Accounting

 

An accountant is the person who sets up the bookkeeping system, monitors it, and interprets the results. Accounting is more of an analytical process than bookkeeping, which is purely mathematical. The accounting process begins with designing a system that will capture the company's financial information in a useful manner without being overly burdensome to the bookkeeper. The accountant then monitors the system to ensure that it's yielding the desired information in the most efficient and useful manner. Finally, the accountant compiles the information on a monthly or quarterly basis, analyzes the information, prepares various reports called financial statements, and presents the financial statements to the business management in such a way that decisions can be made.

 

In smaller companies, bookkeeping and accounting may be handled by the same person. In larger businesses, one or more accountants typically supervise multiple bookkeepers. In very large companies there may be hundreds, possibly even thousands of accountants. One will be designated as the "Controller" who oversees the entire accounting and bookkeeping system.

 

CPA stands for Certified Public Accountant, which is an accountant who has passed a series of tests in order to earn their certification, and must take continuing education classes yearly to retain it. The requirements to become a CPA are quite rigorous; it takes an accountant several years to gain their CPA license, and constant upkeep in order to retain it.

 

Hiring a CPA full-time may be cost-prohibitive for the average small business owner. CPAs are usually more expensive than regular accountants, and hiring a CPA for a bookkeeping position is definitely overkill. Many companies work with bookkeepers and accountants throughout the year and hand off their year-end records to their CPA for a final audit before the year's taxes are prepared.