficient bookkeeping services, you can always stay up-to-date and ready for tax season.

You can also consult our CPAs, who have an in-depth understanding of tax laws and regulations.

Get tailored advice on tax planning strategies, compliance requirements, and crucial deadlines, ensuring compliance with all applicable federal and state laws.

With doola, you can rest assured that all tax-related matters are handled accurately and efficiently by professionals with years of experience in this field. 

Let us take care of the numbers while you focus on growing your business.