CPA vs. Bookkeeper: Know the Differences and Which is Better

Bryce Welker
·11 min read

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When it comes to financial careers, the choice between becoming a CPA or a bookkeeper is pivotal. CPAs earn an average annual salary of $97,000, a testament to their skill set and the demand for their services.

But here’s the kicker:

Bookkeepers, essential to the financial fabric of any business, earn a median annual pay of $46,000. This significant difference in compensation highlights the diverse roles and responsibilities each position entails.

Now, why does this matter? As a CPA, I’ve witnessed first-hand the impact of this career choice not only on income but also on the scope of work, career progression, and overall job satisfaction. Let’s dive deeper into this comparison and explore what it truly means to be a CPA versus a bookkeeper.

Key Takeaways

  • Distinct Career Paths: CPAs handle complex accounting, audits, and tax advisory after passing the Uniform CPA Exam and meeting educational requirements, while bookkeepers focus on daily financial record-keeping without needing a bachelor’s degree or CPA certification.

  • Educational Investment: Transitioning from a bookkeeper to a CPA requires significant educational investment, including completing 150 semester hours and passing the CPA exam, compared to the less formal education path for bookkeepers.

  • Certification and Specialization: CPAs and bookkeepers can enhance their career prospects and earning potential through certifications (CPA or Certified Bookkeeper) and specialization in areas like tax preparation or financial reporting for CPAs and accounting software or industry-specific knowledge for bookkeepers.

  • Collaborative Roles: Bookkeepers and CPAs often work closely within businesses, with bookkeepers managing the day-to-day transactions and CPAs focusing on strategic financial planning and compliance, highlighting the importance of both roles in maintaining financial health.

  • Career Advancement Opportunities: The transition from bookkeeper to CPA is a viable path for those seeking to expand their expertise and opportunities in the accounting field, offering a broader range of career opportunities and higher salary potential for CPAs.

CPA vs. Bookkeeper: Role Comparison

Certified Public Accountants

A CPA is a finance and accounting professional who has passed the Uniform CPA Exam and met all certification requirements set by their state’s board of accountancy. This prestigious designation empowers CPAs to undertake specialized accounting tasks, such as conducting detailed audits, preparing reviewed or audited financial statements, and representing clients before the Internal Revenue Service (IRS).

CPAs boast expertise in various accounting domains, including tax preparation, financial reporting, and strategic planning for business finances. A stringent code of ethics binds them. They must complete continuing education credits to maintain their certification, ensuring they stay abreast of the evolving accounting standards and practices.

CPAs often work in accounting firms or run their own practices, providing accounting services that cover a wide spectrum of financial needs for businesses and individuals. Their role is crucial in advising on tax liabilities, managing cash flow, and ensuring the financial health of the entities they serve. With a deep understanding of accounting software and financial data, CPAs play a pivotal role in shaping the financial strategy and reporting of the businesses they work with.

Bookkeeper

Bookkeepers are the custodians of a business’s day-to-day financial transactions and records and are responsible for recording financial transactions, managing bank statements, and maintaining the general ledger and other financial records. While not required to hold a bachelor’s degree or pass the CPA exam, professional bookkeepers often pursue specific certifications such as the Certified Bookkeeper (CB) designation offered by the National Association of Certified Public Bookkeepers to validate their skills and knowledge.

Unlike CPAs, bookkeepers do not typically engage in tax advisory or conduct audits unless they possess additional certifications. However, their meticulous work in recording daily transactions and managing the financial documents of a business lays the groundwork for accurate accounting and financial reporting.

CPA vs. Bookkeeper: Educational Requirements

The educational paths for Certified Public Accountants (CPAs) and bookkeepers diverge significantly, reflecting the differing scopes of their responsibilities and the complexity of the tasks they are authorized to perform. Understanding these requirements is crucial for anyone considering a career in either field.

Certified Public Accountants

  • 150 Semester Hours of Education: CPAs must complete 150 hours of education, typically earning a bachelor’s degree in accounting or a related field from an accredited college, followed by additional education to meet the 150-hour requirement. This often means pursuing a master’s degree in accounting or business administration.

  • Uniform CPA Examination: Passing the CPA exam is a cornerstone of becoming a CPA. This rigorous exam, administered by the American Institute of Certified Public Accountants (AICPA), tests knowledge in areas such as auditing and attestation, business environment and concepts, financial accounting and reporting, and regulation.

  • Continuing Education: To maintain their certification, CPAs must also complete continuing education credits regularly, ensuring they remain up-to-date with the latest accounting standards, legal issues, and best practices.

Bookkeepers

  • Less Stringent Educational Requirements: The educational path for bookkeepers is generally less formal than that for CPAs. While many bookkeepers hold an associate degree in accounting or a related field, it is not uncommon for professionals to enter the field with a high school diploma and gain knowledge through on-the-job training.

  • Certification Programs: Although not required, many bookkeepers pursue certification to demonstrate their professional expertise and commitment. The Certified Bookkeeper (CB) designation, offered by the National Association of Certified Public Bookkeepers (NACPB), is one such certification. To earn the CB designation, bookkeepers must pass an exam and have at least two years of bookkeeping experience.

  • Practical Experience: Practical experience managing financial transactions, using accounting software, and maintaining accurate financial records is invaluable for bookkeepers. Many professionals develop their skills through hands-on experience recording daily transactions, managing bank statements, and preparing financial documents.

Scope of Work and Career Opportunities

The roles of CPAs and bookkeepers within organizations are distinct, each playing a crucial role in the financial management and operational efficiency of businesses across various industries. By examining the scope of work and career opportunities for both professions, individuals can better align their career paths with their professional goals and interests.

CPA Work

  • Legal and Financial Tasks: CPAs have the unique authority to perform detailed audits, represent clients before the Internal Revenue Service (IRS), and engage in tax advisory services. Their certification allows them to handle complex accounting tasks that require a deep understanding of tax laws, financial regulations, and business finances.

  • Financial Reporting and Analysis: CPAs are skilled in preparing audited financial statements, conducting internal audits, and creating financial projections critical for business strategic decision-making. They use advanced accounting software to analyze financial data and generate comprehensive reports.

Bookkeeper Work

  • Recording Financial Transactions: Bookkeepers manage a business’s financial records, including posting debits and credits, managing bank statements, and maintaining the general ledger. Their work ensures that all financial transactions are accurately recorded and categorized.

  • Financial Document Preparation: While not authorized to perform audits, bookkeepers are vital in preparing financial documents such as income statements, balance sheets, and other financial reports that provide insights into a business’s financial health. They also manage payroll and create invoices, supporting the operational aspects of business finances.

CPA Career Opportunities

  • Diverse Industries and Settings: CPAs can find opportunities in public accounting firms, corporate accounting departments, government agencies, and non-profit organizations. Their expertise is valued in the healthcare and technology sectors, offering a broad spectrum of career paths.

  • Advancement Potential: With their extensive education and certification, CPAs often ascend to high-level positions such as Chief Financial Officer (CFO), tax advisor, or partner in an accounting firm. The CPA designation opens doors to international career opportunities and higher salary potential, reflecting their specialized skills and legal authority.

Bookkeeper Career Opportunities

  • Wide Range of Work Environments: Bookkeepers are essential in small and large corporations, as well as accounting firms that offer bookkeeping services. Their skills are applicable in any industry that requires accurate financial record-keeping, from retail to manufacturing.

  • Career Growth: Professional bookkeepers can advance their careers by obtaining additional certifications, such as the Certified Bookkeeper designation from the NACPB. Experience and specialization in areas like accounting software or specific industries can lead to roles with greater responsibility and higher compensation.

CPA vs. Bookkeeper Salaries

The salary expectations for CPAs and bookkeepers vary significantly, influenced by certification, specialization, industry, and experience level. Understanding these differences can help guide career decisions and expectations regarding income potential in each field.

CPA Salaries

  • Starting salary: An entry-level CPA with less than a year of experience can expect to earn an average total compensation of $59,000, according to Payscale.

  • Average salary: The average salary for a CPA is approximately $97,000.

  • Low range: The lowest pay reported for CPAs is around $54,000 per year.

  • High range: The higher average pay for CPAs can be around $123,000 up to $300,000 or more per year, indicating senior-level or highly experienced CPAs.

Bookkeeper Salaries

  • Starting salary: Entry-level bookkeepers might start around $30,000 to $35,000 annually, according to the Bureau of Labor Statistics.

  • Average salary: On average, bookkeepers earn about $46,000 per year or just over $22 per hour.

  • Low range: The starting or lower end of the salary range for bookkeepers can be around $30,000.

  • High range: For experienced bookkeepers, especially those with additional skills or certifications, salaries can be higher, around $65,000 per year.

Transitioning from Bookkeeper to CPA: Insights and Strategies

The journey from being a bookkeeper to achieving the status of CPA is a path many professionals consider for career advancement and increased earning potential. Drawing from a Reddit thread started by a 31-year-old bookkeeper in Manhattan with a bachelor’s in management, we explore practical steps and insights for making this transition.

  • Career Advancement: The aspiration to move from a bookkeeping role to a CPA position reflects a common ambition among accounting professionals seeking higher salaries and more strategic organizational roles.

  • Educational Pathways: While the individual in the case study expressed concern about the necessity of obtaining a master’s degree for CPA certification, it’s important to note that the CPA journey requires meeting specific educational criteria, including 150 semester hours of education, which can sometimes necessitate further study beyond a bachelor’s degree.

Strategies for Transition

  • Leverage Your Bachelor’s Degree: Start by maximizing your current bachelor’s degree in management. Consider additional courses or a post-baccalaureate certificate to meet the CPA education requirements without necessarily pursuing a full master’s degree.

  • Man a Start-Up: Another practical piece of advice was, “Start your own bookkeeping business. If I had hired a bookkeeper and assistant when I was at my busiest, my business would be making over $200k net right now.”

  • Gain Diverse Experience: As suggested by a controller of a $65M company, job hopping every two years can be beneficial. This strategy helps in gaining diverse experience and increasing your salary incrementally. Specializing in areas like cost accounting and learning various ERP systems can also add significant value to your resume.

  • Certification Beyond CPA: Exploring certifications that require only a bachelor’s degree, such as the Certified Management Accountant (CMA), can enhance your credentials and potentially increase your marketability and salary.

Conclusion

The journey from bookkeeper to CPA embodies a strategic career shift, offering a pathway to higher earning potential and broader professional opportunities. Whether leveraging a bachelor’s degree, gaining diverse experience, or enhancing credentials with certifications like the CMA, individuals have various avenues to transition and elevate their careers. This exploration underscores the importance of aligning educational pursuits and professional development with long-term career goals, ensuring a well-informed decision-making process for those at this pivotal crossroads in accounting.

FAQ

What is the difference between a CPA and a bookkeeper?

A CPA is an accounting professional who has passed the Uniform CPA Examination and met additional state certification requirements, enabling them to perform audits, tax advisory, and other high-level accounting tasks. On the other hand, a bookkeeper manages daily financial transactions and records, focusing on maintaining accurate financial data for businesses.

Is a bookkeeper higher than an accountant?

No, a bookkeeper is not considered higher than an accountant. Bookkeepers handle the day-to-day financial record-keeping, while accountants have a broader role, including analyzing financial data, preparing reports, and sometimes providing tax advice. Accountants typically have more formal education and may hold certifications like CPA or CMA (Certified Management Accountant).

Can a CPA do bookkeeping on the side?

Yes, a CPA can do bookkeeping on the side. Many CPAs offer bookkeeping services, especially as part of a broader suite of accounting services for small businesses or individuals. Their expertise allows them to efficiently manage financial records and provide more complex accounting and tax services.

Do bookkeepers need to be certified to work?

No, bookkeepers do not need to be certified to work. However, obtaining certification, such as the Certified Bookkeeper designation from the American Institute of Professional Bookkeepers or the National Association of Certified Public Bookkeepers, can enhance a bookkeeper’s job prospects, credibility, and potential earning power.

How can a bookkeeper transition to becoming a CPA?

A bookkeeper can transition to becoming a CPA by fulfilling the necessary education requirements, typically completing 150 semester hours of education and earning a bachelor’s degree in accounting or a related field. They must also pass the Uniform CPA Examination and meet additional state-specific requirements, such as gaining a certain amount of work experience under a licensed CPA.