Every field has its buzz words. Accounting is no different. We’ve got accountants, bookkeepers, tax preparers, and Certified Public Accountants (CPAs) to name a few. But what’s the difference? And why should you care?
Let me ask you: when you hire a lawyer, you (generally) don’t ask if they have a degree or passed the bar, do you? That’s because the rules of the law profession and our legal system are strict – only people who’ve passed the bar and have a degree are allowed to set up shop and call themselves attorneys. (The penalty for lying about your lawyer-dom is jail time and/or seriously huge fines.)
The rules for the accounting field are not so strict, unfortunately, and that can be confusing to you as the client. (Sorry! One thing the lawyers are better at than us!) We can sum it up for you in one simple sentence:
All CPAs are accountants, but not all accountants are CPAs.
The American Institute of Certified Public Accountants (AICPA) confers the designation and holds CPAs responsible to their continuing education requirements every year. A CPA (like our Master CPA, Sue Holly ), must have the “3 E’s” accomplished before she can brand herself as a CPA:
- Education: Up to 150 credit hours in some states, with specific accounting courses passed
- Exam: A passing score (75% or better) on all 4 parts of the multi-day CPA exam. The 4 parts are:
- a. Auditing & Attestation (yuck!)
- b. Business Environment & Concepts (helps us help you better)
- c. Financial Accounting & Reporting (makes sure we know our stuff)
- d. Regulation (double yuck!)
- Experience: A minimum of up to 2 years of experience in the accounting field (minimum varies by state).
Here’s some more info on what it takes to even qualify to sit for the CPA exam, which many say is a harder test to pass than the bar.
Depending on your personal or business’s financial situation, you made not need to a CPA. (We cannot tell a lie…) How can you be sure if a CPA is right for you?
Here’s a little cheat-sheet help you make an informed decision about which type of financial or tax expert is right for your job:
|Title||Who Verifies the Title or Occupation?||Is a College Degree Required?||License or Exam Required?||Continuing Education Required?||Can They Represent You to the IRS?|
|Accountant||No one – anyone can call themselves an accountant||No||No||No||No|
|Bookkeeper||No one – anyone can call themselves a bookkeeper||No||No||No||No|
|Registered Tax Return Preparer (RTRP)||The Internal Revenue Service (IRS)||No||Yes||No||Maybe|
|Enrolled Agent(EA)||The IRS and the NAEA (National Association of Enrolled Agents)||No||Yes||Yes:72 hours every 3 years||Yes|
|Certified Public Accountant (CPA)||The IRS and the American Institute of CPAs (AICPA) board||Yes||Yes||Yes:Varies by state. For FL, 80 hours every 2 years. Must also pass Ethics course every 2 years.||Yes|
© 2013, Team Holly CPA & Co
If you’re interested in learning more about the difference a CPA can make to your taxes or business, please contact us for a free consultation.