If you’re in the market for a tax accountant and want to know what is the difference between a CPA and an accountant, we’ve got your back. A tax accountant or tax preparer is someone who helps people with their tax returns, while an accountant typically does not specialize in taxes. If you’re wondering how to choose between CPAs and accountants when looking for a financial adviser, keep reading.
Table of Contents
1. What is an Accountant?
Accounting is the process of keeping track of financial transactions and recording and reporting them. Anyone who performs accounting activities can describe themselves as a professional accountant. This is true even if they lack a college degree in accounting. However, an accountant usually has at least a bachelor’s degree in accounting.
Accountants without formal training may often execute bookkeeping, general accounting responsibilities, and tax-related duties. Accountants with a minimal amount of training and expertise, however, can perform a wide range of services.
Accountants may assist senior accountants or work alongside experts in the finance department.
2. What is a CPA?
A CPA’s job, on the other hand, is to attest to the accuracy of a company’s financial statements. CPAs are licensed by the state in which they work. CPA candidates must pass the American Institute of Certified Public Accountants Unified CPA examination.
The AICPA Unified CPA exam covers which has four sections: Regulation, Financial Accounting, and Reporting Business Environment and Auditing. A CPA also must meet professional experience requirements. They must complete continuing education courses every year in order to maintain their CPA certification.
A CPA can provide more comprehensive services than regular accountants because they have more training and expertise when it comes to financial statement audits, tax planning, and preparation, as well as consulting services.
CPAs may assist a broad range of businesses, individuals, for-profit and nonprofit institutions, and the government.
3. What’s the difference between an accountant and a CPA?
The primary distinction between Accounting and CPA is that Accounting is the technique of keeping, reporting, and recording a company’s financial activities, whereas CPA stands for Certified Public Accountant, which is basically an accountant that owns a state license to practice.
CPAs are accountants who specialize in managing money and investments as well as financial planning. They can do more complex taxation and auditing services than an accountant with a license, which they can provide to clients.
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So what’s the difference? Generally speaking, CPAs offer more comprehensive services than accountants because they have more training and expertise in financial statement audits, tax planning, and preparation, as well as consulting services.
CPAs may assist a broad range of businesses, individuals, for-profit and nonprofit institutions, and the government. On the other hand, accountants typically focus on bookkeeping activities such as preparing tax returns, handling payroll, and other financial transactions. CPAs can perform attestation services, but accountants can not provide attestation services.
Key Differences Between Certified Public Accountants and Accountants:
#1 – Licensing
CPAs have completed rigorous testing and strict standards for licensing in the state in which they wish to work. They must pass a comprehensive examination of business, tax, auditing, and general accounting talents.
CPAs must maintain their credentials by enrolling in continuing education programs throughout their careers to stay up to speed on issues and changes in the accounting world.
#2 Fiduciary Responsibility
Many companies that are mandated to have a financial statement review or audit will require a CPA to conduct these services and administer the required reports.
Additionally, CPAs are viewed as fiduciaries with a legal obligation and the ability to act on behalf of their clients. Accountants that do not fall in the CPA category are not viewed as fiduciaries to their clients.
#3 Taxes and Regulations
Accountants without a CPA credential might prepare a tax return, but CPA qualifications provide clients with services that non-CPAs do not.
Many CPAs have more knowledge of tax codes because of previously mentioned CPA licensing examinations that are rigorous and continuing education requirements. Another crucial factor is that CPAs are qualified to represent clients to the IRS, where a non-CPA accountant, on the other hand, cannot.
#4 Codes of Ethics and State Requirements
CPAs have to respect a strict code of ethics and continuously meet the high standards of their profession, having the license itself is not the sole requirement to become a CPA.
#5 Cost and Expenses
When compared to accounting programs/certifications, the costs and expenses of pursuing a CPA degree are higher.
Final Thoughts on CPA vs Accountants
- When it comes to deciding which of the two is better for your business, it comes down to your priorities, budget, and time. If you opt for a CPA, you will go through with international standards, laws, and principles.
- Obtaining a CPA license is much more difficult and takes more time, which means that a CPA will put more hard work in from the start.
- A personal tax accountant can provide three types of financial statements: compiled, reviewed, and audited. A Non-CPA business tax accountant can prepare only a compiled financial statement.
- Even though small businesses might not require a reviewed or audited financial statement, public companies are mandated to issue audited statements.
As tax season draws near, many people are looking for the best tax accountant to help them with their tax returns. A CPA or an accountant? What’s the difference? Make sure to look at the key differences mentioned in this article before making your decision.
Greg is a Chartered Financial Analyst (CFA) with 22+ years experience in Financial Services. He has held numerous FINRA Securities licenses (series 7, 63, 65, and 66), and is an expert on Investment Products and Financial Planning. Greg has 22+ years experience as a real estate investor and degrees in Psychology and Philosophy.
Greg has been quoted/interviewed in Yahoo Money, Yahoo Finance, USA Today, Authority Magazine, Realtor.com, Business Insider, and others.
Greg is an avid runner, and the father to identical twin girls and their awesome brother. His love of budgeting and his kids led him to join The Great Resignation in 2021.
Disclaimer: Any Financial Tips on ChaChingQueen are general and informational. Speak with a professional about your specific situation.