CPAs and Accountants… pretty much the same thing, right? Not exactly. A CPA is a certified public accountant. Although all CPAs are technically accountants, standard accountants are not CPAs. A CPA goes through more rigorous education to be able to hold the well respected title. It is important to evaluate your personal and business needs to determine which accounting option is the best fit for you.
CPAs vs Accountants
One of the main differences between a CPA and standard accountant is that a certified public accountant is a licensed professional that goes through many steps to hold their title whereas an accountant is a professional trained in the field, but not licensed.
Although each state has their own requirements, in general, a CPA must have the following qualifications:
- Bachelor’s degree with a minimum number of credit hours dedicated to CPA courses. Courses may include finance, accounting, economics, ethics, etc.
- Pass an ethics exam.
- Obtain a minimum number of paid or unpaid working hours as a CPA. This is often completed through an internship program. Many states require at least 2,000 hours of on the job training or work.
- Meet CPE (Continued Professional Education) hours based on state requirements. Courses may include but are not limited to taxing, auditing, or accounting. On average, states require at least 40 to 80 hours annually.
- Pass the CPA exam.
Certified public accountants must meet a large number of criteria compared to an accountant. An accountant typically has a bachelor’s degree in a field relating to accounting or finance and on the job training.
What Can CPAs Do That Accountants Can’t?
Both certified public accountants and accountants can assist individuals and businesses with the following:
- Bookkeeping or general ledger services.
- Tax preparation for individuals or businesses.
- Verify financial statements for accuracy.
- Auditing services.
In addition to the above tasks, a CPA can do the following, whereas a non-licensed accountant cannot:
- Prepare audited financial statements.
- For businesses, having your financials audited for accuracy by a CPA can actually benefit you when filing for taxes to avoid potential audits from the IRS.
- Provide tax preparation and advice.
- Although all accountants can assist with tax documentation preparation, only a certified public accountant can provide financial advice and represent you if you were to be audited but the IRS.
- File a tax return on your behalf.
- Both CPAs and accountants can assist in tax preparation, but only a CPA can file your tax return for you.
Choosing Between a CPA or Accountant
Choosing a certified public accountant or an accountant for yourself or your business will depend on the needs you have. Although CPAs are highly credible and ethical, they also come with a higher price tag. CPAs tend to be more expensive because of their reputation which may or not be an important factor when choosing an accountant. Asking yourself the following questions will better assist you in finding the right accounting solution for you:
1. Are you looking for guidance and advice?
- If you are looking for someone to provide advice to you, a CPA may be the better option since they can advise and represent you regarding your taxes and financial decisions.
2. Are you looking for basic bookkeeping services for your business?
- For basic bookkeeping services, such as invoicing, payroll, and expense reporting, it may be a more affordable option to go with an accountant.
Reasons You May Need an Accountant or CPA
In addition to having a business or wanting representation for taxes in case of an audit, there are additional reasons you may wish to hire an accountant or CPA.
- You are self employed and want assistance preparing for taxes.
- You earn income from rental properties.
- You had a major life event during the year such as marriage, divorce, or getting an inheritance.
- You want to itemize your deductions (rather than taking the standard deduction) on your tax return. By itemizing your deductions with an accountant, you may be able to get back more money on your return.
- You are starting up a business and looking for financial advice.
- You wish to save time and money. An accountant can assist you with your tax preparation which can save you time in the long run. When hiring a professional accountant or CPA you also have the potential to save money. Although there is a charge for these accounting services, their expertise in preparing your taxes may give you the best refund.
Although accountants and certified public accountants are very similar in how they can assist you or your business, a CPA is a licensed professional with the highest ethical standard. Because CPAs are so reputable and admired, their services do come with a higher price tag. It is important to review your specific needs to determine if an accountant or a certified public accountant is the better option for you.
