CPA VS ACCOUNTANT: Difference & Which Best Suit Your Business

CPA vs Accountant
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Accountants are essential in any organization, but first, you must establish the kind of accountant your company requires before hiring an accountant. Generally, CPAs appear to be different from accountants. As a highly sought-after accounting certification, a CPA is a certified public accountant who has completed strict state and educational licensing requirements and passed the CPA exam, while an accountant is one who has earned a bachelor’s degree in accounting. Hence, a CPA holds a stronger position in the career path than a regular accountant. Let’s discuss CPA vs accountant, which one is best for your business, who is accountable for filing taxes, and the one with a higher salary.

What is a CPA?

“CPA” refers to a Certified Public Accountant who has additional credentials and expertise in contrast to conventional accountants. Additionally, CPAs will need to write an exam. Those who pass the CPA exam have the license to practice in the United States. Thus, they widely regard them as accounting experts. 

U.S. accountants take the Uniform CPA Examination that is being administered by the American Institute of CPAs (AICPA), which has four parts: Regulations, Financial Reporting, Business Environment, and Auditing. CPA qualification is typically considered a sign of an accountant’s dedication to professional standards.

Opinions on financial statements can only be provided by licensed CPAs in most US jurisdictions as a certain level of expectation and responsibility is attached to the CPA title. So, while accountants are necessary for any company, CPAs are more than essential. 

What’s a CPAs Role?

CPAs are experts in financial reporting and analysis of financial data. As with other types of accountants, one goal of a CPA is to provide clients with financial advice. They have a better reputation for neutrality because of the requirement to meet rigorous standards in order to get and maintain their license. In addition to their responsibilities include the following:

  • Establishing, modifying, and sustaining accounting policies
  • Preparing and compiling reports for tax or government audit reasons.
  • Reviewing salaries, perks, assets, and firm spending.
  • Managing accounts payable and receivable
  • Overseeing or creating a budget
  • Ensuring accuracy of reporting through internal audits.
  • Monitoring and adjusting policies and procedures to meet the most recent changes in the financial industry and government laws.
  • Maintains a high standard of conduct.

Criteria for Obtaining a CPA License

Three E’s required in becoming a CPA are the following;

  • Education (four years of accounting education), 
  • Examination (Uniform CPA Examination), and 
  • Experiential Learning (varies depending on the state).
Note: Each state's board of accountancy requirements varies and hence sets its own rules and regulations, so be sure to verify with your state's board of accountancy before you begin.

Also note that all Certified Public Accountants (CPAs) must complete 150 academic credits, perhaps at the undergraduate or master’s level, as well as sit for the four-part Uniform CPA Examination.

Who Is an Accountant?

In the world of business, an accountant is a professional who provides advisory services to clients. A bookkeeper enters data and generates reports; an accountant, on the other hand, examines those reports and transforms the data into a useful, long-term business strategy to aid your success. All an accountant needs is a Bachelor of Science degree in accounting, but a CPA will need more than just a degree to become an accountant.

The role of an accountant however is not insignificant as they are also very essential in any business. Their responsibilities are the following

  • Making sure that your bookkeeper’s work is accurate
  • Making and analyzing financial statements for a company
  • Cash flow planning and management.
  • Completing tax forms
  • Putting business out there
  • Creating great ideas for the growth of the business
  • Giving tax planning advice etc

Criteria

Becoming an accountant for a company doesn’t require extra effort. You are only required to have a degree in accounting. As easy as becoming an accountant can be, a CPA will be chosen over a regular accountant with extra qualifications. 

Bookkeeper vs Accountant

In most cases, bookkeepers are mistaken for accountants. Both of their roles are distinct, though one can stand-in for the other in some aspects of the other’s job description.

The tabular form below shows the difference between these two.

BookkeeperAccountant
Prepares financial data and reports for the company.Analyze reports and corporate data to provide effective recommendations,
Deal with a company’s day-to-day financials.Provides guidance and insight into a company’s overall finances.
Rather than having a degree, they often have real-world experience and/or certification.A bachelor’s degree is usually required, preferably in accounting.
Only knows about the company’s finances.Knows both the company’s and the client’s financial situation
Does not file tax returns, but can aid with payroll and sales taxesPrepares tax returns for both businesses and individuals.

 CPA vs Accountant

It is important to note that accountants and CPAs are distinct in that accountants record and report the financial affairs of companies, while CPAs are designated by the American Institute of Certified Public Accountants (AICPA) after passing the CPA exam.

Accountants and CPAs have a variety of responsibilities, but here are some important differences:

The following table outlines their differences

Certified Public Accountants (CPA)Accountant
Must have a Bachelor’s and have successfully passed the CPA certification examGenerally has a bachelor’s degree, preferably in accounting
Can legally represent a clientCannot legally represent a client
Offers advice and insight about the big picture finances of a business, and can often offer a deeper knowledge of tax codesOffers advice and insight about the big picture finances of a business
Can create audit reports and review reportsCan only create compilation reports
Read Also: 5 CAREER OPTIONS FOR FINANCIAL ACCOUNTANTS

An accountant advises businesses and performs bookkeeping tasks like reconciliation and record-keeping. A CPA can accomplish the same tasks but has more rigorous certifications and can represent your firm before the IRS.

CPAs are accountants, but accountants aren’t all CPAs. Here’s a rundown on the differences with regard to the following terms.

  • As regards taxes and audits, a CPA vs accountant can analyze reports and finances, manage cash flow, and file tax returns, but only a CPA can represent your firm legally before the IRS and write audit and review reports. 
  • As regards licensing, the degree of schooling a CPA must attain to become certified and keep their license is another key difference. 
  • As regards competence, CPAs are more trustworthy and knowledgeable than regular accountants.

What Kind of Accountant Do I Need for My Company?

Having covered the differences between these two accountants, how do you know which one you should hire? Is a bookkeeper the ideal person to handle your finances? Is it a regular accountant? or a Certified Public Accountant (CPA)?

The answer will depend on your business’s requirements. Determining the type of accounting professional you need begins first by analyzing your business’s needs. Think about the following questions while deciding between a bookkeeper, an accountant, and a CPA.

  • Do I want data or analysis?
  • Do I need help managing my finances or advice managing my business?
  • Do I need tax support?
  • How important is legal representation to me?
  • What level of expertise and licensing am I comfortable with?

Understand that you are not confined to working with a particular kind of accountant when making your choice. Many firms require the services of an accountant and a bookkeeper. So, while the day-to-day activities can be handled more affordably by the bookkeeper, you can bring in the big guns for the strenuous work.

Therefore, a bookkeeper, accountant, or CPA may be the appropriate fit for your company depending on the above factors.

CPA & Accountant Salary

The salary range for these two accountants will obviously vary from one another. A CPA will certainly have a higher salary than a regular accountant will, owing to the qualifications a CPA has over an accountant and the job descriptions of both accountants. Here’s a ballpark salary figure for a CPA or accountant.

Average CPA Salary  

A CPAs salary, like those of most professionals, can be influenced by where they work. The employment opportunities for an accountant vary according to the type of accounting specialization they hold and the same can be said about their salary

Texas, California, New York, Florida, and Pennsylvania, according to the BLS, are the states where accountants are most in-demand and earn the highest pay in the United States. The BLS does not separate out accountant positions by CPA vs. normal accountant, so these data reflect accountant salaries. BLS data from May 2021 shows that CPAs in New York, California, Texas, Pennsylvania, and Florida earn an average of $105,790, $92,840, and $85,860 respectively per year, while those in Pennsylvania earn $79,200 per year.

Average Accountant Salary

Accountant work and salary for those without a CPA designation are diverse as the pay varies section by section. 

  • Payroll, Bookkeeping, and Tax Preparation: The BLS estimates that the median annual salary will be $77,080 by 2021.
  • Finance and Insurance Companies: Accounting firms that specialize in insurance and finance pay substantially for their accountants’ work. Accountants earn a median yearly salary of $79,310, according to the Bureau of Labor Statistics (BLS) which is slightly higher than that of tax preparers. 
  • Civil Employment Jobs: The typical yearly salary for accounting positions in government is roughly $77,290. 
  • Junior tax associate accountant: In the year 2021, the median yearly wage was estimated at $56,780 by the Bureau of Labor Statistics (BLS). Junior tax associates and accountants are readily available positions for accounting graduates. Jobs in the tax industry might serve as a springboard to better-paying positions. A junior tax associate will need to know about federal, state, and local tax regulations and how to prepare tax returns and other tax-related papers on behalf of people or businesses.

CPA vs Accountant for Taxes

Accountants without a CPA qualification are capable of preparing tax returns, but CPAs have benefits that other accountants do not.

CPAs are more familiar with tax rules and codes since they require to go through stringent license exams and complete education seminars. If an audit is necessary, CPAs can represent their clients in front of the Internal Revenue Service, whereas non-CPA accountants cannot.

Final Thoughts

In summary, bookkeepers, accountants, and Certified Public Accountants (CPAs) all have their own distinct advantages. Hence, to make the right decision on the type of accountant needed for your business, it’s important to know the differences between the three categories and decide exactly what you would want to delve into or which of them you will be needing in your company.

CPA vs Accountant FAQs

What is the difference between CPA and regular accountant?

Accountants record and report the financial affairs of companies, while CPAs are designated by the American Institute of Certified Public Accountants (AICPA) after passing the CPA exam.

What can a CPA do that other accountants Cannot?

CPAs are more familiar with tax rules and codes since they are required to take stringent license exams and complete education seminars. If an audit is necessary, CPAs can represent their clients in front of the Internal Revenue Service, whereas non-CPA accountants cannot.

Do CPAs make more than regular accountants?

A CPA will certainly have a higher salary than a regular accountant will, owing to the qualifications a CPA has over an accountant and the job descriptions of both accountants.

Can you be an accountant without being a CPA?

Most positions in California that require accounting expertise don’t require you to hold a Certified Public Accountant, or CPA, license. However, earning a CPA is necessary if you want to practice public accounting without limitations.

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