Public Accountant Vs Private Accountant

Like most small business owners, you are probably not sure how to choose a Raleigh tax accountant. The right accountant is vital for your business and will save you time and money year after year. Whether picking a certified public accountant (CPA) or a private accountant, it could be a difficult decision to take. Here is some explanation on the difference between a Public Accountant and Private Accountants. To make it clear and simple, C. E. Thorn, CPA, PLLC has shared a few of the most common differences below.

The Main Differences Between Public and Private Accountants

Certified Public Accountant (CPA) – Public Accountant Independent Non-Certified Accountants – Private Accountant
Education & Certification requirements

 Public Accountant Certification – licensed by a State.

 Education requirements include 500 hours of  auditing time, 2 years of work in an established  accounting firm, knowledge in practice, theory, auditing  and tax laws.

 Educational continuance of 124 hours’ tax courses  every 3 years to remain certified and licensed.

 No educations and certification are  required. However,  to prepare taxes, most states require a certain number of  qualified hours of study plus an educational continuance each  year.

 Several certifications are available for independent accountants  but it is not an obligation to hold one.

Financial Analysis  A CPA is the only one able to prepare an audited  financial statement and a reviewed one. These processes  require high methodology examination and testing skills.

CPA’s provide support and advice on tax and financial  matters.

Note: CPA designation doesn’t guarantee the quality on  the advice.
Read our previous blog post on choosing the best CPA for  your business!

 

 

 

 

Non-certified accountants review business financial records and  prepare and analyze the financial reports (Balance Sheet and  P&L).

 

 

 

 

 Industry  expertise  Experience in multiple industries gained by clients  Limited knowledge: confined in a single industry
 Taxes*  Classified by the IRS as ‘enrolled agents’:
– More familiar with tax laws than  private one (tax code  is a big part of a CPA’s license)
– Stay update with tax laws to maintain their  license. Note: Not all CPA’s are specialized in  small business  taxes.
 Classified by the IRS as ‘enrolled prepares’:

Are able to prepare and sign tax returns but do not  provide  assurance:
– on the ability to do it
– to represent you before the IRS, even if this person has signed  your tax returns.

 

 Audit  Support  

 

Eligible to represent you before the IRS.

 

 

 Not Eligible in representing you before the IRS. (Private  Accountants can only represent clients in a very limited manner)

*If you hire a professional to prepare your tax, be sure his  person has the full authority to represent you in an audit and to  execute claims on your behalf.

*** The IRS requires all tax preparers to have a preparer tax identification number. The IRS distinguishes between preparers who are enrolled agents, CPA’s, or attorneys, and other preparers (considered unenrolled preparers). Accountants who are not CPA’s are considered unenrolled preparers. An unenrolled preparer’s ability to represent a client in a tax matter before the IRS is very limited.

Speak with a Trusted Local Small Business CPA

If you own a small business in the Raleigh-Durham, NC area, we look forward to helping you with your tax filing and other small business services. Consider C.E. Thorn, CPA, PLLC for your personal and small business accounting needs. We invite you to take advantage of our complimentary consultation by calling 919-420-0092 or completing the contact form.