Businesses, both big and small, require the expertise of a tax advisor. In certain cases, a small business may need the help of someone with a deeper expertise in tax issues. This is where a certified public accountant (CPA) comes in.
What is the difference between a CPA and an enrolled agent and why does a small enterprise need a CPA? We’ll take a look at the unique qualifications of a CPA below, but first let us look at what makes an accountant and enrolled agent different.
An enrolled agent status is given by the IRS to a tax preparer and it is recognized in every US state. Enrolled agents are trained and federally licensed to represent their clients to the IRS in cases of collections, audits, and appeals. They qualify by passing an IRS test or through their experience as former IRS employees.
Accountants are professionals that record and report financial transactions. They can hold general bookkeeping and accounting jobs for the finance departments of private firms and public institutions even without an accounting-related degree. Accountants may take care of tax-related matters, depending on their knowledge of taxation.
A CPA is an accountant who has passed the licensing requirements of a US state. The minimum requirements to become one include passing the Uniform Certified Public Accountant Examination, 150 hours of college education, and a year of accounting-related experience.
CPAs for Small Businesses
You might need a CPA for your small business if your tax situation is more complex than the average filing of returns. If you’re running a business, it is a good idea to have a CPA on your side to help you come up with a long-term tax plan.
The biggest reason to seek the help of a CPA is their eligibility to represent their clients before the IRS in an audit. An accountant has limited representation rights in an audit, while an enrolled agent has no expertise in preparing and analyzing financial statements. A CPA can do the job functions of both on top of the CPA’s own set of skills. It is advisable that the person you’re paying to do your tax preparation should also be capable of representing you in an audit.
We Can Help
If you need the help of a CPA, we can help guide you in the right direction. Contact us today at 818-452-2641 or fill out our contact form to schedule a free consultation.