If you’ve ever wondered, “What is the difference between a CPA and an accountant?” you’re not alone. People often assume they are the same, but there are crucial distinctions between these two financial professionals. While both CPAs and accountants help manage finances and provide critical financial insights, their roles, qualifications, and responsibilities differ in significant ways. Understanding these differences can help you make more informed decisions, whether you’re hiring someone for your business or pursuing a career in accounting.

Introduction: CPA vs. Accountant

Before diving into the nitty-gritty details, let’s address the basic question: What is the difference between a CPA and an accountant? In simple terms, all CPAs are accountants, but not all accountants are CPAs. Think of it this way: just like how all doctors are medical professionals, but not all medical professionals are doctors, CPAs hold a specialized certification that distinguishes them from general accountants.

Now, let’s explore this topic in more detail so you can understand exactly what sets these two roles apart.

What is an Accountant?

An accountant is someone who records, organizes, and manages financial transactions for individuals or businesses. Their tasks may include everything from bookkeeping to financial analysis and even preparing tax returns. Accountants play a vital role in ensuring that the financial aspects of a business or personal finances are in order. They help with:

• Tracking Income and Expenses: Accountants are often responsible for maintaining detailed records of all financial activities, ensuring accuracy in your books.
• Preparing Financial Statements: Accountants prepare important documents like balance sheets and income statements, helping you understand your financial health.
• Offering Financial Advice: Many accountants offer valuable insights into budgeting and forecasting for both businesses and individuals.

While many accountants have a degree in finance, business management, accounting, or a related field, they don’t necessarily have any specialized certifications. The term “accountant” is broad and can apply to a wide range of financial professionals. Some may specialize in managerial accounting or cloud-based accounting systems, depending on their career path.

What is a CPA?

Now, what is a Certified Public Accountant (CPA)? A CPA is an accountant who has passed the CPA exam and met all licensing requirements, including education and work experience, to earn the title. This certification is awarded by the American Institute of Certified Public Accountants (AICPA) and gives CPAs the authority to perform more advanced tasks, such as conducting audits and representing clients in front of the IRS.

Here’s a breakdown of what makes a CPA different from a general accountant:

• Advanced Education and Certification: CPAs must complete 150 credit hours of college-level coursework, typically pursuing a bachelor’s degree in accounting or a related field. After earning a bachelor’s, aspiring CPAs must pass a rigorous, multi-part CPA exam.
• Licensing Requirements: CPAs are licensed by their state’s Institute of Certified Public Accountants, and they must meet ongoing continuing education requirements to maintain their license.
• Special Authority: CPAs can conduct external auditing, sign audited financial statements, and represent clients during IRS audits. These are tasks that non-CPA accountants aren’t authorized to do.

In short, CPAs have both a higher level of expertise and legal responsibilities that set them apart from general accountants.

Key Differences Between CPAs and Accountants

While CPAs and accountants share many responsibilities, their qualifications and the scope of their work differ greatly. Here’s a closer look at some of the main differences:

Education and Certification

• Accountants: Generally, accountants have earned a bachelor’s degree in accounting, business, or a related field. While they may continue their education, there is no formal certification process that all accountants must follow.
• CPAs: In contrast, CPAs must meet specific educational requirements (usually 150 credit hours) and pass a comprehensive CPA exam. This certification process ensures that CPAs have an in-depth understanding of accounting principles, tax law, and financial regulations.

Licensing and Legal Authority

• Accountants: While accountants can perform many essential financial tasks, they lack the legal authority to perform audits or represent clients in front of the IRS.
• CPAs: A CPA has the legal authority to conduct audits and reviews, sign audited financial statements, and represent clients during tax disputes or audits with the IRS.

Scope of Work

• Accountants: Accountants focus on everyday financial management tasks, including bookkeeping, financial reporting, and tax preparation.
• CPAs: CPAs can do all that accountants do but also handle more complex tasks like forensic accounting, external auditing, and financial planning. They also advise bankers, financial advisors, and boards on important financial matters.

Ongoing Professional Development

• Accountants: Accountants aren’t typically required to continue their education after earning their degree, though many choose to do so to stay current with financial practices.
• CPAs: CPAs must maintain their certification by meeting continuing education requirements set by their state’s licensing board. This ensures they remain up-to-date on tax law, accounting standards, and other important regulations.

Job Opportunities and Career Path

• Accountants: Accountants can work in various settings, including corporations, non-profits, government agencies, and as freelancers. Their career path is often flexible and can include managerial roles or specialization in areas like cloud-based accounting systems.
• CPAs: CPAs are often sought after for higher-level roles in accounting firms, corporations, and government agencies. They have opportunities to work in specialized fields such as forensic accounting, tax strategy, and external auditing.

Salaries

• Accountants: Accountants’ salaries can vary depending on the industry and their level of experience. On average, accountants earn a stable income, but their salaries are typically lower than CPAs. They may see increases in pay as they gain more experience or specialize in areas like managerial accounting or cloud-based systems.
• CPAs: CPAs tend to earn higher salaries due to their advanced qualifications and the specialized nature of their work. With the ability to perform tasks like auditing, financial planning, and tax representation, CPAs command a premium in the job market. Their salaries also increase with experience and as they take on senior roles like CFO or financial consultant.

Global Recognition and Industry Demand

• Accountants: While accountants are in demand across many industries, their qualifications may not be widely recognized internationally. They typically serve smaller businesses or local clients, focusing on day-to-day financial tasks.
• CPAs: CPAs are often internationally recognized, allowing them to work across borders in global corporations or multinational firms. Their specialized skills in areas like auditing and tax representation make them highly sought after, particularly in regulated industries like finance and healthcare.

Future Outlook and Technology

• Accountants: With the rise of automation and cloud-based accounting systems, accountants are adapting to new tools for efficiency. However, some of their routine tasks, like bookkeeping, may become automated, which could limit future demand in certain areas.
• CPAs: CPAs are expected to remain in high demand due to their ability to handle complex tasks that automation cannot replace, such as external auditing and tax strategy. Their expertise in financial regulations will continue to be valuable in an increasingly regulated global economy.

Should You Hire a CPA or an Accountant?

So, should you hire a CPA or an accountant? It all depends on what you need. For day-to-day financial tasks like bookkeeping or tax preparation, an accountant might be sufficient. However, if your needs are more complex—such as conducting an audit or representing your business in front of the IRS—a CPA is the better choice.

Here’s a simple guide:

• Hire an accountant if you need help with:
  • Bookkeeping
  • Financial statements
  • Budgeting and forecasting
  • Preparing tax returns
• Hire a CPA if you need help with:
  • Audited financial statements
  • Complex tax strategies
  • Representing your business during an IRS audit
  • Conducting an external audit for investors or creditors

CPAs have the legal authority and expertise to handle these specialized tasks, making them indispensable for larger businesses or individuals with complicated financial situations.

Hiring CPA or Accountant from A&I Financials

When considering whether to hire a CPA or an accountant from A&I Financials, it all depends on your specific financial needs. If you’re a small business or an individual looking for help with basic bookkeeping, financial statements, or tax preparation, one of our skilled accountants will be the perfect fit to keep your finances in check. 

However, for more complex situations like auditing, tax strategy, or representing you in front of the IRS, you’ll want to hire one of our certified CPAs. With their advanced qualifications and legal authority, our CPAs can handle more intricate financial challenges, ensuring compliance and providing expert advice for larger financial decisions. At A&I Financials, we have the right professionals to meet your every financial need.

Career Path and Licensing Requirements for CPAs

If you’re considering a career in accounting, becoming a CPA can open many doors. However, the path to becoming a CPA is much more challenging than that of a general accountant.

Educational Requirements

To become a CPA, you typically need to complete 150 credit hours of education, which often includes earning a bachelor’s degree in accounting. Many students opt to pursue a master’s degree to meet this requirement.

Passing the CPA Exam

After meeting the educational requirements, candidates must pass the CPA exam, which consists of four parts:

1. Auditing and Attestation
2. Business Environment and Concepts
3. Financial Accounting and Reporting
4. Regulation

Passing this exam requires dedication, as it covers a wide range of topics from financial reporting to legal regulations.

Licensing and Continuing Education

Once you pass the exam, you’ll need to meet your state’s licensing requirements. CPAs must also complete ongoing continuing education to maintain their certification. According to the Bureau of Labor Statistics, CPAs enjoy strong job prospects and are highly valued in many industries.

Conclusion: Making the Right Choice

So, what is the difference between a CPA and an accountant? Simply put, a CPA has more education, certification, and legal authority than a general accountant. If you need basic financial help like bookkeeping or tax prep, an accountant can do the job. But for more complex tasks like auditing or representing you in front of the IRS, a CPA is your go-to expert.

Whether you’re hiring for your business or considering a career in accounting, understanding these differences can help you make the right choice. Both CPAs and accountants play crucial roles in financial management, and choosing the right one depends on your specific needs.

In short, when you’re facing big financial challenges, having a CPA on your side can make all the difference.