Business Process

What’s the Difference Between an Accountant and a CPA?

“What’s the difference between an accountant and a CPA?” might sound like the beginning of a bad joke, but business finances are far from a humorous matter.

While both accountants and CPAs work in the accounting sphere, there are some critical differences between the two.

If you’re looking to forge a career in accounting, or if you need to hire an accountant, you need to know what the difference is between these two roles.

CPAs Are Licensed

The main difference between an accountant and a certified public accountant is the latter must be licensed.

Although it can be beneficial to hold a degree in an accounting-related field of study if you want to become an accountant, you do not have to carry a qualification to work in accounting.

Accountants record and report on business and financial transactions. Non-certified accountants typically perform tasks like bookkeeping, maintaining accounts, and dealing with simple tax-related matters.

They can also provide general advice. For instance, an accountant could point out the benefits of getting a PayPal business account, and becoming eligible for different types of business loans.

So, although any uncertified person can set up as an accountant, you cannot become a CPA without first passing the CPA exam. To become a CPA, you must meet state licensing requirements.

You’ll also usually need to hold a minimum qualification of a bachelor’s degree and have a good level of experience in accounting before you can take the CPA examination.

There are several CPA exam review courses that prospective CPAs can enroll with, such as the Uniform CPA exam, which is administered by the American Institute of CPAs. This exam consists of four sections, all of which must be completed to gain a CPA certification. The sections are:

·       Regulation

·       Financial Accounting and Reporting

·       Business Environment

·       Auditing

CPAs Are Trustworthy

According to a survey performed by the American Institute of Certified Public Accountants, CPAs are considered some of the most trusted advisors within the world of business.

Also, CPAs are seen to act according to the best interests of their clients, whereas non-CPA accountants are not considered to be fiduciaries to their clients.

CPAs Have Better Tax Knowledge

Although non-CPA accountants can prepare tax returns, a CPA is much more knowledgeable. That knowledge can provide many advantages to businesses.

CPAs learn about tax codes during their rigorous examinations. CPAs are also required to continue their education throughout their careers. That means they are always up-to-date on all the latest procedures and requirements.

Also, a CPA is eligible to represent clients before the IRS, whereas non-CPA accountants are not permitted to do so.

CPAs Have the Highest Standards

As well as passing the CPA exam and continuing their education at regular intervals, CPAs are expected to follow a strict code of ethics and meet the profession’s high standards at all times.

So, if you want to hire the best type of accountant you can, hire a CPA. Or, if you are looking to forge a career in accounting, you can set your sights high and work your way towards becoming a superman or superwoman of the accounting world, as a certified public accountant.