The Difference Between Accountant and CPA
When choosing an accountant or CPA for your business: Where does one start?
Often, those terms (CPA vs. accountant) are thrown around interchangeably. Still, to make the most of your resources and budget, you should understand the key differences between the roles before determining which kind of financial professional you need, since accountants generally cost much less to employ.
This article will share the key differences between accountants and CPAs. By the end, you’ll understand the basics of what it takes to become a CPA or accountant and be able to make an informed decision on which will work best for your business, based on your business’s individual needs.
Choosing Between an Accountant and CPA
Do you work for a government contractor? Do you own a private small business, a public company, or are you just looking for personal financial advice?
Ultimately, what do you hope to achieve by seeking an accounting professional?
The type of business and what you seek to achieve are the two most important questions to answer before considering anything else. Per federal statute, certified public accountants are legally allowed to do several things for clients that non-licensed accountants cannot do, such as:
- Audit and attest work
- File reports with the Securities and Exchange Commission
- Act as representative before the IRS
Additionally, CPAs must:
- Follow state-specific education requirements
- Pass the Uniform CPA Examination
- Adhere to AICPA standards
- Earn continuing education credits (CPE) to keep their certification
On the flip side, an accountant doesn’t require any specific licensure or educational requirements or adhere to specific professional, ethical or fiduciary standards like CPAs.
|Education||150 semester hours of accounting-related coursework, typically comprised of a bachelor’s degree and some graduate-level courses.||Though many accountants have an undergrad degree in accounting, there is no formal educational requirement.|
|Uniform CPA Exam||Required to pass the Uniform CPA Exam.||No requirements.|
|Licensure||Must be licensed by the state board of accountancy (in all states they wish to practice in.)||No requirements.|
|Continuing Professional Education (CPE)||Required to maintain the CPA designation. The number of required CPE credits varies by state.||No requirements.|
|Code of Ethics||Expected to follow a strict code of ethics; fundamental principles include:
|Fiduciary Responsibility||Have a legal duty and the power to act on behalf of their clients.||Expected to be informed.|
As mentioned above, accountants are not required to follow a strict code of ethics like those of a practicing CPA. Many businesses prefer working with a CPA for this reason—however—this isn’t to say that non-certified accountants aren’t ethical; rather, they’re not legally required to follow “the regulations governing CPAs … that grant the CPA designation.” CPAJournal.com
For more information about the principles CPAs must abide by, I suggest going to the primary source: AICPA Code of Professional Conduct.
If you’d like to learn more about the specific requirements CPAs must follow in the state your business resides in, visit ThisWaytoCPA.com.
When Are Accountants the Better Option?
In researching and writing this: It feels as if every other article leans towards CPAs and away from non-certified accountants. But “pro one, anti other” isn’t the thesis I’m going for in this article; the point is to deliver a true non-biased comparison to help businesses determine the type of accountant they need. So I asked myself: when does it make more sense to seek out *just* an accountant?
Here are five examples of when hiring an accountant would make more sense (and cents):
- You need someone to record financial transactions.
- You need someone to help supervise bookkeepers. (Learn about the differences between bookkeepers and accountants here.)
- Your company has grown, and you’re looking to hire someone to help handle payroll.
- You need help analyzing financial statements and reconciling accounts.
- Budgeting has proved challenging, and you’re looking for someone to help create, maintain and examine them monthly, quarterly, and annually.
All CPAs Are Accountants; Not All Accountants Are CPAs
In conclusion: CPAs are a type of accountant, but not all accountants are CPAs. The variance lies in their education, certifications and continuing professional education, as well as the state they practice in.
Our suggestion? Before making any decision about employing a CPA vs. accountant:
- Check out the exact requirements for your state
- Consult with similar businesses in your state
- Determine the type of work your new employee will be doing
And don’t forget: Once you hire that new employee, make sure all of their work is done in a cloud-hosted environment. Using cloud hosting ensures your small business’s most sensitive financial information is protected from theft or loss, secured, and easy to access from any device, anytime.