Excite Tax's answer: bookkeeping records and reconciles transactions; under Utah Code 58-26a, audits and reviews are attest work, and only licensees may issue their reports.
Excite Tax's short version: bookkeeping is the record, accounting is the judgment built on it. Bookkeeping enters, categorises and reconciles every transaction; accounting chooses the method, adjusts the books, reads the statements and prepares the return. The legal line in Utah sits further out, at audits, reviews and other attest engagements. The side-by-side is below.
Bookkeeping is the running record of what the business earns, spends, owns and owes. Each transaction goes from its source document into a journal, and the totals into a ledger organized by account. In double-entry books every transaction is a debit in one account and a credit in another, so the books check themselves. The walk-through and a worked example are below.
Every business needs bookkeeping, because every person liable for tax must keep the records the IRS prescribes. Accounting judgment is needed at fixed points: the accounting method chosen on the first return, each year-end close and each return. An audit or review is needed only when a lender, investor or other outside party requires one. More below.
No, though they are often sold together. Accounting and bookkeeping share one ledger: bookkeeping builds it, accounting reads and adjusts it. When a provider offers bookkeeping and accounting, ask which rows of the table below the fee covers, and whether any report on the statements is issued; in Utah only a licensee may issue one.
Yes. Utah Code 58-26a-305 lets anyone use accounting skills, including preparing tax returns and financial statements, as long as no report is issued. Statements prepared that way carry a cover page saying they were not audited or reviewed and give no opinion or assurance.
Excite Tax draws the line where the work changes. Bookkeeping answers "what happened?": every sale, bill, transfer and card charge entered, categorised and matched to the bank. Accounting answers "what does it mean, and what should the business do?": the method, the adjustments, the statements, the return and the advice. Attest work answers a third question for someone outside the business: "can these statements be relied on?"
Who may do what in Utah (Utah Code § 58-26a-305; § 58-26a-501; § 58-26a-102)
| Work | What it produces | Who may do it in Utah |
|---|---|---|
| Bookkeeping | Transactions entered, categorised and reconciled; a ledger whose debits equal its credits | Anyone: using accounting skills needs no licence |
| Tax return preparation | The federal and Utah returns | Anyone: the exemption names the preparation of tax returns |
| Financial statements with no report | A profit and loss statement and balance sheet for the owner, a partner or a lender | Anyone, with a cover page saying they were not audited or reviewed |
| Compilation | Management's information presented as financial statements, with no assurance expressed | A licensee, because compilation report language is reserved |
| Review | Limited assurance, mainly from inquiry and analytical procedures | A licensee: review report language is reserved |
| Audit | An engagement under the Statements on Auditing Standards | A licensee: a report on another business's financial statements is reserved |
Most small businesses live in the first three rows. The last three matter when someone outside the business, usually a lender, an investor or a bonding company, asks for assurance in writing.
Bookkeeping is the running record of what the business earns, spends, owns and owes. The IRS sets the outcome, not the tool: the books must show gross income, deductions and credits, and any recordkeeping system that clearly shows income and expenses will do. The cycle is the same in a paper ledger, a spreadsheet or bookkeeping software:
Excite Tax's example: three transactions in a landscaping business's first week of May (IRS Publication 583: total debits must equal total credits)
| Transaction | Debit | Credit | Balances? |
|---|---|---|---|
| A customer pays a $1,200 invoice into checking | Checking (asset) $1,200 | Sales (income) $1,200 | Yes: $1,200 debit, $1,200 credit (debits equal credits) |
| Fuel of $85 bought on the business card | Fuel (expense) $85 | Credit card (liability) $85 | Yes: $85 debit, $85 credit (debits equal credits) |
| The $85 card balance paid from checking | Credit card (liability) $85 | Checking (asset) $85 | Yes: $85 debit, $85 credit (debits equal credits) |
After the three entries, checking is up $1,115, sales show $1,200, fuel shows $85 and the card is back to $0, with total debits still equal to total credits. Reconciling is the next step: the bank statement should show the same $1,115 increase, and a difference means an error to find and correct. The profit and loss for the week is $1,200 of sales less $85 of fuel, a $1,115 profit, read straight from the balanced ledger. Whether single or double entry suits a business is its own question: single or double entry.
Accounting takes the reconciled books and makes decisions with them. Some decisions are hard to undo: the accounting method is chosen on the first return, and changing it later generally needs IRS approval. That choice is set out in cash or accrual accounting.
Excite Tax keeps the books and prepares the return they feed; a licensed CPA at TBD CPA LLC signs every return Excite Tax prepares.
TBD CPA LLC's Utah firm registration details are pending confirmation and will appear here, with a reviewed date, once confirmed.
"Attest and attestation engagement" means ... (i) an audit ... (SAS); (ii) a review of a financial statement ... (SSARS); (iii) an examination of prospective financial information ... (SSAE)
In plain words: audits, reviews of financial statements and examinations under the national standards are attest engagements. Issuing a report on another business's financial statements, or a report worded like a review or a compilation, is unlawful conduct for anyone without a Utah licence to practise public accountancy.
What the chapter leaves open is most of the work a small business needs. Section 58-26a-305 exempts anyone using accounting skills, including preparing tax returns, management advisory services and financial statements issued without a report. Statements prepared that way stay outside the statute's definition of a report when, among its conditions, their cover page says they were not audited or reviewed and expresses no opinion or assurance.
Titles are the other line. Using the profession's title, its initials or any wording that tends to indicate it, without the Utah licence, is unlawful conduct, and a firm that practises public accounting must also register with the state. A citation for unlawful conduct carries a fine of up to $1,000 for a first offense and up to $2,000 for a second. That is why Excite Tax names the credential only beside the partner that holds it. Checking a Utah licence before hiring anyone is covered in how to choose a bookkeeper.
Tax returns sit on the accounting side, but federal rules, not Utah's, decide who may deal with the IRS for a client. Under 31 CFR § 10.2, practice before the IRS includes preparing and filing documents, corresponding with the IRS and representing a client at conferences, hearings and meetings. Section 10.3 of Circular 230 limits that practice to the practitioners it lists, attorneys and enrolled agents among them.
Representation before the IRS is not a service Excite Tax offers. When a notice arrives, the bookkeeping's job is to have the records ready for whoever answers it.
Excite Tax's rule of thumb: if nobody outside the business has asked for assurance, what the business needs is books that reconcile every month and a return prepared from them. To decide who keeps those books, see do I need a bookkeeper and bookkeeping for Utah businesses.
Hand the books over when keeping them costs more hours than the business can spare, or when they stop agreeing with the bank.
Excite Tax keeps these books; the return they feed is reviewed and signed by a licensed CPA at TBD CPA LLC.
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