CPA vs Tax Preparer
November 7, 2022
When you’re filing your taxes at the end of a fiscal year, as a small business you have a few options to help you get through this complex process error-free.
Option 1, you can file your taxes yourself.
This may definitely be a sensible option for a start-up in its early days, with extremely simple tax return. It can save you the cost of hiring a professional accountant to file the return for you.
If your start-up is past the simplicity phase then you may want to consider working with an actual professional. This is option 2.
There are normally two types of professional accountants to pick from for your tax preparation needs:
- A certified public accountant (CPA)
- A non-CPA tax preparer
Let’s discuss a few key differences between these types of professionals:
Knowledge and Experience
The majority of the non-CPA tax preparers are not required to have any significant background in accounting. They are only required have to do some studying and pass the IRS’s competency exam in order to be eligible to charge a fee for tax preparation services.
Much of the competency exam is based mostly on rote memorization and doesn’t truthfully test critical thinking skills. Additionally, tax laws and dealing with legal situations is not covered by this exam.
On the other hand, CPAs have a much more extensive knowledge background and experience in traditional accounting and latest accounting systems. CPAs have a more rigorous and well-established qualifications benchmark which requires them to have at least a Master’s degree in accounting. They then need to pass a series of challenging exams, each of which tests a different area of accounting.
A CPA who focuses on tax accounting, is highly likely going to have a much more in-depth knowledge of the tax laws, and is better equipped to lever any unusual tax situations that your company may have.
Stability and Consistency
CPAs work continuously, and so can provide constant accounting services to their clients. When it comes to handling your financial matters, this can offer stability and peace of mind to you as an owner. This continuity enables the accountant to become acquainted with your finances, business situation, and any other matters that may impact your finances and your tax return.
Most tax preparers, however, work for a grander tax preparation company and are only working seasonally. Hence it is quite unlikely that you will ever work with the same tax preparer twice, even if you go into the same office every year.
Ongoing Assistance in Financial Matters
As mentioned, CPAs are made to study deeper and are tested on far more than just taxes. They acquire knowledge and experience of numerous areas of accounting, including business audits, budgeting, forecasting, variance analysis etc. Many business owners want to take advantage from the fact that CPAs are capable of helping them with a wide range of financial matter, and so they need more than just tax preparation and accounting services.
Because they’re managing more than just one aspect of your finances, they will by all means have a better understanding of the company’s financial standing. This can help you get the best outcome on your return.
Contrary to that, non-CPA tax preparers only focus on taxes, they cannot provide constant services in other accounting areas.
Here is another important comparison between CPAs and general tax preparers. Most tax preparers cannot and will not offer you representation if you’re audited.
CPAs, as compared to them, have been legally authorized to represent their clients during a legal audit.
Thus, CPAs can bring you a lot of peace of mind as a business owner who is stuck in such a stressful time. An audit can turn out to be less of a hassle and significantly easier, less stressful, and more manageable when you have legal representation from a person who understands the law and all financial legalities.
Why You Should Use a CPA
Choosing which type of professional for preparing your return is a tricky decision. Most individuals however, are better aided by a CPA. With their greater knowledge and experience in tax accounting and a more diverse set of skills, their ability to assist you with a huge range of financial matters remains unshaken.
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Accounting, cpa, Online CPA, tax, tax Preparer