Is a CPA better than an accountant?

Is a CPA better than an accountant?

Is a CPA better than an accountant?

In a word, yes. A CPA is an accountant who meets certain licensing qualifications, whereas an accountant is unlicensed. A CPA has a broad knowledge-base in financial accounting, business law, auditing standards, and ethics achieved through an advanced college degree (usually a master’s degree). However, anyone who does some sort of accounting may call themselves an “accountant”, regardless of their education.  A CPA must pass a comprehensive exam and have professional experience to obtain their license. An accountant has not met these requirements. Only a CPA can perform certain duties, such as audit financial statements. An unlicensed accountant cannot and is limited in function.

What can a CPA do that an accountant can’t?

An accountant must have a CPA license to (i) perform any financial statement audit engagement or (ii) represent a client before the IRS.  The IRS does make an exception to its representation rule in that it will allow an accountant who has passed the IRS’s enrolled agent exam to represent a client.

What is the difference between a CPA and a tax accountant?

Anyone can proclaim themselves as a “tax accountant”.  There is no licensing requirement to label yourself that way.  A CPA, however, must meet stringent licensing requirement that include college education (usually a master’s degree), continuing education requirements, and other professional standards.  Some CPAs focus their practice on tax work, others focus their work on performing independent audits of financial statements for companies that need to provide those types of statements, and some CPAs focus on the internal management of companies.  They may serve as controllers or chief financial officers of the companies that they work for.

Is a CPA a tax accountant?

If the CPA choses to focus their efforts in the area of taxes, they may be considered a tax accountant.  Some CPAs choose to work in industry as controllers or financial officers.  Although they have an understanding of taxes, their focus may be in other areas of management or corporate governance.  Some CPAs may choose to focus their professional attention on performing financial statement audits.  Again, these CPAs have an understanding of tax laws, but they would probably refer tax questions to someone else.

Are accountants tax experts?

An accountant may be a tax expert if they spend their focus on tax issues.  The tax laws are ever-changing so for someone to be considered an expert, he/she must devote a considerable amount of time understanding statutes and court cases.  Tax laws are created by congress and our bodies of government.  These laws may be challenged in courts– so a tax expert needs to understand the laws and the ever-continuing court cases that create what is called common law. As with anything, expertise comes through experience, preparation, and continuing education.

4 thoughts on “Is a CPA better than an accountant?

  1. Eli Richardson says:

    It’s helpful to know that a CPA needs to have a college education to get a license to work. I have an aunt who wants to hire an accountant to help manage her new branch next month, so I’ll make sure she reads your post right away. I appreciate your post about identifying a professional CPA.

  2. Millie Hue says:

    I find it interesting when you said that there are CPAs who will focus on taxes, some on independent audits for companies and their financial statements, and some on internal management processes. I can imagine how important it is to find the right professional who specializes in the type of industry you are in. Doing research will probably help you find and hire the right people to ensure that the processes of handling your finances will be done correctly which can even help your company to develop more.

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