The short answer
A bookkeeper records, reconciles and reports your transactions, and Idaho law does not reserve that work for license holders. A CPA is licensed by the Idaho State Board of Accountancy, and only licensees may issue audit, review or compilation reports. An enrolled agent is licensed by the IRS for tax work. CPAs, enrolled agents and attorneys can represent you before the IRS. Many businesses and churches use a bookkeeper monthly and a CPA or enrolled agent for tax work.
Three jobs that all get called "the accountant"
Most owners and church treasurers meet these roles one at a time. The books fall behind, so you hire a bookkeeper. Tax season arrives, so you find a preparer. Then a lender asks for reviewed financial statements, or an IRS letter shows up, and you learn that the person you already pay is not allowed to handle it.
The three roles do different work under different rules. A bookkeeper keeps the records. A certified public accountant (CPA) holds a state license and is the only one of the three who can issue a report on your financial statements. An enrolled agent (EA) holds a federal tax credential from the IRS. Knowing which is which keeps you from paying one professional for another's work.
Churches have a few extra wrinkles, such as audits for lenders or denominations and minister payroll. Those are covered in bookkeeper, CPA or auditor for a church. This guide covers small businesses and the credentials themselves.
The bookkeeper: records, reconciliations, reports
A bookkeeper records income and expenses, codes each transaction to the right account, reconciles every bank, card and loan account to its statement, and produces monthly reports such as a profit and loss statement and a balance sheet. The result is a set of books your CPA or enrolled agent can work from at tax time.
Idaho does not license bookkeeping. Idaho Code section 54-221 reserves reports on financial statements for licensees, but it says that does not prohibit anyone from performing other services that use accounting skills, including preparing tax returns and preparing financial statements without issuing a report. Section 54-220 does limit titles: someone without a license may not call themselves a certified public accountant, a "public accountant" or a similar title, or use the letters CPA.
Because there is no state license, you judge a bookkeeper on experience, references, a written process and a written scope. Software certifications, such as Intuit's QuickBooks ProAdvisor program, show training in that software. They are not a license to practice accounting or tax.
The CPA: licensed by the state, and the only one who issues reports
CPAs are licensed by state boards of accountancy. In Idaho that is the Idaho State Board of Accountancy, whose licensing is handled by the Idaho Division of Occupational and Professional Licenses (DOPL). The IRS describes CPAs as people who passed the Uniform CPA Examination, completed accounting study at a college or university, met experience and character requirements, and keep up continuing education.
Two kinds of work bring most small organizations to a CPA. The first is tax: returns, planning and questions such as how an owner should be paid. Not every CPA does tax work, so ask. The second is a report on your financial statements. Under Idaho Code section 54-221, only licensees may issue a report on another organization's financial statements or offer attest or compilation services. If a lender, grantor or board asks for an audit, a review or a compiled statement with a report, you need a CPA.
The enrolled agent and other paid tax preparers
An enrolled agent is licensed by the IRS, not by a state. The IRS says an enrolled agent earns the credential either by passing a three-part examination covering individual and business returns, or through experience as a former IRS employee, and must complete 72 hours of continuing education every three years. Idaho Code section 54-220 says only people the IRS has designated may use the title "enrolled agent" or "EA." Enrolled agents work on tax: returns, planning, IRS notices and disputes. The credential does not cover audits or reviews of financial statements.
Anyone who prepares or helps prepare federal returns for pay must have a preparer tax identification number (PTIN), whatever their credential. A PTIN on its own is not a credential.
- Unlimited representation rights: enrolled agents, CPAs and attorneys can represent you before the IRS on any matter, including audits, collection and appeals. Treasury Department Circular 230 sets their rules of conduct.
- Limited representation rights: preparers in the IRS Annual Filing Season Program can represent you only on returns they prepared and signed, and not in appeals or collection.
- PTIN only: a preparer with a PTIN but no credential and no Annual Filing Season Program record can prepare returns but cannot represent you.
| Question | Bookkeeper | CPA | Enrolled agent |
|---|---|---|---|
| Who grants the credential | No state license; software certifications come from the vendor | Idaho State Board of Accountancy (a state license) | The IRS (a federal credential) |
| Keeps and reconciles the books | Yes, the core of the job | Some do; many focus on tax and reports | Some do; most focus on tax |
| Prepares tax returns for pay | Only with a PTIN; many bookkeepers do not | Yes, with a PTIN | Yes, with a PTIN |
| Issues audit, review or compilation reports | No | Yes, as a licensee under Idaho Code 54-221 | No |
| Represents you before the IRS | No | Yes, on any matter | Yes, on any matter |
| How to check | References, a sample report and a written scope | Idaho DOPL license search | IRS preparer directory |
How to check a credential before you hire
A credential takes a few minutes to confirm, and the official lookups are free to use.
- CPA in Idaho: search the person or firm in the Idaho DOPL license search, which covers the Board of Accountancy.
- Enrolled agent or credentialed preparer: use the IRS Directory of Federal Tax Return Preparers, linked from the IRS page on choosing a tax professional. It lists attorneys, CPAs and enrolled agents with valid PTINs, plus Annual Filing Season Program participants.
- Any paid preparer: the IRS says paid preparers must sign the return and include their PTIN. An unsigned return is a red flag.
- Bookkeeper: ask for references, a sample monthly report, and a written scope that says what is and is not included.
How the roles fit together
There is no single right setup. An owner with a simple business may keep their own books and hire an enrolled agent or CPA once a year. A growing business often adds a bookkeeper for the monthly work so the CPA's hours go to tax questions instead of sorting transactions. Some CPA firms also keep books, which can suit you if you want one firm. If you need an audit or a review, ask the CPA how keeping your books would affect their independence. Whether to keep books in-house or hire out is its own question, covered in in-house vs. outsourced bookkeeping.
Danielson Bookkeeping & Consulting is a bookkeeper. Carey Danielson holds an MBA and is a QuickBooks Online Advanced ProAdvisor, and is not a CPA, an enrolled agent or an attorney. The firm does not prepare tax returns, give tax or legal advice, perform audits or reviews, or represent anyone before the IRS. It keeps reconciled books and works alongside the CPA or adviser you choose, as set out on how we work and about Carey. If you are comparing bookkeepers, how to choose a small business bookkeeper is the next step.
