Unlicensed vs Licensed CPA – What does that mean for you?

Almost anyone can call themselves an accountant. This isn’t true of CPAs (Certified Public Accountants), which is a designation requiring specialized training towards becoming a licensed CPA.

The American Institute of Certified Public Accountants (AICPA) states, “All CPAs are accountants, but not all accountants are Certified Public Accountants (CPAs). Receiving your CPA certification distinguishes you from other business professionals – the benefits are increased trust, opportunity, and financial reward.”

What are the main differences between licensed CPAs and accountants?

• Training – CPAs have passed rigorous testing and strict requirements for licensing in the state in which they intend to practice. After becoming licensed, CPAs must take continuing education classes throughout their career in order to maintain up-to-date information on issues and changes in the accounting world.
• Fiduciary Responsibility – Many businesses that are required to have a financial statement audit or review will need a CPA to perform these services and issue the required reports. CPAs are also considered fiduciaries with a legal duty and power to act on behalf of, and in the best interest of their clients. Non-CPA accountants are not considered to be fiduciaries to their clients.
• Taxes and Regulations – Accountants without a CPA certification may prepare a proper tax return, but a CPA offers distinct advantages to clients that non-CPAs cannot provide. Many licensed CPAs are more knowledgeable in tax codes as a result of the rigorous CPA licensing examination and continuing education requirements. Licensed CPAs are also eligible to represent clients before the IRS if audit support is required, while a non-CPA accountant is not.
• State Requirements and Codes of Ethics – The license is not the only requirement to be a CPA. CPAs are also expected to follow a strict code of ethics and meet the high standards of the profession.

Pitfalls of working with an unlicensed accountant?

An unlicensed accountant can disappear with your data at any time. While a licensed CPA is professionally responsible by the State Board of Accountancy to make sure your data is protected.

Having a licensed CPA provides you recourse with the State Board of Accountancy in you ever need to report them. If you work with an unlicensed person and they disappear, there is no one to call or complain.

Licensed CPA vs Unlicensed Accountant Snapshot

According to Merchant Maverick, “An accountant is a finance professional who offers business advice and can perform bookkeeping tasks like reconciliation and record-keeping. But only a CPA can represent your company legally before the IRS  and create audit reports and review reports.”