The Difference between a CPA vs. Bookkeeper
Bookkeepers & CPAs
If you stop and talk to business professionals across various industries, you will probably hear the words CPAs and bookkeepers used interchangeably. Upon first reflection, both job descriptions appear very similar; however, you would be surprised to know that CPAs and bookkeepers do have a number of important differences.
A bookkeeper, by definition, is an administrative professional whose primary job is to follow a set of procedures or tasks related to the financial management of a business. They generally do not need to have a particular certification in order to perform their tasks.
An accountant, on the other hand, is more specialized, and often handles higher level financial structuring and analysis. Becoming a CPA requires a four year college degree and a passing grade on the CPA exam. So while most companies do use the two titles interchangeably, it’s important to remember there are several key things which distinguish them.
If you really want to see your business grow to another level, it is recommended that you consider hiring both a CPA and a bookkeeper as opposed to trying to roll both of these jobs into one position. Be sure to allow each of these employees to actually operate based on their preexisting skill set. Hiring both a CPA and a bookkeeper will not only save you money in the long term, it will also help take your business to the next level. Many people may try to talk you out of hiring both on your team, but ultimately, at the end of the day, you cannot have a bookkeeper on your team without a CPA to guide your bookkeeper along the way.
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What are the Requirements to Become an IRS Tax Preparer?
If you are considering earning your income as a future IRS Tax Preparer, there are number of requirements you must meet in order to start working with clients in need of a tax service.
Categories of Tax Preparers
The IRS classifies qualified tax preparers into several distinct categories. These categories are:
- Enrolled Agents
- CPAs
- Attorneys
- Supervised Preparers
- Non-1040 Preparers
Each category has its own set of qualifications which must be met in order to prepare individual or corporate tax returns.
Enrolled Agents
Enrolled Agents are the most rigorously qualified preparers of tax documentation. They must pass a three-part, comprehensive IRS exam which covers both individual and corporate returns. They are required to take a minimum of 72 hours of continuing education courses every three years, and must adhere to strict ethical standards. As a result, these preparers have unlimited rights before the IRS.
CPAs and Attorneys
CPAs and attorneys must pass a tax compliance check and a background check, but they are not required to take an IRS exam. Some may be required to complete continuing education courses in order to remain complaint with US law, but this varies. Both have unlimited rights before the IRS.
Supervised Preparer and Non-1040 Preparers
Both the supervised preparer and non-1040 preparer positions require the least amount qualifications. As a result, their ability to represent their clients concerning tax matters is severely limited in dealing with the IRS.
If you are looking for a career in tax preparation, these are the paths you can consider for employment.
Image credit: Alan Cleaver
