Almost anyone can call themselves an accountant. This isn't true of CPAs (Certified Public Accountants), which is a designation requiring specialized training. The American Institute of Certified Public Accountants (AICPA) states, “All CPAs are accountants, but not all accountants are Certified Public Accountants (CPAs). Receiving your CPA certification distinguishes you from other business professionals – the benefits are increased trust, opportunity, and financial reward.”
Avoid unscrupulous tax preparers who include errors or false information on a tax return that could leave you open to liability for unpaid taxes, penalties, and interest.
What are the main differences between licensed CPAs and accountants?
- Training - CPAs have passed rigorous testing and strict requirements for licensing in the state in which they intend to practice. After becoming licensed, CPAs must take continuing education classes throughout their career in order to maintain up-to-date information on issues and changes in the accounting world.
- Fiduciary Responsibility - Many businesses that are required to have a financial statement audit or review will need a CPA to perform these services and issue the required reports. CPAs are also considered fiduciaries with a legal duty and power to act on behalf of and in the best interest of their clients. Non-CPA accountants are not considered to be fiduciaries to their clients.
- Taxes and Regulations - Accountants without a CPA certification may prepare a proper tax return, but a CPA offers distinct advantages to clients that non-CPAs cannot provide. Many licensed CPAs are more knowledgeable in tax codes as a result of the rigorous CPA licensing examination and continuing education requirements. Licensed CPAs are also eligible to represent clients before the IRS if audit support is required, while a non-CPA accountant is not.
- State Requirements and Codes of Ethics - The license is not the only requirement to be a CPA. CPAs are also expected to follow a strict code of ethics and meet the high standards of the profession.
Pitfalls of working with an unlicensed accountant?
An unlicensed accountant can disappear with your data at any time. While a licensed CPA is professionally responsible by the State Board of Accountancy to make sure your data is protected. Having a licensed CPA provides you recourse with the State Board of Accountancy if you ever need to report them. If you work with an unlicensed person and they disappear, there is no one to call or complain.
Licensed CPA vs Unlicensed Accountant Snapshot
According to Merchant Maverick, “An accountant is a finance professional who offers business advice and can perform bookkeeping tasks like reconciliation and record-keeping. But only a CPA can represent your company legally before the IRS and create audit reports and review reports.” Certified Public Accountant (CPA)
- Must have a Bachelor's and have successfully passed the CPA certification exam
- Offers advice and insight about the big picture finances of a business, and can often offer a deeper knowledge of tax codes
- Can create audit reports and review reports
- Can legally represent a client
Unlicensed Accountant
- Generally, has a bachelor's degree, preferably in accounting
- Offers advice and insight about the big picture finances of a business
- Can only create compilation reports
- Cannot legally represent a client
What do I need?
- Do you need help managing the day-to-day bookkeeping processes of your business? Hand the reigns to a professional bookkeeper to free up your time.
- Do you need financial advice regarding your business? A professional accountant or CPA will be able to analyze your business finances and offer business advice.
- Do you need to prepare your taxes? A bookkeeper can help you manage your payroll taxes, and sales taxes, and compile 1099s, but only an accountant, CPA, or EA can file your tax returns for you.
- Are you worried an employee is stealing from you? A forensic accountant will be able to get to the bottom of the issue and spot any potential fraud.
- Are you a private or public corporation? If you are a public corporation, it must provide audit reports to investors and only CPAs are qualified to create those reports.
Analyzing your business's needs is the best way to determine which type of accounting professional you need. We would be happy to discuss your needs to determine what type of services you might require. Insogna CPA offers bookkeeping, payroll, virtual/fractional CFO, and more services to help take your business to the next level. Give us a call.
