In case you are seeing this page, chances are you probably have been thinking all along that tax accountants and CPAs are the same.
Sounds Familiar? Maybe you’ve made some tax filing mistakes in the past and want to avoid repeating them, or perhaps you simply want to invest in accounting services that save the hassle for you so that can focus on growing your business.
But now you are stuck with the question, whom to hire? Tax accountants and Certified Public Accountants (CPA) both work with taxes, but they differ in terms of services, qualifications, and the depth of expertise they bring.
So, before making that choice, read along to clear up your confusion between cpa vs accountant.
What is a Tax Accountant?
A tax accountant specializes in tax preparation, planning, and compliance. They help individuals and businesses file their taxes accurately and efficiently while aiming to minimize tax liabilities.
Tax accountants are familiar with the latest tax codes and regulations, and their expertise lies in understanding deductions, credits, and tax strategies that can legally reduce tax burdens.
Key Responsibilities of a Tax Accountant
- Tax Preparation: Completing and filing tax returns for individuals and businesses.
- Tax Planning: Advising on strategies to reduce future tax liabilities.
- Tax Compliance: Ensuring clients meet all tax regulations and deadlines.
- Financial Record Analysis: Reviewing financial records to ensure accurate tax filing.
What is a CPA?
A CPA is a highly trained professional who specializes in managing and analyzing financial information across a company. They are simply experts who help individuals, businesses, and organizations with preparing taxes, maintaining accurate financial records, and offering advice on managing money wisely.
To become a CPA, someone needs to pass a tough certification exam, meet strict education and experience requirements, and stay up-to-date with financial laws and regulations. This makes CPAs uniquely qualified to handle complex financial issues, such as tax planning, audits, and ensuring a business complies with financial rules.
In simple terms, CPAs are problem solvers and advisors who help you make better financial decisions, avoid costly mistakes, and keep your finances on the right track. Whether you’re an individual trying to file taxes or a company needing financial strategy, a CPA can guide your decisions better.
Key Responsibilities of a CPA:
- Auditing and Assurance: Conducting audits for companies to verify financial accuracy and compliance.
- Tax Preparation and Planning: Similar to tax accountants, but with additional authority in complex tax matters.
- Financial Consulting: Offering broader financial advice on matters like budgeting, cash flow, and growth strategies.
- IRS Representation: Acting on behalf of clients during IRS audits or legal matters.
Is CPA Same as a Tax Accountant?
As far as you have guessed already, a CPA is not the same as an accountant.
An accountant typically holds a bachelor’s degree in accounting, which allows them to handle general accounting tasks such as bookkeeping, preparing financial statements, and managing budgets.
On the other hand, a CPA is a licensed professional who has passed the CPA exam, met specific state requirements, and accumulated relevant work experience.
Read More: What’s the Real Difference Between Bookkeeping and Accounting?
Key Differences Between Tax Accountants and CPAs
Let’s have a look at the many differences between a tax accountant and a CPA:
| Feature | Tax Accountant | CPA |
| Certification Required | No specific certification needed; many have accounting degrees or experience | Must pass the rigorous CPA exam and meet state-specific licensing requirements |
| Scope of Services | Primarily focuses on tax-related services such as filing, planning, and ensuring compliance | Offers a wide range of services including auditing, consulting, financial planning, and IRS representation |
| IRS Representation | Limited; may help with tax filing and basic issues but cannot represent clients before the IRS | Full authority to represent clients before the IRS, including handling audits and disputes |
| Tax Filing and Planning | Specializes in preparing tax returns and helping with tax planning | Can also handle tax filing but goes further by offering strategic tax planning for complex situations |
| Financial Consulting | Focused mainly on tax-related advice, offering basic guidance | Offers broad financial consulting, including business growth, estate planning, and investment strategies |
| Expertise in Auditing | Does not conduct audits | Can perform audits, ensuring compliance with regulations and offering assurance on financial statements |
| Business Services | Limited to tax preparation for businesses | Provides a full spectrum of business services like financial reporting, management consulting, and strategic planning |
| Continuing Education | May pursue courses in tax law and preparation but no formal requirement | Required to complete ongoing professional education to maintain CPA status and stay updated on regulations |
| Complexity of Client Issues | Typically handles basic or straightforward tax situations | Equipped to manage complex issues, from business tax strategies to high-net-worth individual planning |
Check this out: Accounting services for small business
Tax Accountant vs CPA: Who Makes More?
The salary difference between a CPA and a non-CPA accountant is significant. On average, CPAs earn around $119,000 per year, while non-certified accountants typically make about $50,129 annually.
Choosing the Right Financial Partner!
While all CPAs are accountants, not all accountants are CPAs. In fact, according to data from the Bureau of Labor Statistics (BLS), only about 50% of accountants in the United States are actively licensed CPAs.
For routine tax filing and smaller financial concerns, a tax accountant can handle the basics. However, when things get more complicated like handling a business’s financials, managing investments, or navigating an IRS audit, a CPA’s expertise is what you would need.
If your business is growing and you’re looking for someone to provide more than just basic tax services, a CPA with experience in business consulting and QuickBooks accounting services might be your best option.
Ultimately, the decision depends on the complexity of your financial situation. Do your homework and pick the right one for the job, because the financial expert you choose can make all the difference in tackling your situation.
For further assistance get in touch with Focus CPA!
