Have you ever found yourself wondering what the differences are between a certified public accountant (CPA) and an accountant? You may have even, mistakenly, thought them to be one and the same. Individuals seeking to improve their financial and tax lives, small business owners seeking to grow, and/or managers seeking to assist in scale their company’s operations learn quickly there is a difference between the two and what they can provide in terms of services. This article will help you understand the difference between a CPA and an accountant, so that you can decide which is the best fit for your financial needs.
Degree
An individual looking to become a CPA or an accountant must obtain a Bachelor’s degree in accounting (4-year degree).
Certification
An accountant can become a CPA upon the successful passing of the CPA exam. Once this exam has been passed, an accountant becomes certified by the state to be able to provide services to the public at large. Accountants do not have to be licensed by the state in order to practice. With that being said, they do not have to take the CPA exam, which means they are not certified by the state and are unable to work with the public.
Continuing Education
CPA’s must complete 120 hours of continuing education in order to keep their license. This ensures that they are staying up-to-date on issues and changes in the accounting field. Accountants are not required to continue their education, which can hinder their ever-growing knowledge of the field.
IRS Representation
A CPA is able to represent you before the IRS, whereas an accountant is unable to do so. Because CPA’s are certified with the state, they are able to help you if your tax return is ever selected for a tax audit.
Governing Body
Accountants do not have a specific governing body they answer to, whereas a CPA does. The state department of regulation where the CPA is licensed governs their actions. CPA misconduct can be reported to the state or the American Institute of CPA’s (AICPA).
Bookkeeping and Accounting
Both accountants and CPA’s can provide bookkeeping and accounting services to small businesses.
Create Compiled Statements
CPA’s are able to create compiled statements for bank, loan purposes, and for other third parties. Accountants are unable to do this. Compiled statements gives third parties additional assurance that the financial statements have been prepared using Generally Accepted Accounting Principles (GAAP) which implies an extra layer of trust in the information being provided.
In closing, while both accountants and certified public accountants are important, the role of the CPA is heightened because they are entrusted with the job of providing financial statements that comply with federal, state, local laws and regulations. As businesses seek to grow and scale their businesses, the emphasis on obtaining a certified public accountant to take on an active role in their company becomes critically important.
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