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Difference Between a Bookkeeper, Controller, CFO, and Tax Accountant

Posted on December 2nd, 2018

Jack Kern
Owner, President
Outsourced Accounting Department, Inc.

Often times I find that many of our clients are a bit confused as to the difference between various accounting roles, and therefore, the various functions our firm performs behind the scenes.  In fact, most small business owners I’ve worked with tend to think in terms of “tax,” as that is the first accounting issue they learned they needed to address when they started their business.  So the challenge we frequently encounter is one of educating our clients on how all of these roles tie together, and the importance of each role to their particular business.

An excellent “Glossary of Job Descriptions for Accounting and Finance” is published by Robert Half International, an employee staffing agency.  The job titles highlighted in yellow in the previous link more or less correspond to the functions we perform.  Of course the larger the business, the larger the internal accounting department that is required to perform the accounting function.  Conversely, the smaller the business, the fewer accounting positions that are justified.

With very small businesses, many small business owners attempt to perform their own bookkeeping using QuickBooks.  But then many often learn that QuickBooks is not as easy as its name implies, and they end up making a mess out of their books that someone has to clean-up, usually their CPA at year-end at CPA hourly rates.  And worse, they often find that “bookkeeping” has become a distraction from running their own business, and a task they’ve come to dread.  So, eventually, during the early stages of their business’ development, many small business owners discover that they are better off outsourcing the bookkeeping task all together so that they can focus their attention on their own business.  This is where our firm comes into the picture, wherein we perform the “accounting department” function on as “as needed,” part-time basis.

In our business, the organization chart would look something like this with the client in the traditional role of “Chief Executive Officer,” and the boxes in red are the services we typically provide:

In a nutshell, here are our “job descriptions:”

  • Bookkeeper:  Performs all data entry including bank and credit card transactions and reconciles same to month-end statements. Provides assistance to some clients who perform some tasks in QuickBooks and need our help.
  • Controller:  Oversees bookkeeper’s work; performs month-end adjustments and closing.  Creates month-end financial statements and various custom reports for client.  The emphasis  here is on management accounting and financial accounting. Provides assistance to some clients who perform some tasks in QuickBooks and need our help.
  • CFO (Chief Financial Officer):  As a business grows, its accounting and financial needs becomes more complex. In terms of the functions our firm provides, this would encompass (on an “as-needed,”part-time basis), financial analysis including ratio analysis, and strategic financial planning including budgeting, projections, business plan assistance, and in some cases, communicating the company’s financial results to prospective lenders and investors.  In terms of the above chart, the CFO role encompasses the positions of FP&A (Financial Planning & Analysis), and Financial Analsyst down the right hand side of the chart, which are all performed by myself (see Owner and Management.)
  • Tax Manager: Converts the company’s books for tax accounting purposes for preparation of the year-end tax return; provides assistance in various other tax related matters such as sales tax, property tax, etc.  (In our organization, this function is performed by an outside CPA firm, our affiliate, Kern and Associates CPA, P.A. which is owned by Marianne Kern, CPA (see Owner and Management).  Marianne’s primary focus is providing tax assistance to our business clients who do not already have an outside tax accountant.)
  • Payroll: While QuickBooks includes a payroll module, in our opinion, it is a tedious process that is more efficiently and economically managed by outside payroll companies.  These company’s typically guaranty timely and accurate submission of payroll tax returns and payment of payroll taxes which most CPA firms I know of do not, and at rates that are more affordable to the client vs. what a CPA firm would charge.  For this reason, we also see many CPA firms who prefer to outsource this task to a payroll company vs. offering this service themselves.

If you have questions on any of the above, as always, please do not hesitate to give us a call or send us an email.  Our contact info is on our website.

Related Articles:

The Difference Between Your CPA and a Controller-M-1

Winging It In QuickBooks

How You Use QuickBooks Can Distort Your Company’s Profitability 

Why Outsource Your Bookkeeping?

The Opportunity Cost of Being Your Own Bookkeeper

 

 


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