As a business owner, it’s not possible for you to be in charge of every aspect of your business. Both CPAs and accountants can help you with your finances, but how do you know which to use in certain situations?
When comparing a CPA vs. accountant, the difference boils down to the level of education and requirements. Accountants have bachelor’s degrees in accounting while a CPA, or Certified Public Accountant, must meet educational requirements and pass a series of exams.
What Is a CPA (Certified Public Accountant)?
As we mentioned, CPAs are accountants who have met specific state licensing requirements. The requirements for CPAs differ based on the state, but at a minimum, they typically require a bachelor’s degree in accounting, experience requirements, and passing the CPA exam.
The American Institute of CPAs (AIPCA) administers the Uniform CPA exam consisting of four sections: Regulation, Financial Accounting, and reporting Business Environment and Auditing. Keep in mind that all CPAs are accountants but not all accountants are CPAs.
What Does a CPA Do?
Is a CPA an accountant? Do they handle the same responsibilities? Generally speaking, certified public accountants have different responsibilities than accountants. CPAs are responsible for analyzing and reporting financial data.
The daily responsibilities of CPAs differ depending on the business. Some duties of CPAs usually include:
- Creating, updating, and maintaining accounting policies and procedures including reporting and monitoring.
- Overseeing or establishing budgets.
- Ensuring accurate reporting through internal audits.
- Completing internal audits to ensure the accuracy of reporting.
- Managing accounts payable and receivable.
- Generating reports for government audits or for tax purposes.
- Reviewing and recommending benefits, compensation, assets, and the overall spending of company funds.
- Understanding changes in the financial industry and updating company policies and procedures to align with new best practices.
One thing to keep in mind about certified public accountants is that it’s important that they don’t provide auditing and consulting services to the same business as it would create a conflict of interest.
What Is an Accountant?
Accountants are usually responsible for general accounting responsibilities for their company. For example, they may take on bookkeeping or the reporting and recording of financial transactions. By evaluating financial reports, tax returns, records, and budgets, accountants are able to provide a high-level overview of the company’s financial state. Be mindful that daily responsibilities of accountants are heavily dependent on the company or the industry for which the accountant works.
What Does an Accountant Do?
If you’re wondering if an accountant is a CPA, know that they are different and handle different responsibilities. You may associate accountants with bookkeepers as there are many similar tasks, but accountants also take on a more complex and analytical job role compared with bookkeepers.
Accountants are responsible for analyzing their company’s financial data and advice on the different financial facets that impact company growth. Here are some day-to-day tasks of accountants:
- Giving tax advice
- Compiling financial statement
- Determining tax liabilities
- Filing income tax returns
- Locating accounting discrepancies
- Ensuring that bookkeeping practices are meeting the normas
- Working with auditors
- Analyzing and determining budgets
- Locating accounting discrepancies
What Is the Difference Between an Accountant and a CPA?
It’s clear that there are many differences between an accountant and CPA. CPAs have met the specific state and education licensing requirements in addition to passing the CPA exam. Here are some specific points of differentiation to help you determine if you need a CPA or accountant.
License and Attestation
CPAs need to pass a series of tests and meet rigid state requirements including completing the necessary coursework. They must have specific hours in accounting, auditing, business and taxation. They must also pass tests on tax, auditing, and general accounting skills. Once they have a license, CPAs need to continue their education throughout their careers to stay updated on changes in the accounting world.
Fiduciary Responsibility
CPAs are known to be some of the most trusted advisors in the business world. Because so many businesses are required to have a financial statement audit, they must rely on the services of a CPA to perform these services and issue the right reports. In addition, CPAs have a legal duty to act in the best interest of their companies and their clients. On the other hand, non-CPA accountants are not considered fiduciaries to their clients.
Taxes and Regulations
If a non-CPA accountant wants to prepare a proper tax return, they may do so. However, a CPA is much more knowledgeable in tax codes due to the rigorous CPA examination requirements. CPAs are also eligible to represent clients before the IRS while non-CPA accountants are not authorized to do so.
Auditing
In the case that a business needs to have their financial statements reviewed or audited, they need a CPA to perform said tasks. The CPA will also be responsible for providing them with the required reports. Because they are fiduciaries for their clients, CPAs are obligated to act on behalf of and in the best interest of their clients while non-CPA accountants are not.
Standing Before the IRS
When it comes to standing before the IRS, a standard accountant does not have a standing with the IRS or the Internal Revenue Service. On the other hand, CPAs are allowed to represent a taxpayer before the IRS.
State Requirements and Codes of Ethics
There is a difference between CPAs and accountants when it comes to state requirements and codes of ethics as well. CPAs must follow a strict code of ethics in addition to meeting the overall high standards of the profession. They must also have the license to be a CPA.
Governing Body
Regarding non-CPA accountants, there is no specific governing body. However, the governing body for CPAs is the American Institute of Certified Public Accountants.
Cost
There is a cost difference to consider between accountants and CPAs. Generally speaking, those who want to become a CPA will have to pay more compared to those pursuing accountancy courses or certifications. The extra cost associated with becoming a CPA is due to the higher level of power and responsibility that they have with this title.
Is a CPA Better than an accountant?
You may be wondering whether a CPA is better than an accountant. Consider: what can a CPA do that an accountant can’t? Accountants are ideal for servicing your basic needs, but a CPA is known to be a credible expert in accounting. CPAs are also better qualified to perform accounting duties.
Consider your priorities, time, and cost to help you make your decision. If you opt for a CPA, you are adhering to all international laws, principles, and standards. As it is much more difficult to pass the CPA exam than other accountancy certifications, you can rest assured that the individual is qualified.
Small businesses may opt for an accountant to manage their financial operations, but a CPA is always a valuable resource in aiding other financial aspects of your business. Examples include tax planning, financial statement analysis, and internal and external auditing.
Do I Need a CPA or an Accountant for My Business?
If you’re trying to decide between an accountant and a CPA for your business, know that there is a use case for both titles. Accountants are helpful for handling everyday aspects such as financial transactions, adjusting journal entries, and managing bank reconciliations. Even if you love your current staff accountant, there are still many benefits to hiring a CPA.
CPAs are ideal when:
- Your tax return is complicated and you need help filing.
- You’re just starting out your business and you want more big-picture financial guidance.
- You’re being audited and you need help with the audit process.
- You’re a public corporation and need audited financial statements.
Accountants are ideal when:
- You need help with routine transactions.
- You need management accounting for internal cost analysis.
- You need to create a budget.
- You need to analyze routine financial statements.
Our CPAs at Lewis.CPA Are Here to Help
It can be tricky to determine whether an accountant or CPA is right for your team. Our qualified and experienced CPAs at Susan S. Lewis, Ltd. are happy to help you manage both your daily financial operations and bookkeeping in addition to complex tasks such as auditing and taxes. Whether you’re a new business just getting off the ground or you’re looking to make a change to a more hands-on financial team, you’ll be in great hands with our team! Contact our professional CPAs to get started.
