What's Best for You?
An Austin Accountant, Austin CPA, or Austin Bookkeeper?
The first
thing to understand is that not all accountants are
CPAs, or Certified Public Accountants. Most
people use the terms "CPA” and “accountant"
interchangeably, but, in fact, there is a huge
difference between the two. The CPA designation carries
much more weight in business and financial circles for
very valid reasons.
CPAs are recognized as an integral, essential part of
the business world, and they are, more often than not,
considered by most business enterprises, large or small,
to be one of their most trusted advisers. CPAs, in
fact, are very often as valuable to a business as
attorneys are.
Many business owners, in fact, say that when it
comes to business, their primary resource for advice is
their CPA or their accountant. Whether it is a CPA
or an accountant, however, a great deal of trust is
involved—often even more so when the advisor is a CPA.
This level of trust is not surprising when you consider
the stringent requirements to enter and stay in this
profession.
Achieving CPA status takes work, smarts, ethics, and a
lifelong commitment to learning. It all starts with over
150 hours of some of the toughest business courses at
any college or university. Then, after graduation and a
year of professional experience under the supervision of
another CPA, candidate CPAs must pass a comprehensive
test of their business, auditing, and general accounting
skills.
The first CPA examination was developed in the
early 1900s to ensure the basic competence and education
of new CPAs entering the field. This is much like
the bar exam works for attorneys and the medical boards
works for physicians.
CPA exams are continually revised and updated to meet
the changing demands of the profession. For example,
candidates are now being tested on their knowledge of
the Sarbanes-Oxley Act, which was passed into law in
2002. This significant change was made because the
marketplace rightly demanded higher accounting standards
of business, and this, of course, has affected CPAs.
Almost every state in the country has passed legislation
that requires accounting graduates to complete 150 hours
of course credits before taking the certification exam.
Many in the profession feel that it’s only a matter of
time—and the sooner the better—when all states will
require this.
The CPA examination is not the only
requirement, however. CPAs are also pledged to follow a
strict code of ethics and perform “within the high
standards of the profession.” In addition, every year a
CPA must complete 40 hours of continuing professional
education (CPE) to keep up with changes in the federal
and state tax codes and new rules and regulations in the
accounting, financial, and business world.
Over the years, as the profession has grown and
matured, the services which professionals provide have
changed as well. CPAs do much more than crunch the
numbers and prepare tax returns. For instance,
their training and unique knowledge perfectly positions
them to function as financial managers and strategists,
often serving as CFOs (chief financial officers) for
medium to large-sized businesses.
In addition, they provide tax and financial planning,
merger and acquisition planning, estate planning, and
investment advice, to name a few areas. Furthermore,
business owners often use CPAs to analyze new product
lines and creative financing opportunities. As
technology advances and financial globalization via XBRL
standards becomes reality, CPAs will play an even more
critical role in business operations.
So What Is an Accountant?
What are the minimum requirements to call
oneself an "accountant?"
The answer is that there are basically no
requirements—no educational requirements, no experience.
In fact, anyone with a knowledge of QuickBooks can go
into business and call himself or herself an accountant.
Wikipedia defines
accountant as "a practitioner of accountancy." It
qualifies the term with more specific terms such as
“Certified Public Accountant,” which many countries now
have, although a number of them use different titles.
CPA is the common nomenclature in the United States.
To quote Wikipedia, "Like other legally restricted
professions including doctors and lawyers,
different countries have their own training and
examination systems to maintain the quality of qualified
(aka, certified) public accountants in their
jurisdictions."
Additionally, you will find that many CPAs use
the shorthand term “accountant” when referring to
themselves, thereby further confusing the public’s
understanding of those in the profession.
There is a growing movement of uncertified
accountants who are working to create a second tier of
licensed financial professionals in the U.S. They are
interested in developing a licensing process that does
not require a full college degree but that accords a
level of professional recognition below that of a
full-fledged CPA.
For many accountants and businesses that rely upon
them—businesses that have grown too large to handle
QuickBooks on their own, for instance, but are still too
small for the services of a CPA—this second-tier level
may be a good idea. Non-CPA accountants typically
charge 30-40% less than CPAs, and in many instances, do
much the same type of work, which is basically track the
finances of a business or individual.
Naturally, some CPAs are resistant to this
change—not necessarily because it is a bad idea for the
public, but because it poses a possible financial threat
to their profession.
As you can see from the
previous discussion, choosing the right type of
financial professional for your small business can be
somewhat confusing. But there is even one more
professional to be considered—and that is the one
referred to as “bookkeeper.” So, where does the
bookkeeper fit into the mix?
If your business is in any way succeeding, then
you reach a point where you need help with the books.
Choosing the right kind of help is not easy, and sorting
through the choices is especially important for this
position since the person selected will have intimate
knowledge of you and your finances. This is someone in
whom you will be placing a great deal of trust—trust
that they are honest and trust that they can keep their
intimate knowledge of your business affairs
confidential.
Bookkeeper
Bookkeepers generally have experience with
basic accounting principles and also, most likely, a
mastery of QuickBooks. They typically understand and
have experience with accounts payable and receivables,
payroll, and employer-filed taxes.
Bookkeepers may have an Associate’s Degree or higher
education degree—or none at all, for they may have
acquired their knowledge and training on the job.
Bookkeepers can be just the ticket for handling the
daily, weekly, or monthly accounting functions required
by a small business. Not only are their fees
considerably less than that of an accountant or CPA,
they may also be more well versed in some of the more
common small business accounting software programs, such
as QuickBooks.
You can hire a bookkeeper as an employee or as
a subcontractor, or you can pay a bookkeeping service
company. By hiring an individual to do your books, you
may get more personalized attention, and they will
probably have the opportunity to learn your company
better, offering you valuable input when it is required.
On the other hand, by hiring a bookkeeping service, you
may acquire a level of security that you do not have
with an employee. Your finances, since they are handled
within a system containing management checks, may be
more secure because there is less opportunity for fraud
or embezzlement.
On this note, it’s worth saying that it’s considered
wise for small business owners to refrain from giving
anyone the authority to sign checks. It may be more
convenient to turn this task over to a bookkeeper, but
it’s best to have them prepare the checks, which the
owner then signs. Larger companies, of course, will have
systems for this, which include institutional layers of
accountability designed to prevent fraud.
Accountant
An accountant is educated in all the basic
accounting functions and will most probably have a
Bachelor’s Degree in accounting or business, although
that is not required. Hiring an accountant, however, as
opposed to hiring a bookkeeper, may be the best way to
go if the complexity of your accounting functions, such
as preparing cash flow statements, is greater than
simple daily entries and check-writing, which a
bookkeeper can easily handle.
CPA (Certified Public Accountant)
As discussed previously, the designation of CPA
represents an entirely different level of accounting
professional. To attain CPA status, an accountant
must be a college graduate, serve an apprenticeship
under a CPA working in the field, and pass a series of
tests, as well as enroll in yearly continuing education
classes in order to retain their license.
The requirements to become a CPA are rigorous, and
although the requirements to sit for the CPA exams can
be different from state to state, the exams themselves
are identical.
Finding an Austin Accountant
You can Trust