If you’re not directly involved in the financial management world, you’ve probably noticed that there are lots of designations for people who work in the field. You probably already know the difference between a bookkeeper and an accountant, but what about CPA vs accountant?
Many people use the terms interchangeably, but they’re not exactly the same. You can be an accountant without being a CPA, but you can’t be a CPA without first being an accountant.
So, if you’re wondering what the difference between an accountant and a CPA is and which one your business needs, you’ve come to the right place. Here’s what you need to know.
What Is the Difference Between a CPA and a Regular Accountant?
CPAs and accountants both work with financial matters, but there is a difference between a CPA and an accountant, and it all happens after they have completed the basis of their studies.
When people start studying to become an accountant, they all take the same courses, which will usually give them a BA degree. However, when they choose to become a CPA vs an accountant, they continue their studies and complete an additional exam.
Passing this exam (and maintaining their knowledge through ongoing training) gives CPAs the right to call themselves Certified Public Accountants.
Think of it in the same way as you would someone who becomes a doctor. You can stop studying when you get your medical degree and become a general practitioner, or you can continue your studies and become a specialist. CPA vs accountant is very much the same thing. One simply stops their studies when they have their degree, while the other chooses to continue studying further.
It’s important to note that the CPA designation does vary by country, so while similar titles exist in other parts of the world, they’re not exactly the same thing.
What Can a CPA Do That Other Accountants Cannot?
The first thing we need to note is that because CPAs have completed all the training ordinary accountants have, they can do everything that a regular accountant can. They could even, in theory, complete bookkeeping tasks.
However, since they do have higher qualifications and they are more highly trained, it’s very rare for any CPA to take on these kinds of tasks. Instead, they focus on tasks that ordinary accountants and bookkeepers can’t complete on their own. These include:
- Act as a fiduciary
- Assist in budgeting and planning
- Complete audits (provided they don’t consult and audit for the same client)
- Complete tax returns for corporations
- Providing representation on tax matters when required
In short, CPAs provide a much higher level and more technical accounting service to their clients, which they can do because they have had the extra education and are certified to do so.
Do CPAs Make More Than Regular Accountants?
As with any career that requires a high level of education, accounting roles are usually remunerated based on what level of education the individual has achieved.
In other words, when it comes to CPA vs accountant salaries, CPAs usually do earn more than ordinary accountants.
However, this will vary significantly depending on a variety of factors, including where they work, which company they work for, how much experience they have, and if they have any additional skills or qualifications that might provide additional value.
Can You Do Accounting Without CPA?
If you’re trying to figure out the difference between a CPA and an accountant for your business, then you might be wondering if an ordinary accountant can do your accounting for you. The answer is yes, but there are certain things they might not be able to do, and you will probably still have to outsource certain functions, like audits.
If you are wondering, do you need a CPA to be an accountant, the answer is no. While many accountants do choose to study further and become a CPA, it’s not required to work as an accountant. Many also start out working as ordinary accountants and choose to continue their studies while they work.
The key difference between an accountant and a CPA, in terms of what they can do for your business, is that CPAs are legally allowed to do more complex things, thanks to their certification. They are also held to a higher ethical standard, though, so there might be times when a CPA will tell you they cannot do something for you because it’s not ethically right.
Do Businesses Need CPAs?
Deciding whether you need a CPA vs an accountant depends a lot on the size of your business, what you do, and how complex your financial situation is.
Many smaller businesses get by with an ordinary accountant or even a bookkeeper and only hire a CPA to do things that their financial department cannot do on their own.
If you have a large corporation with a complex financial situation, it might make more sense to have a CPA on the payroll.
However, no matter what kind of financial management your company needs, giving your team the right tools to get the job done is critical to their success.
If you’re not already using a commercial accounting package, it’s probably time to make the investment. Once you do, look at tools like LiveFlow, which can be used to automate a variety of reports and processes in your accounting department.
In business, time really is money, and whether you have a full accounting department, a single CPA or something else, the more time you can save, the more you can get done at a lower cost. Giving your team the tools they need to get their jobs done more accurately and faster is always good for your bottom line.
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