Accountant vs. CPA: Do You Want Your Company to Grow?
2018-02-05 | by Gene Reynolds
Small business owners often go through a pattern of formulating plans, experiencing a downturn trying to implement the plans, and growth when the plans take hold. You might even repeat this pattern a few times per year.
So, why should your accounting plan be stagnant? Many small businesses start with a basic-level accounting service trying to maintain their books and file accurate tax returns. For your company to grow, though, you need to ask the question of whether you should be using an accountant or CPA.
An Accountant Will Keep You Stable
By definition, an accountant is someone “whose job is to keep or inspect financial accounts.” When you read that definition, you get a sense of maintenance — an accountant’s job is to maintain the financial records of your company and maintain the health of the records.
Or, you might consider the IRS definition of non-certified accountants as “unenrolled preparers.” There are two implications in the IRS definition: the accountant is not officially recognized and their job is limited to preparing the tax documents.
This level of accounting service is important for the early stages of your business to maintain stability and accurate reporting. Now that your company is maturing and growing, you need to consider why it’s time to shift from an accountant to CPA to find ways to grow your business through deep-level financial analysis and identifying tax advantages.
A CPA Will Help Your Company Grow
There is a significant difference between an accountant and Certified Public Accountant. The difference is your growth opportunity. Consider these three important differences that capture your ability to find the next growth pattern in your company.
1. You Need a Thorough Review of Your Business
CPAs are capable of looking below the surface of your financials to find ways to make important adjustments. Whereas an accountant is tasked with maintaining your books, a CPA is highly trained to find solutions that help you take advantage of your company resources.
This financial analysis service includes using advanced ratios to better understand the position of your company. An experienced CPA will apply these ratios to your specific industry to understand the true value of your resources in relation to the industry standard.
A deep dive into your business will provide you with information to proactively make adjustments. Comparatively, you will find yourself in reactive mode when working with an uncertified accountant because of the limited access to financial insight and analysis. That’s why shifting to a CPA is vital to growing your business.
2. CPAs Know Tips to Prepare for Taxes
Shifting to the insurance industry, the insurance company Farmers currently has an ad slogan: “We know a thing or two because we’ve seen a thing or two.” The campaign is meant to assure customers that the company has walked through enough life as an insurance provider to handle any type of claim.
The same applies to a CPA who combines college education, real-world experience, additional education and tax courses, and knowledge of companies across multiple industries to share important tips with clients.
Specifically, CPAs know how to prepare for tax season with insight on how to save in your business to fuel growth. CPAs also know what the IRS is watching out for in your tax returns. A CPA will be able to find these common tax audit triggers and help make the proper adjustment before filing your return.
Just as an insurance company safeguards your business against relevant concerns, a CPA will proactively manage your accounting to save you money and help you achieve scale as your company matures.
3. CPAs Can Represent Your Company Before the IRS
Small businesses are often audited because they hit one of the IRS triggers, which ties to not having a CPA review your financials. That highlights another significant accountant vs. CPA difference.
If your company is audited by the IRS, a CPA is legally capable of representing you as an “enrolled agent.” Additionally, because CPAs know the tax law, they can help make your case before the IRS.
As an attorney-in-fact, a qualified CPA can act on your behalf without needing to hire a tax attorney or lawyer to defend your business. This is a valuable service that CPAs can provide in addition to analyzing your financials and preparing your tax return.
It’s Time to Transition to a CPA
Our CPA firm, Reynolds and Associates, is committed to guiding small businesses in Houston through the important growth stage. We take a proactive position helping our clients identify and implement financial solutions.
We understand and appreciate that our clients have businesses to run and need a CPA firm that can reliably guide them on critical accounting decisions and issues.
When you are ready to make the shift from an accountant to CPA, contact our firm to discuss our structured and organized approach to support and grow your business.
About the Author
Gene is the Founder and President of Reynolds and Associates, a Houston-based CPA Firm. He has spent 42 years helping Houston entrepreneurs navigate their enterprises thru both calm and stormy waters.