Tax season is right around the corner and you may be concerned about whether a standard tax preparer is equipped to handle your business’s tax filings. You may also be thinking about using the services of a Certified Public Accountant to assist in such important preparations. If you’re still on the fence about whether you’re going to trust your tax preparation to a paid tax preparer or a CPA, think about the differences between the three and the benefits that are included when you choose a Certified Public Accountant. There are several reasons why choosing an official CPA offers the most suitable tax preparation services you can get for your business. Let’s explore what sets a CPA apart from a paid tax preparer.
First, what is a CPA?
A CPA, or Certified Public Accountant, is an accountant who has received special licensure via a combination of college education, experience, knowledge of tax law, examination, and ethics training to perform accounting duties to the public as well as advise clients and perform financial analysis. This differs from a tax preparer, who has the training to prepare tax returns but may or may not have a college degree or be very well versed in the current laws related to income tax. It should also be noted that an accountant and a paid tax preparer are not the same thing. Often, a paid tax preparer is not an accountant, but has completed training to prepare tax documents and legally do so with a Preparer Tax Identification Number obtained from the IRS.
CPA Education Requirements
In order to be a licensed CPA in the state of Texas, there are several education and training requirements. The CPA in question must have completed a Bachelor’s degree from an accredited college or university, and must have credits pertaining to the field of accounting. These include credits in upper-level accounting, business, economics, and courses in ethics approved by the Texas State Board of Accountancy.
A standard tax preparer has far fewer educational requirements to satisfy. A tax preparer’s educational courses usually take only weeks to complete in most cases. A college degree is not required to prepare tax returns, and the training courses usually cover only basic tax law.
While not required, many accountants do have a college degree, but even the more involved courses in tax preparation and accounting pale in comparison to the educational standards required for Certified Public Accountants.
CPA Training and Examination
Along with sitting for the CPA examination, a potential CPA must have at least one year of experience working full-time under another state-certified Public Accountant. This training period, along with the required Bachelor’s degree and additional course material, prepares a potential CPA not only for the examination, but for practicing as a public accountant in the future.
CPA’s require a passing grade on over 19 hours’ worth of examinations covering accounting, reporting, auditing, regulations, and business environments. These testing periods are sectioned into four different parts, each needing a passing grade. All Certified Public Accountants must also comply with the state of Texas’s requirements for continued education, ensuring that they stay current with the evolving tax laws each year.
A Certified Public Accountant has received licensure from the government as well as the state, in this case the Texas State Board of Accountancy. This board is composed of fifteen members, both from public and private sectors, appointed by the governor to be responsible for determining that all CPAs are qualified to obtain and maintain their titles. The TSBPA reviews each CPA application for proper qualifications and runs a background check on candidates to ensure that no criminal convictions are present, and that the candidate is of good moral standing. “CPA” is a professional title, and the pursuit of this title is treated very seriously so that the board can be sure beyond a shadow of a doubt that any person possessing the title of CPA is continuously qualified to have it.
After licensure, a CPA needs to follow legal codes of conduct, including continued ethics and educational training. Legal action can be taken against any CPA who fails to keep in line with the determined code of ethics, so working with one of these professionals gives clients the peace of mind that their chosen CPA is willing to put their license on the line to stand behind the services they’ve provided.
Analysis by CPAs
In addition to preparing tax returns, Certified Public Accountants conduct thorough financial analysis and they are qualified to give advice on financial concerns, unlike a standard tax preparer. To the best of their ability, they will counsel you regarding your optimal options in finance and tax decisions for your business. Though not every CPA’s education is concentrated in small business affairs, they are always highly knowledgeable regarding current tax laws.
This means that along with assisting in tax preparation, a CPA can provide advice on cashflow, discover opportunities to save money, as well as evaluating the financial needs of a company. A CPA looks at a company’s financial statements, which include balance sheets, income statements, cash-flow statements, and other notes. They can assist their clients in developing both short and long-term financial goals and planning a realistic budget, as well as advising against decisions considered unwise for the company or those that raise any red-flags to be potentially audit-worthy to the IRS. They are prepared to act as trusted financial advisors regarding many financial issues and concerns.
Not only are they highly skilled in any tax situation that can potentially benefit a company, they’re also trained to spot acts of embezzlement and can protect a business from committing fraudulent actions.
Representation by CPAs
Aside from having the education, experience, and analytical skills necessary to provide you with the numerous options for your business, a CPA is also capable of representing you and your company in the case of an IRS audit. An tax preparer’s ability to represent a client is very limited. They are capable of preparing tax returns, but can only represent a client before the IRS if he or she holds the title of Enrolled Agent. A CPA has unlimited rights to represent clients in audits, payment issues, and appeals and stands behind their training in case of issues with your returns or your finances.
Every CPA has to consider their training and experience before offering advice, being certain that the options that they present fall neatly into the code of ethics. Mistakes or lackluster performances can reflect negatively on their licensure, so these professionals are very careful and considerate when it comes to the advice they give. Unlike a tax preparer, a CPA has the credentials to back up their thorough reports and advice.
In conclusion, though a Certified Public Accountant may charge more for services than a paid tax preparer, you’re gaining valuable assistance and information with the extra money that you’re spending. Consider it a wise investment, as a CPA is the greatest bang for your buck when it comes to the security of knowing that you’ve got a certified professional taking care of your business.
Each Certified Public Accountant is responsible for their skilled preparation of documents, and with a CPA, you know that you’re not hiring a random person off the street. You’re working with a person deemed qualified for his or her title by a qualified board of officials in the industry.
*West Austin Tax is not a CPA firm.