Hi CEOs,

I received some questions around who does what in the world of tax and accounting. I wanted to share with you exactly who does what to help you identify what you may need based on where you are in your business.

BOOKKEEPER:

Responsible for recording financial transactions, maintaining accurate financial records, and organizing financial data. Your bookkeeper may or may not understand how things should be recorded for tax purposes.

ACCOUNTANT:

Analyzes financial data, prepares financial statements (Profit and Loss, Balance Sheet, Statement of Cash Flows), and provides insight into the health of the business. Your accountant may also participate in financial planning and budgeting.

TAX ACCOUNTANT:

Does the same as an accountant, but they specialize in tax related matters. Your tax accountant may prepare tax returns in compliance with tax laws, and provide advice on ways to save on taxes based on the tax law.

FRACTIONAL CFO:

An outsourced or part-time Chief Financial Officer (CFO) who provides high level financial expertise, and strategic advice to your company. Your CFO focuses on financial strategy, risk management, and your overall financial health.

TAX PREPARER:

Files taxes for individuals and businesses based on the financial information that is provided. There is little to no barrier to entry for anyone who wants to prepare taxes.

TAX ADVISOR:

Provides guidance on tax strategies to help you minimize your tax liability. Tax advisors can help you structure your financial transactions to achieve the maximum benefits to reduce your taxes.

CERTIFIED PUBLIC ACCOUNTANT (CPA):

Can provide a wide range of accounting and financial services including auditing, tax preparation, and consulting. All CPAs are not tax experts. CPAs are licensed by the state, but can file taxes in all 50 states. I've passed 3 out of 4 of the CPA exams. The fourth one is in progress.

ENROLLED AGENT (EA):

Enrolled Agents are licensed on the federal level through the IRS to represent taxpayers in all 50 states for tax matters. EAs specialize in tax matters including tax resolution. We are America's tax experts. We can do the same thing CPAs do except audits. I'm a little biased to EAs because I love all things taxes. I've been an EA for 6 years.

In conclusion, bookkeepers and accountants handle general financial tasks, tax accountants, tax preparers, and tax advisors focus specifically on tax-related matters. A Fractional CFO provides high-level financial strategy, while Enrolled Agents and CPAs have specific qualifications and roles in tax representation and accounting services, respectively.

Each role has a unique purpose that contributes to the overall financial well-being and compliance of individuals and businesses. You may need one or you may need a few of these people in the different roles.

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