Miller and McPhail CPA

Accounting Firm in Athens and Chattanooga

What is a Certified Public Accountant?

A certified public accountant (CPA) is an accountant who has passed extensive testing to meet licensing requirements in their state. They must also complete 120 hours of continuing education over 3 years to ensure that they remain up-to-date on all financial laws and requirements. A CPA is an accountant, but all accountants are not CPAs.

A CPA, therefore, is uniquely qualified to handle your tax advice and preparation. He or she can also assist your business in several ways. From financial management and consulting to audits and forensic accounting, CPAs provide critical insight for your company. And, he or she can legally represent you with the IRS if need be. Whether you are starting a new business and looking for advisement or you need a second set of eyes to help you review your finances and strategies, a CPA is an invaluable resource. 

What's the difference between a Tax Preparation Service, a Regular Accountant, and a CPA

The simple answer to this question is that the three are separated by their educational background. An individual working in a tax preparation service does not have to have an accounting background. An accountant, normally, has received a bachelor's degree in accounting. A CPA has an accounting degree and has passed rigorous testing and certification. 

As the level of certification increases, so too does the amount of services that each can provide. A tax preparation service exists solely to help you complete and file your business or personal taxes. The individual preparing your taxes has studied tax code and passed a test to become a certified tax preparer. However, they do not provide general accounting or advisory needs. 

An accountant, on the other hand, typically has a bachelor's degree in accounting. He or she can provide valuable information related to the financial picture of a business, can help you with taxes, assist with budgets, help track income and expenses, manage assets and liabilities, and help your company with its financial statements. An accountant can help you effectively present your finances to investors, shareholders, and the IRS.

A CPA will have a bachelor's degree and will have passed the CPA certification exam. They can handle all of the services provided by a tax preparer or an accountant but also do even more. Because they are required to consistently complete continuing education, a CPA is going to be caught up with everything happening in the financial world. A CPA is the most qualified individual to assist your company financially and can provide forensic audits, review reports, and legally represent you before the IRS if necessary. A CPA is a comprehensive accounting and tax specialist with the financial knowledge to best position you for long-term success.

When should I use a CPA?

A CPA is beneficial in all sorts of circumstances. Whether you need tax assistance in your personal life or are seeking prudent financial advice for your business, a CPA can help. Understanding and utilizing a CPA's skill set can increase the likelihood of your financial success and significantly reduce the risk of errors when it comes to your tax preparation and filing. A CPA can also perform audits and reviews to ensure that everything is as it should be.

 

If you are thinking about starting a business, one of your first calls should be to a CPA. He or she can work with you to determine the right structure for your company (LLC, partnership, or a sole proprietorship). A CPA can also help you set up your business, aiding you as you apply for a Tax ID number, for instance, to ensure that it is built properly for the future. They can also advise you on the best type of accounting structure for your company.


You should also consider hiring a CPA for your tax needs. Not only can a CPA help you with this year's taxes, but they can also help you properly prepare for next year's taxes. They can work with you to reduce or minimize tax liability and, when necessary, legally represent you before the IRS. Because a CPA remains current on all tax changes and laws, they can also give you the information you need when updates or alterations are made in the federal or state tax codes.

 

CPAs are also beneficial in specific circumstances. If the IRS audits you or requests additional information about your return, a CPA can be given power of attorney to handle these types of matters on your behalf. Other specific situations that might require a CPA include instances where personal circumstances may affect your business (things like divorce, the death of a business partner, etc).

 

Finally, if you sell your business, close it, buy another business, or merge with another company, hiring a CPA is a good decision. He or she can analyze the finances of the other business and walk you through the ways that your actions may impact your tax liability. After all, knowledge is power, and a CPA can give you the information you need to make the best possible decisions.