Clearing up the confusion: accounting firm vs. CPA firm.
Come tax time, everyone knows someone who uses a CPA firm to sort through their mess of receipts and accounts to satisfy the IRS. But do you, either as an individual taxpayer or a small business owner, really need a CPA firm to manage your financial information and tax preparation? Let’s break it down. What is the difference between a CPA firm and an accounting firm, and which one do you need?
The Difference Between a CPA and an Accountant
All CPAs are accountants, but not all accountants are CPAs. The primary difference is coursework and licensing. A CPA has to have an additional 150 hours of college courses. They must pass the state licensing exam. Finally, they also must have continuous education and classes throughout their careers to stay up to date accounting practices. Something important to note is that a CPA firm is usually not all certified accountants. In fact, a CPA firm only has to have one CPA on staff. However, the rest of the firm can consist of unlicensed accountants.
What Do These Firms Do?
One of the most common services offered by these types of businesses is tax preparation and filing, for both individuals and businesses. This can include quarterly estimates, tax liability projections, tax planning, and payroll tax calculations. Additionally, they provide guidance for taking advantage of available deductions while staying in compliance with laws and regulations.
These firms also offer services to help businesses, including audits and consulting. An audit of a business’s financial statements can ensure accuracy and compliance, as well as catch or prevent fraud. Consulting can include valuation, investing advice, support during litigation and mergers, and guidance in acquisition. But it may also include professional advice regarding budgeting, staffing, purchasing, and upgrading of equipment and technology. This can be incredibly valuable input if you’re looking to expand or grow your business.
So What’s the Difference?
Both CPAs and accountants can offer all the above services. The only reason you may want to consider a CPA over an accountant is if you have an incredibly complex tax situation. If you’re like most small business owners, this won’t be the case for you. You can utilize all the knowledge and experience of an accounting firm without the top-dollar prices that are common with CPA firms.
When to Hire an Accountant
If you’re an individual, you might think you’re better off using an online e-file service to do your taxes. It does all the work for you, right? Well, yes and no. While most of these services can ask you enough basic questions to get your taxes done right, they definitely can’t be aware of any unique or specific circumstances that might make you eligible for additional deductions or credits the way an accountant can. This is especially true if you are self-employed if you’re going through a major life change, such as marriage, divorce, or having children, or if you’ve recently purchased real estate or made investments.
If you own a small business, it’s even more important to get the guidance of an expert, not only at tax time but year round. They can help you by making sure your books are up to date. That includes your accounts, cash flow, receipts payable and receivable, and payroll. They make sure your taxes are accurate and reconciled. And they can give you advice as you grow your business, staff it, and budget for it.
Don’t be afraid to take advantage of help from the experts. Hiring an accountant is one of the best ways to take care of your finances and taxes now and in the future. Click or call 678-990-0924 for a free consultation to learn how an accounting firm just might be a better choice than a CPA firm to help your business.