Bookkeepers vs. accountants, it’s all numbers at the end of the day right?!

Unfortunately, nothing is ever that easy. Think of it like a line cook and a pastry chef, it’s all food but drastically different principles.

As a private practice owner (and business owner in general), you’ll need both a bookkeeper and an accountant/tax professional (You could also have a cook and a pastry chef too, I’m not judging!) so it’s important to understand the differences.

Here’s what you need to know:

Bookkeepers vs. Accountants? The Simple Answer:

Bookkeepers = day to day recording of income, expenses, liabilities, equity, assets, etc, in a business. (The keeper of the records!)

Accountants = AKA a tax professional/tax preparer/CPA. They use the Financial Reports that come from your bookkeeping to complete your private practice tax return and provide additional tax services which we’ll get into below.

But naturally, there’s a little more to it than that, so here’s the long answer too:

The Role of A Bookkeeper

A bookkeeper handles ALL of the day-to-day organizing and record-keeping of your business finances. When a client makes a payment to your private practice, you give gifts to your employees or contractors, you have payroll taxes, or you purchase a bunch of office furniture, those all have to be recorded, categorized, and reconciled on your books to ensure your data and numbers are accurately captured for tax time. A bookkeeper ensures the recording, categorizing, and reconciling are done correctly, and in alignment with how your business is formed as well (LLC, Corporation, etc). And a great bookkeeper will be able to turn that day to day data into killer financial reports for you that show you exactly how much you’re making, spending, and have left over each week, month, quarter, year, etc (whatever you’d like). And an amazing bookkeeper is going to be able to help you evaluate those financial reports so you can really learn about the financial health of your business and make sound business decisions.

The Role of An Accountant

Now, an accountant takes all of that data and work the bookkeeper has compiled for you on the books, and prepares your annual business and personal taxes, without pulling their hair out with a messy stack of papers! A great accountant will be well-versed in your industry, state, and filing status (LLC, Corporation, etc), so that they can help you with any tax planning for your private practice (and even your personal taxes). An amazing accountant will always be on top of the ever changing tax rules and regulations, and be proactive about making sure you’re doing what’s best for your business, tax wise – even if that means changing things to align with new tax rules & regulations.

Another point to note is that bookkeepers and accountants are both financial professionals and have very different skill-sets. Sometimes there is an overlap but they generally handle two drastically different parts of your private practice! More often than not, I’ve found that my colleagues who are strictly tax preparers loathe any type of bookkeeping and have no desire in handling it because they just love preparing taxes! The day to day, nitty-gritty work though? Not so much!

Can A Bookkeeper File My Taxes For Me?

Unless they have the qualifications and licenses to prepare taxes, then no. A bookkeeper also can’t give you tax advice (unless licensed) – so you need to consult a licensed tax professional for this. Taxes are complicated and there can be serious consequences for filing incorrectly (read: lots of fines).

So, bookkeepers or accountants. Which does your private practice need?

So, I mentioned earlier it’s a good idea to have both a bookkeeper and an accountant. There’s a reason for this! When you have a great bookkeeper making sure your finances are in order, correctly, then they can provide you and your accountant with beautiful financial reports that tell your financial story and the accountant then uses those financial reports to seamlessly prepare your taxes. This organization saves you time and money on tax prep services and gives you the peace of mind that you have everything covered, plus keeps your financial story clear throughout the entire year because you always know how much you make, how much you spend, where the money was spent, and what was left over!

You can focus on what’s important in your private practice to you, plus have financial control!

Therapeutic Bookkeeping is a virtual accounting firm working exclusively with therapists all across the United States providing professional bookkeeping and accounting services!