CPAs and accountants—are they the same thing, and does it matter? When you’re looking for an accounting professional for your business, you might be surprised to learn that the qualifications of an accountant and a CPA are quite different. In short, a CPA is held to a higher standard of knowledge and can perform additional services. Read on to learn more about the differences between a CPA and an accountant in Jamestown, ND.
What is an accountant?
All CPAs are accountants, but not all accountants are CPAs. Accountants are professionals who handle recording and reporting financial transactions, such as bookkeeping, recordkeeping, creating financial policies, budgeting and reconciling information. Accountants are not required to take any exams or even hold a degree in accounting, although many of them do. Anyone who performs accounting duties can call themselves an accountant.
While the terms “accountant” and “bookkeeper” are often used interchangeably, they describe different roles. Bookkeeping refers to keeping track of short-term finances, such as bills, deposits, invoices and other day-to-day financial business. Accountants are focused on the long-term future, such as advising on financial structure, analyzing financial records, taxes and long-term financial and business planning. Accountants can perform bookkeeping duties, but it’s more likely that a bookkeeper (whether yourself or a hired professional) and accountant will work together.
What is a CPA?
CPAs are accountants who have passed their state’s CPA exam. If you want a licensed accountant, you need a CPA. Additional requirements vary by state, but many states require that a CPA have a bachelor’s degree and at least two years of accounting experience. This ensures that when you hire a CPA, you’re hiring a professional who has been subject to stringent licensing requirements, must renew their license periodically and already has professional accounting experience. In contrast, an accountant is anyone who holds themselves out as an accountant, regardless of training and experience.
CPAs can also perform additional duties, such as attestation services, representing clients in front of the IRS and signing returns or representing clients during tax audits. In short, they offer more services and protections than an accountant alone.
Whether you need a CPA or an accountant largely depends on the complexity of your business. If you’re running an Etsy business to supplement regular income, for example, an accountant might be sufficient. If your business explodes in popularity and you want to grow, or your financial operations are complicated, a certified public accountant is the way to go.
When you need help with your small business finances, hiring a CPA is one of the best decisions you can make. CPAs provide financial, tax and business expertise, ensuring that you can focus on running your business instead of getting bogged down in paperwork. Craig S. Hanson, CPA offers decades of experience in accounting services for businesses and individuals. For more information about the differences between a CPA and an accountant in Jamestown, ND, reach out to us today. We’d be glad to tell you more about what we can do for you!