What is the Difference Between a CPA and Tax Accountant?
Qualifications & Licensing A Certified Public Accountant or CPA holds a license issued by the state. Acquiring this license requires an individual to acquire rigorous education, pass certain exams, and develop their skills for as long as they work. Tax accountants may receive formal training but do not need certification to operate.
Scope of Work CPAs and tax accountants perform overlapping duties. CPAs, however, have a broader scope. Tax accountants mostly handle tax return preparation, planning, and compliance. CPAs offer audit services, financial consulting, forensic accounting, and regulatory compliance, along with everything tax accountants do.
Legal Authority One significant difference between a CPA and tax accountant services in Santa Monica is legal authority. CPAs are licensed to provide audited financial statements, making them essential for businesses needing compliance with regulatory agencies, investors, or lenders. Despite being knowledgeable in tax laws, accountants cannot sign audited reports or provide attest services.
IRS Representation When dealing with the IRS, not all providers of tax accountant services in Santa Monica have the same level of authority. CPAs can represent clients in IRS audits, appeals, and collections, similar to tax lawyers and enrolled agents.
Which One Do You Need? Choosing between a CPA and tax accountant depends on your specific financial needs. If you need basic tax preparation and filing, a tax accountant should suffice. However, if you need IRS representation, auditing, financial planning, or business consulting, a CPA is the better choice.
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