Are you confused about the differences between a Certified Public Accountant (CPA) and an accountant? They appear to have the same qualifications and experience, but there are certain differences you'll want to know about before you decide which one to hire.
What's The Difference?
One way to explain the difference between these two professionals is that all CPAs are accountants but not all accountants are CPAs. Confused? It is confusing to differentiate between these two professionals. In short, a CPA is finance professional who has passed a state licensing exam. An accountant has not passed this exam and is not licensed by the state.They both perform finance and tax-related work and they both adhere to the rules and regulations set by the Financial Accounting Standards Board (FASB) such as the Generally Accepted Accounting Practices (GAAP). Both sets of professionals likely have college degrees, and although the degrees may not be in Finance or Accounting, they probably are.The term "accountant" is more of a general term used to refer to a person who performs finance work, following those FASB rules and regulations, whereas CPA can only be used by someone who has passed the state licensing exam.
What Makes A CPA So Special?
The key reason why these professionals are so highly valued has to do with the state licensing exam. Licensing requires the completion of a several days long examination covering many different areas of taxes and finance. To maintain the license, the professional must remain up-to-date on tax laws and meet continuing education requirements every year. Bookkeepers and other financial professionals do not have to do this.
When Should You Hire One?
There are several instances in which a CPA may be a better choice than an accountant. Three specific areas are:
Taxes. In most cases, they will be more familiar with tax law than other finance professionals. They are also recognized by the IRS as certified preparers. This is important because certified preparers have a greater ability to represent clients to the IRS, if the need arises.
Financial Analysis. Routine financial work such as inputting records and preparing reports can be performed by anyone who is capable of it, but a licensed expert is needed to perform a thorough analysis of the financial situation. They can also offer advice on tax and financial issues that others cannot.
Audits. One of the biggest benefits is their ability to represent you to the IRS. If you are going to hire someone to do your taxes, it pays to make sure they can represent you if you are audited.
Working Together
It's entirely possible to have both professionals working side by side and it may even be in your best interest to have this arrangement. Unlicensed professionals can handle the routine tasks while the CPA handles the tax work and financial analysis. CPAs can be outside consultants who are brought in only for specific needs, projects or times of the business cycle, saving businesses from having to hire an internal pro.The question of which professional to hire depends on what work you need performed. If it is tax or audit related or financial analyses, then a CPA is worth the extra cost. If it is routine tasks, reporting and day-to-day financial management, an accountant can fit the bill.
Article Source: http://EzineArticles.com/8090287
What's The Difference?
One way to explain the difference between these two professionals is that all CPAs are accountants but not all accountants are CPAs. Confused? It is confusing to differentiate between these two professionals. In short, a CPA is finance professional who has passed a state licensing exam. An accountant has not passed this exam and is not licensed by the state.They both perform finance and tax-related work and they both adhere to the rules and regulations set by the Financial Accounting Standards Board (FASB) such as the Generally Accepted Accounting Practices (GAAP). Both sets of professionals likely have college degrees, and although the degrees may not be in Finance or Accounting, they probably are.The term "accountant" is more of a general term used to refer to a person who performs finance work, following those FASB rules and regulations, whereas CPA can only be used by someone who has passed the state licensing exam.
What Makes A CPA So Special?
The key reason why these professionals are so highly valued has to do with the state licensing exam. Licensing requires the completion of a several days long examination covering many different areas of taxes and finance. To maintain the license, the professional must remain up-to-date on tax laws and meet continuing education requirements every year. Bookkeepers and other financial professionals do not have to do this.
When Should You Hire One?
There are several instances in which a CPA may be a better choice than an accountant. Three specific areas are:
Taxes. In most cases, they will be more familiar with tax law than other finance professionals. They are also recognized by the IRS as certified preparers. This is important because certified preparers have a greater ability to represent clients to the IRS, if the need arises.
Financial Analysis. Routine financial work such as inputting records and preparing reports can be performed by anyone who is capable of it, but a licensed expert is needed to perform a thorough analysis of the financial situation. They can also offer advice on tax and financial issues that others cannot.
Audits. One of the biggest benefits is their ability to represent you to the IRS. If you are going to hire someone to do your taxes, it pays to make sure they can represent you if you are audited.
Working Together
It's entirely possible to have both professionals working side by side and it may even be in your best interest to have this arrangement. Unlicensed professionals can handle the routine tasks while the CPA handles the tax work and financial analysis. CPAs can be outside consultants who are brought in only for specific needs, projects or times of the business cycle, saving businesses from having to hire an internal pro.The question of which professional to hire depends on what work you need performed. If it is tax or audit related or financial analyses, then a CPA is worth the extra cost. If it is routine tasks, reporting and day-to-day financial management, an accountant can fit the bill.
Article Source: http://EzineArticles.com/8090287
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