When it comes to financial services, there are many different types of firms available to choose from. Two of the most common are accounting firms and CPA firms. While they may seem similar on the surface, there are some key differences between the two that can impact the type of services they offer and the qualifications of their staff.
In this article, we'll explore the differences between accounting firms and CPA firms, so you can make an informed decision when choosing a financial service provider.
The Difference Between a CPA and an Accountant
One of the key differences between accounting firms and CPA firms is the qualifications required for their staff. While both types of firms may employ bookkeepers and other financial professionals, the second one require that their staff hold a CPA license which is granted by the state board of accountancy and requires passing a rigorous exam, meeting education, and experience requirements, and adhering to strict ethical standards.
Accounting firms, on the other hand, may employ individuals with varying levels of education and experience. While some may hold a bachelor's degree in accounting, others may have only completed some coursework in accounting or have no formal education in the field at all.
What Do These Firms Do?
Both accounting firms and CPA firms offer a range of financial services, such as bookkeeping, tax preparation, and financial planning. However, there are significant differences between the services they offer.
Accounting firms typically focus on day-to-day financial tasks, such as bookkeeping, payroll processing, and preparing financial statements. CPA firms, on the other hand, tend to provide more specialized services, including tax planning, audit services, and forensic accounting.
Tax preparation and filing is one of the most common services offered by both types of firms, for both individuals and businesses. This can include quarterly estimates, tax liability projections, tax planning, and payroll tax calculations. Additionally, they provide guidance for taking advantage of available deductions while staying in compliance with laws and regulations.
| Criteria | Accounting Firm | CPA Firm |
|---|---|---|
| Focus | Day-to-day financial tasks, such as bookkeeping, payroll processing, and financial statement preparation | Specialized financial services, such as tax planning, audit services, and forensic accounting |
| Professional qualifications | A range of financial professionals with varying levels of education and experience | Certified Public Accountants, who are licensed by state boards of accountancy and have met rigorous education, exam, and experience requirements |
Legal and Regulatory Requirements
Both accounting firms and CPA firms are subject to legal and regulatory requirements, but these requirements can differ significantly between the two. CPA firms are typically subject to more stringent regulations, as they are licensed and regulated by state boards of accountancy. These regulations may include requirements for continuing education, ethical standards, and quality control procedures.
Accounting firms, on the other hand, may not be subject to the same level of regulation. However, they may still be required to adhere to certain standards, such as generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS).
Niche and fees
While accounting firms typically serve a diverse range of clients, including small businesses, non-profit organizations, and individuals, CPA firms often specialize in serving businesses and organizations that require more specialized financial services. These services may include tax planning, audit services, forensic accounting, and strategic data-driven analysis.
The scope of services offered by CPA firms can vary greatly depending on their size and focus. Some may specialize solely in audit and assurance services, while others may offer a wider range of services such as tax preparation, enterprise risk management, and consulting. In addition, many CPA firms provide professional advice regarding budgeting, staffing, purchasing, and compliance, which can be valuable for businesses looking to expand or grow.
Furthermore, CPA firms may specialize in serving specific industries, such as healthcare, finance, or real estate, and tailor their services accordingly to meet the unique needs of clients in these industries.
Finally, there are differences in the fee structures of accounting firms and CPA firms. Accounting firms may charge hourly rates for their services, or they may offer flat fees for specific tasks, such as bookkeeping or financial statement preparation. CPA firms, on the other hand, often charge higher fees due to their specialized services and a higher level of expertise and some have partnership programs for long-term clients.
Which One to Choose?
Both CPAs and accountants can offer all the above services. Unless you have an incredibly complex tax situation, you may not need the specialized services of a CPA firm and can benefit from the knowledge and experience of an accounting firm without the top-dollar prices.
Whether it is an accounting firm or a CPA firm, both are very professional in providing accounting, financial auditing, and tax-related consulting and services to clients. Ultimately, the key is to find a firm that meets your needs and provides the services and expertise that can help you achieve your financial goals.
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Kevin Mitchell, CPA
Senior Manager and CPA with over 20 years of experience in accounting and financial services, specializing in risk management and regulatory compliance. Skilled in managing audits and leading teams to deliver exceptional services. Proud father of two.
References: Orzech, J. (2018, March 14). The Difference Between a CPA Firm and an Accounting Firm. Duluth Accountant | Accounting Partners. https://accountingpartnersusa.com/the-difference-between-a-cpa-firm-and-an-accounting-firm/
