CPA vs. Accountant: Here’s How They Differ
What is a CPA and how do they compare to accountants? Learn the main differences between CPA vs. accountants in this guide.
December 8, 2021
Keeping accurate records and filing tax returns can be quite complex, so many Americans choose to seek professional help from an accountant. It’s not necessarily cheap to work with a tax professional, but it can save you lots of time, and potentially unlock tax breaks you wouldn’t otherwise find on your own.
There are several different types of tax professionals — from bookkeepers to accountants to CPAs — which can create some confusion.
This article will distinguish the differences between a CPA vs. accountant, and what those differences might mean for you.
What is an accountant?
An accountant is an individual who keeps financial records and analyzes or interprets them. In some cases, accountants are also called bookkeepers.
Accountants may perform a wide variety of tasks for themselves and others, including:
Keeping records of personal finances and financial activities
Keeping records for businesses
Analyzing financial revenues and expenditures
Preparing tax returns
And more
Can you be an accountant without a CPA designation? Certainly. The term accountant is not legally protected. This means that almost anyone can call themselves an accountant.
What is a CPA?
CPA is an acronym for Certified Public Accountant. A CPA is an accounting professional who has met state-level certification requirements to obtain the CPA designation.
A certified public accountant can offer a wide range of accounting and tax services, including:
Public accounting (for government and government agencies)
Private accounting (for businesses & individuals)
Nonprofit accounting (for charities and organizations)
Internal auditing
Management of the response to an IRS audit
Financial analysis
Tax preparation
Tax consulting
And more
CPA is a legally protected term. Only individuals who have received the CPA designation from the state can advertise themselves as CPAs.
This means that, in order to become a CPA, an individual must become formally certified in their state. They must complete the necessary training, obtain real-life work experience and pass the thorough CPA exam. They must also complete ongoing education each year.
CPA vs. accountant
The main difference between a CPA and an accountant is in their level of training and certification.
Almost anyone can call themselves an accountant — but only those who have passed the Certified Public Accountant exam and met other requirements can call themselves a CPA.
In other words, all CPAs are accountants, but not all accountants are CPAs.
Other differences include:
CPAs can represent the client in the case of an IRS audit, whereas non-CPA accountants cannot.
CPAs must pass rigorous exams and meet experience minimums, while accountants have no such requirements.
CPAs must complete ongoing education (~40 hours a year in the majority of states), while accountants do not need any specific continuing education.
CPAs have a fiduciary responsibility, which means they must legally act in the best interest of their clients. Accountants do not have fiduciary responsibilities.
CPAs must follow a strict code of ethics set by the AICPA; accountants do not have this responsibility.
CPAs often charge higher rates than accountants.
CPAs can produce certified copies of certain documents that accountants cannot.
In short, CPA responsibilities are far more regulated than those for accountants. Likewise, CPAs typically offer a wider range of services, compared to accountants.
Frequently asked questions
Do you need a CPA to be an accountant?
No. An individual can be an accountant without passing the CPA exam. However, CPAs are more in-demand, and can charge higher rates and perform a wider range of services.
What does CPA stand for?
CPA stands for Certified Public Accountant.
Do you need a CPA to file a tax return?
Taxpayers may file their own tax returns, or use tax software such as TurboTax or H&R Block. With that said, many Americans do prefer to use an accountant (or a CPA) to do their taxes for them to save time.
What does a CPA do?
CPA duties can include a wide variety of accounting and tax activities, including:
Public accounting (government)
Private accounting (business & industry)
Nonprofit accounting
Internal auditing
Management of IRS auditing process
Financial analysis
Tax preparation
Tax consulting
And more
CPAs can work with individuals and businesses alike, and can complete a wide variety of financial and tax tasks. With that said, many CPAs specialize in certain areas, and may not offer all of the above services.
What this all means for you
Now that you understand the difference between a CPA vs. accountant — what does this actually mean for you?
If you’re an individual looking for help filing your taxes: You can probably work with a CPA or a standard accountant. Either way, it’s important to choose a reputable service.
If you’re getting audited and need support: It’s wise to use a CPA.
If you’re a business owner and need help with bookkeeping: You can likely work with either an accountant or a CPA. Just ask the provider what services they offer to ensure they can help with everything you need assistance with.
When in doubt, it’s typically best to use a Certified Public Accountant whenever possible. CPAs are generally more knowledgeable about the recent changes in tax code, and they have a fiduciary duty to act in your best interest. A CPA will be more expensive — but, in many cases, it’s worth the cost difference.
Looking to close out your financial year strong? Whether you’re working with a CPA or filing taxes on your own, it’s helpful to be prepared. Start gathering all the necessary tax documents now, so you’re ready for the upcoming tax season.
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