Frequently Asked Questions 

General Questions

The question is a fair one, as the distinction between a bookkeeper, an accountant, and a CPA is often blurred.
First, a bookkeeper can be an accountant, an accountant can be a bookkeeper, and a bookkeeper can be a CPA. But on the flip side, a bookkeeper might not be an accountant, an accountant may not be a bookkeeper, and an accountant might not be a CPA.

In very general terms, when people refer to a bookkeeper, they’re generally referring to someone who may not have the training of a CPA and may even be self-taught. Whereas when people refer to an accountant, generally they’re referring to someone who has at least some formal training as an accountant. But there is one distinction we can make: A CPA (Certified Public Accountant) is always an accountant, has formal training as an accountant, and has passed a difficult exam which shows they have obtained at least a minimum level of knowledge.

Typically, smaller businesses use a bookkeeper and larger businesses usually call their bookkeeper an accountant or controller. And there is an implied level of knowledge, but as we stated, the distinction is not always present.
Bookkeeping is the process to record transactions on a daily basis in a continuous and honest way. This is an important component to building a strong business. A bookkeeper is responsible for processing paperwork for a company’s business transactions. Eventually, the transactions will be registered in the accounts of the general account holder of the company.

Bookkeepers should be efficient, accurate, and knowledgeable about the debit and credit, chart of accounts, payable procedures, sales, accounts, payroll, etc. The responsibilities of each bookkeeper will vary according to the type and size of the company or business. To accommodate, the bookkeeper’s role can be expanded so that a bookkeeper can generate income details and balance sheets from accounting software. Bookkeepers are mainly required for recording financial transactions, accurately posting credits and debits, managing AR and AP operations, and analyzing financial business reports.

A CPA is often used by small business owners to prepare their taxes. In some cases, larger businesses require a CPA to audit their financial records. Generally speaking, CPAs who are practicing public accounting do not provide significant review of the business’ financial performance. There are always exceptions to any rule, but most public accounting firms focus their accounting practice around taxes and audits.

So when a business needs answers to questions like how to improve cash flow, boost business revenue, or manage expenses, they turn to a financial business consultant. One of the challenges for business owners hiring a financial business consultant is hiring a quality consultant—it’s not uncommon for someone to say they’re a business consultant, when in fact they’re just between jobs or exploring if someone will pay them for advice.

When hiring a business consultant, it’s important to interview the person or firm and understand if they’ve worked on projects similar to the business challenges you’re facing. We also recommend picking a person or firm that has been a professional business consultant for many years. The years of experience indicate that they’ve succeeded in providing business advice, and that they likely have a solid approach to solving business programs. It also avoids the issue of someone who is just learning or trying consulting.

Their advice can not only provide little value, but can even do harm. We have also found that experience at large consulting firms can be helpful, in that these firms provide a standard approach. But also look for someone who has worked with businesses that are similar in size to your own business. Small and mid-sized businesses often have challenges which may be unique compared to large companies.

A Virtual CFO or Virtual Financial Officer is an outsourced service that provides highly skilled assistance in the financial requirements of an organization. Just as a CFO provides financial insights and guidance for large organizations, a virtual or part-time CFO in a smaller business is a trusted business advisor. Although the concept of Virtual CFO (Virtual Chief Financial Officer) is very common in the United States, it is a service that is being offered and used by more businesses than in the past.

A Virtual CFO can help founders and startups plan their future, reduce their costs, and provide general business guidance and experience. A Virtual CFO provides strategic and value-added services to a startup and goes beyond services typically provided by a public accounting firm.

Both Clarity FI and The Entrepreneur’s Network share the same founder.  David started Clarity FI to help business owners grow their businesses profitably.  Over time he found the business owners and founders he worked with didn’t have a good place to meet other business owners, network and ask important questions that are often common across a variety of startups.

So David started The Entrepreneur’s Network as a way to have business owners connect with one another.  The group was immediately popular and soon David found there were several hundred members.  Now the group grows by over 25 new members every day and has total membership of nearly 55,000 across the globe.  Stay tuned for updates as David plans to add more services supposed by Clarity FI to help these business owners connect with one another.  If you have ideas or suggestions feel free to send a note to info@clarityfi.com.

Have a question you want to have answered? Send us your comments or questions to Info@clarityfi.com