Updated
"Bookkeeper," "accountant" and "CPA" get used as if they mean the same thing. They don't, and knowing who does what is most of the decision. The rest is honest arithmetic about how complicated your business is and how much of the routine you'll actually keep up with.
What's the difference between a bookkeeper, an accountant, a CPA and an EA?
Each does a different part of the job. The IRS credential descriptions below come from its page on preparer credentials:
| Role | What they typically do | Licensed by | Can represent you before the IRS? |
|---|---|---|---|
| Bookkeeper | Records and categorizes transactions, reconciles accounts, may run payroll and invoicing | Generally no license required; some hold voluntary certifications | Only if they also hold a credential below |
| Accountant | Prepares financial statements, analysis, tax planning and returns | Not necessarily licensed; the title alone isn't a license | Depends on credential |
| CPA | All of the above, plus attest work only licensees may do | State boards of accountancy, after the Uniform CPA Exam plus education and experience requirements | Yes, unlimited |
| Enrolled agent (EA) | Tax preparation, planning and representation | The IRS, after a three-part Special Enrollment Examination and a suitability check; 72 hours of continuing education every three years | Yes, unlimited |
| Other paid preparer | Prepares returns | Needs an IRS PTIN; no exam required | Limited (Annual Filing Season Program participants) or none |
The practical split: a bookkeeper keeps the records current all year; a CPA or EA uses those records to prepare your return and advise you. Some firms do both, and some solo owners do the bookkeeping themselves.
What are the signs I need a bookkeeper?
You probably need one if several of these are true:
- You have employees, or you're about to hire
- You sell physical products and track inventory
- You have business loans, financed equipment or investors
- You collect sales tax
- You run more than one business, or a partnership or S corporation
- A lender, landlord or investor asks for monthly or quarterly financial statements
- You have more than a few accounts and they're months behind
- You've missed estimated payments because you didn't know your profit
- Your CPA has told you, more than once, that your records slow them down
If you're already behind, read catch-up bookkeeping first; the fix for this year and the plan for next year are different decisions.
What can a solo freelancer handle without a bookkeeper?
Quite a lot, if the business is simple: one or two accounts, no employees, no inventory, cash basis, Schedule C. A workable routine looks like this:
- Use one business checking account and one card for business only
- Once a month, download each statement and mark the business charges
- Save receipts or invoices for business purchases; for travel, meals and gifts, IRS Publication 463 generally doesn't require one under $75, except for lodging
- Note the business purpose next to trips and meals the same week
- Keep a mileage log if you drive for work
- Set aside money for tax and pay estimates on the Form 1040-ES dates (the next one is Jan 15, 2027)
- Hand your CPA or EA complete records once a year
IRS Publication 583 notes that records kept electronically meet the same requirements as paper, so a folder of PDFs and a spreadsheet is a legitimate system. See how to organize receipts for taxes for a simple one.
Example: a freelance copywriter with one checking account, one card and about 40 business charges a month spends roughly an hour a month on this and pays an EA to prepare her return. When she later hires two part-time contractors and takes out an equipment loan, the hour doubles and the loan accounting confuses her. That's the point to bring in a bookkeeper.
Can I use AI for bookkeeping?
Yes, for parts of it. AI tools are good at the repetitive steps: reading statements in different formats, suggesting categories, pulling receipts out of email, spotting a charge that appears twice, and noticing patterns such as a cluster of charges in another city.
They have limits you should plan around:
- They don't know your intent. A dinner can be a client meal or a date. Only you can supply the business purpose that IRS Publication 463 asks you to record.
- They can be confidently wrong. Review what they suggest, especially categories, before anyone relies on them.
- They don't own the result. You are responsible for your records, and your CPA decides how items go on the return.
- They don't replace judgment on complex items: payroll, inventory, loans, depreciation and entity choices.
The labor data points the same way. The US Bureau of Labor Statistics projects employment of bookkeeping, accounting and auditing clerks to decline 6% from 2025 to 2035 and says technological change is expected to reduce demand for these workers. It still projects about 144,100 openings a year, from replacing people who leave the occupation. Software is taking over routine entry; people are still needed for review and judgment.
Will an accountant alone be enough?
Often, for a simple business. Many CPAs and EAs prepare Schedule C returns from statements, income forms and an organized expense list without a formal ledger. Ask yours what they need and whether they charge more for unorganized records. If they want reconciled books, you need either a bookkeeper or a bookkeeping routine you'll actually keep. The small business tax prep checklist shows what to bring either way.
Where Amy fits
Amy isn't a bookkeeper or a CPA, though working with her is a little like having a bookkeeper you can text. She does the part most solo owners skip: she finds the business expenses in the records you already have and tells you what's missing. Your accountant sees the source behind every line and makes the call.
