Accounting doesn’t come with a handbook when you start a business. And yet, somehow, you’re expected to know how to manage your QuickBooks file, understand what counts as a write-off, and magically know the difference between a bookkeeper, an accountant, an EA, and a CPA.
We’ve been in this space for a long time, and we see the same misconceptions pop up over and over again—so let’s clear a few of them up.
Myth 1: All Accountants Are the Same (and They All File Taxes)
Not all accountants are CPAs—and not all accountants prepare taxes.
Let’s clear up a big misconception: the word accountant is often misunderstood. It doesn’t always mean “tax preparer,” and it definitely doesn’t always mean “licensed CPA.” In fact, some states—including California—have laws specifically covering the use of accountant titles or designations to avoid public confusion.
Here’s the breakdown:
- CPA (Certified Public Accountant): A state licensed accounting professional who can file taxes and represent clients before the IRS. CPAs also often offer tax strategy, audits, compilations, and broader financial advisory services.
- EA (Enrolled Agent): A tax specialist licensed at the federal level by the IRS. EAs are authorized to prepare taxes and represent taxpayers in audits, collections, and appeals. Unless they have additional education or certifications, EAs typically focus exclusively on tax—not general accounting or financial planning.
- Accountant: A broader term that generally refers to someone skilled in financial reporting, analysis, and other business-focused tasks—but not necessarily licensed. Many small business accountants provide advisory services, reporting, budgeting, and bookkeeping oversight—but not services provided by a CPA or EA.
- Bookkeeper: Handles the day-to-day recording of financial transactions—like categorizing expenses, reconciling accounts, and managing your QuickBooks file. They often work closely with accountants and tax preparers to keep your financials clean and accurate.
At Accounting Therapy, we are bookkeepers that proudly specialize in bookkeeping and accounting—but we do not prepare income taxes or offer any services that require a CPA or state license. Our work focuses on accurate books, strong systems, and financial clarity, so your CPA or EA has clean data to work with when it is tax time.
TL;DR: Not all accountants file taxes, and not all tax preparers do bookkeeping. Knowing the difference helps you build the right team.
Myth 2: You Only Need an Accountant at Tax Time
Great accountants and bookkeepers are most valuable between tax seasons.
We get it—tax season is the loudest time of year in the financial world. But if that’s the only time you’re thinking about your numbers, you’re missing out on what strong financial support can actually do for your business.
Whether your “accountant” is a CPA who files your taxes or not, most small businesses need more than just once-a-year help. You need someone who knows your books before tax time rolls around—and who can help you make informed decisions all year.
Here are just a few of the things your accountant or bookkeeper should help with outside of April 15:
- Keep your books clean and reconciled
- Plan your cash flow
- Create accurate budgets
- Forecast upcoming expenses
- Track and understand profitability
- Spot red flags before they become emergencies
- Prepare reliable financial reports to guide decisions
- Make sure your tax preparer has what they need—before they need it
At Accounting Therapy, we may not file taxes, but we work closely with the people who do—and we make sure the numbers they rely on are accurate, timely, and easy to understand.
Myth 3: Writing Something Off Makes It Free
Ah, the good ole “It’s a write-off!”
We’ve all heard it. But let’s set the record straight: writing something off doesn’t make it free. That means it might reduce the amount of tax you owe—but it doesn’t erase the cost of what you bought.
Let’s say you spend $2,000 on a business coaching program or marketing consultant. If that’s a legitimate deductible expense and you're in the 25% tax bracket, it could reduce your tax bill by about $500, or 25%.
But that still means you paid $2,000 out of pocket. The tax savings is only a portion of the total—you don’t get the whole amount back.
So yes, deductions are helpful. But they aren’t a refund, and they definitely don’t make things free.
Bottom line: Buy what your business truly needs, not just what you hope will “save on taxes.” Spend with strategy, not as a knee-jerk write-off.
Myth 4: Buying Inventory or Equipment at Year-End Will Reduce My Taxes
We hear this one a lot, especially around Q4:
“Let’s load up on inventory before year-end to reduce our profit and pay less in taxes.”
Sounds great—except that’s not how it works.
When filing on an accrual basis, if you buy inventory in December but don’t sell it until the following year, that cost sits on your balance sheet—it doesn't hit your P&L until the product is sold. No sale, no deduction (yet).
Equipment is a bit different. Some purchases may be fully deductible in the year they're made under Section 179 or bonus depreciation—but only if your business qualifies and has enough taxable income to apply the deduction. These rules are nuanced, and not every business entity is eligible.
The best move? Work with your tax team to put a strategy in place before spending to stay intentional and avoid panic spending.
Myth 5: Business Owners Automatically Understand Financials
Most business owners didn’t start their company to become a CFO.
You started your business because you’re good at what you do—coaching, consulting, designing, selling, building, etc. That doesn’t automatically mean you know how to:
- Read a profit & loss report
- Interpret a balance sheet
- Spot trends in your gross margin
- Forecast your cash flow
And that’s totally normal. These are skills you learn over time—or ones you outsource to a professional.
One of the best things we hear from clients is, “Thanks for explaining that in a way that made sense.” That’s what a great accountant or bookkeeper should do: meet you where you’re at, and help you get where you want to go.
Bonus Myth: QuickBooks Does It All for You
We couldn’t leave this one out.
QuickBooks is a powerful tool—but it’s not a “set it and forget it” system.
Some common misconceptions we hear:
- “If it’s in the bank feed, it’s already recorded.” (Nope. Not until you add or match it.)
- “QuickBooks will categorize everything correctly.” (Not really. The AI gets it wrong a lot.)
- “I set up a rule once, so I never need to check it again.” (Please check it again; refer to this blog post for more details.)
Tools are only as good as how you use them. QuickBooks is incredible when it’s set up right—and messy when it’s not.
Final Thoughts
Accounting shouldn’t be a mystery. But we get why it feels that way.
There’s a lot of jargon, and it’s easy to feel like you’re supposed to just know how this stuff works. But most of the time, these misconceptions stem from people not being given clear information—and that’s something we’re here to change.
Whether you’re trying to clean up your books, prep for tax season, or just get a better understanding of your numbers, you’re not alone.
And we’re here to help.
Until next time readers, stay myth-free and balanced (just like your checkbook 😉)!
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