Posts

CPA vs. Accountant Responsibilities

When deciding whether you need to hire a CPA or a general accountant for your small business, it’s essential to know the difference. There are a variety of accounting services that you can outsource or hire an in-house accounting team to address. Bookkeeping and day-to-day accounts payable and receivable do not necessarily require hiring a person with a degree in Accounting.

There are more in-depth accounting services that you would need to hire someone who is educated with an accounting degree. A CPA is a Certified Public Accountant with even further education and has passed a test to earn that title. They must adhere to a code of ethics as well to keep their certification.

For a greater understanding of which accountant professional may be right for your small business, let’s look at the roles of an accountant and a CPA.

Accountant Responsibilities

While many accountants are trained to do many of the duties that your small business may require regarding accounting, some tasks may need a CPA’s expertise. What are the responsibilities of an accountant who doesn’t have their CPA credential?

  • Has a Bachelor’s Degree in Accounting: A general accountant will have a Bachelor’s Degree in accounting or have a degree with a large number of accounting credits.
  • Oversees Bookkeeping: A general accountant should be experienced in managing bookkeeping and signing off on the processes.
  • Consults on Financial Strategy: A general accountant will have a broader view of your company and offer advice on how to save money in the long run.
  • Sets Up Business for Taxes: An accountant can register your small business as an LLC or whichever category is best for your tax situation.
  • Manages Cashflow: An accountant will keep a close eye on the cashflow and have boundaries set on how much cash goes out in order to maintain ample working capital.
  • Projects Future Earnings: A general accountant can collect data and look at the earnings and growth over a period of time. They will use this data to predict earnings for the future.
  • Runs Reports and Analyzes for Optimal Savings: A small business accountant will also run reports to compare and contrast month-to-month or even week-to-week reports. They should also be experienced in recognizing opportunities for savings within your company.
  • Business Planning: They can help with business planning and offering advice on the financial side of your business. Having an accountant in on the meetings with big ideas for the future is always a good idea.
  • Tax Planning: Every business has a strategy with taxes that helps them save money and utilize tax credits. A small business accountant will be very familiar with the best tax strategies for your business.
  • Files Business Taxes: An accountant can file taxes for your business and make sure there aren’t any errors that could lead to red flags that alert the IRS for an audit.

A general accountant can get the job done when it comes to running the financial side of your business. They are well-versed in business planning and helping businesses thrive. There are some things that an accountant cannot do without the CPA certification.

CPA Responsibilities

It changes state to state, but a CPA generally has a Bachelor’s Degree with a certain amount of accounting credits. And on top of that, they either have to have a Master’s Degree or 150 credits total to be able to sit for the CPA exam. Once they have passed the exam, they participate in continuing education to keep their CPA license valid.

Here are the responsibilities of a CPA:

  • Legally Defends Your Company in an IRS Audit: If the IRS audits your small business, a CPA can defend your business and act as a representative. Choosing a CPA with their tax expertise will minimize the fees that may be required by the IRS.
  • Creates and Signs Off Audit Reports: When a CPA signs off on an audit report, they are putting their name and reputation on the line. A CPA signature means that you can trust anything on the report is accurate.
  • Has Expert Tax Knowledge: If you are looking to file out of state taxes or have a complicated tax return, a CPA will have knowledge of all the various tax laws. They will be able to help you with your unique tax return.
  • Offers Advanced Tax Strategy Advice: A CPA will have advanced knowledge of tax strategies for small businesses.
  • Adheres To a Strict Code of Ethics: The reputation and career of a CPA are on the line if they were to break any rules or sign off on an audit without thoroughly checking it for accuracy.
  • Signs Off on All Financials for Publicly Traded Companies: If your company is publicly traded in the stock market, then all financials that are presented must be signed off by a CPA. The public isn’t going to trust your profit margins until you have a CPA’s stamp of approval.

As you can see, it takes special training and effort to receive a CPA credential. Because of this, their work is more valued and sought after. If you need help with an IRS audit, a CPA can help. And you can always know that they have to be honest and ethical to keep their license.

What is an EA?

An enrolled agent, or professional tax preparer, also has to sit for an exam and adhere to a code of ethics. An EA has the expertise in the tax side of the CPA certification. Their roles include:

  • Preparing Complex Tax Returns: If you are looking for an expert in tax preparation and strategy, then an EA will help you with that. Their role is primarily to prepare taxes and execute tax strategies that are best for big and small businesses.
  • Specialized Knowledge in Tax Law: An EA will know all of the tax laws and fix any problems in your small business that may be bad news to the IRS. They can also defend you if the IRS were to accuse your company of breaking any tax laws.
  • Representing Your Business Before the IRS: An EA is qualified to defend your business before the IRS, just the same as a CPA. They will fight for your business during an audit and reduce fees and present the proper paperwork throughout the process.
  • Negotiating Payment Plans with the IRS: An EA can work with the IRS to negotiate payment plans if there are back taxes that are owed. They can also advocate for your small business and cooperate kindly with the IRS demands.

An EA may be an excellent option for your company if you are looking for an accountant to help you with an IRS audit. They are well-qualified and tax experts. Most of the work an EA focuses on is in the tax side of accounting, so they will always be a great option to take care of your small business taxes.

Which Accountant Professional Is Right for Your Small Business?

Here are some questions you might ask yourself to decide what accounting professional is right for your small business:

  • Is my company private or public? If your company is public, then you will need a CPA to certify all of the financial documents that you present to the public.
  • Do I need help with specialized accounting? For any complex accounting processes, a CPA will be the right person to use their further education to help your small business.
  • Do I need help with daily bookkeeping and simple accounting? A general accountant can help you with any bookkeeping processes and help get your company organized.
  • Do I need representation in an IRS audit? A CPA or an EA can represent you before the IRS. These agents are used to working with the IRS and have the negotiation skills to save you the most money.
  • Am I seeking financial advice for my business? An accountant or CPA is an excellent option if you are seeking big picture advice for your business.
  • Do I need help with taxes? An accountant, CPA, or EA can help you file your taxes and remember all the tax credits for which you qualify. A CPA or EA may have more specialized knowledge and more experience. Plus, their certification is on the line if any big mistakes were to occur.

The answers to these questions should get you started on which path to take when choosing the right accountant for your company. Doing the proper research beforehand will save you from having to hire additional help in the future. The last thing you want is to be audited just to find out that your accountant isn’t qualified to help you with the IRS.

Contact Small Business Accountants Today

When you sign up for accounting services, you want a team who can help you with every need that you have. With Easier Accounting, we have a team of qualified accountants and CPAs who specialize in small business. Our experts can relieve your stress related to bookkeeping or taxes, or day-to-day checks and balances. Invest in your small business by hiring small business accountants today. Give us a call at (888) 620-0770.