Financial Literacy Part 7--The Difference Between Accountants and CPAs

If there is one thing that people universally dread it is tax season. For business owners tax season comes up to five times a year. No business owner should go through these quarterly and annual paper-cut ridden days without their new best friend—a CPA and many non-business owning individuals should consider getting one too.

What is a CPA?

CPAs, also known as Certified Public Accountants, are number crunchers with accounting degrees who have also taken the financial industries equivalent to the Bar exam, the Uniform Certified Public Accountant Examination given by the American Institute of Certified Public Accountants. There is also an ethics exam that all would-be CPAs must pass. In the end, those who pass are issued a license to operate in their state.

The Difference between CPAs and Accountants

Once they have taken and passed all the required exams, CPAs are able to prepare your taxes just like a non-CPA accountant can. This may seem like it doesn’t matter who you hire—a CPA or an accountant—to do your tax returns. If you assume this then you are missing one crucial difference.

CPAs are licensed and accountants are not.

As licensed financial professionals, CPAs are not only able to audit financial statements but they are also required to adhere to very strict ethical standards in order to retain their licenses. CPAs are held to inflexible professional requirements and continuing education demands that help keep them on the cutting edge of IRS tax codes and operating standards, and accountants are not. This is not to imply that accountants are not able, or willing, to hold themselves to the same standards as CPAs, but they are not required to do so by any professional licensure.