Accountant vs CPA, would you let either do your books if you had a small business?

Worriedone wrote: ↑ I got into a discussion last night with some friends/family and I never thought I would be the odd man out here.

Basically, if you ran a small business and had some rental properties would you let an accountant or accounting firm do your books, file your taxes and give tax advice who have no CPA designations or would you only hand it off to a CPA?

General rule of thumb - you get what you paid for; I've had client tax returns given to me from both CPAs and non-CPAs and the common theme was that the cheaper the price, the lower the quality of the work.

Tiberious

I'm slightly confused by your question. Most accountants in public practice WOULD have a CPA. I'm not seeing the trade off. On the other hand, plenty of people with CPAs don't call themselves accountants. They may work in corporate (industry) with limited tax and advisory experience. Like they might be focused on managing corporate budgets rather than traditional accounting.

What you should do is find someone with competence specific to your industry and also with public practice experience. Though of course the problem is often you can't tell how competent the person is until you catch them filing a mistake. The other consideration is the complexity of your business. If you are just doing rentals, heck, just file it yourself. An accountant might not add much value. A lot of accountants don't do much advisory. They just take whatever information you give them and file based on that. The only way to ever get the best result is to learn and do everything yourself which is very time consuming of course. Even if you use an accountant they will never "cheat" for you. When CRA audits you, you might be on your own. The accountant will just say they filed based on client information, and that the client did not request an audit engagement.

I own a business, AND have a CPA. I don't file my own taxes. I do the books but let an accounting firm do it so there's the feel of having a 3rd party professional do it.

BananaHunter wrote: ↑ I'm slightly confused by your question. Most accountants in public practice WOULD have a CPA. I'm not seeing the trade off. On the other hand, plenty of people with CPAs don't call themselves accountants.

This is what I always thought and where the confusion is coming in. I was told today that you could call yourself an accountant, do accounting work and not have a CPA. The CPA is a special designation and beyond that of an accountant. I always thought if you called yourself an accountant you had to have a CPA

I always thought You can be a book keeper and not need a CPA but a book keeper could not call themselves an accountant.

Which is true?

Worriedone wrote: ↑ This is what I always thought and where the confusion is coming in. I was told today that you could call yourself an accountant, do accounting work and not have a CPA. The CPA is a special designation and beyond that of an accountant. I always thought if you called yourself an accountant you had to have a CPA

I always thought You can be a book keeper and not need a CPA but a book keeper could not call themselves an accountant.

Which is true?

There is a difference, you can be an accountant and not be a CPA; as long as you are not misrepresenting, anyone can call themselves an "accountant"

Tiberious

CPA is a just a certification. It's like hiring an electrician. There is a certification process. You can certainly find people calling themselves an electrician who have no certification. It boils down to whether you can trust them. And frankly a lot of times, you can't know until they do the job. That's why word of mouth matters. Reputation matters but of course, the places with established reputation will charge a premium. Having crendentials is a way to try to "prove" your ability. But of course, we are all human. Some licensed professionals still make mistakes, while some unlicensed people can do a fantastic job. It's entirely possible you pay a premium and still get crappy results.

With accounting, I STRONGLY recommend sole owners to learn at least some basics. Electricians can rip you off maybe a couple hundred perhaps. But when it comes to business, it's your time and personal investment on the line. Accountants won't lie for you. You need to more or less bring the numbers to the accountant first and have an idea of how to set up your bookkeeping and documentation process. A good accountant will advise you (for a fee of course). A more greedy accountant may suggest services you don't need to create more work, and hence more business.

A good example is an accountant recommending to open a holding company. While yes...there are situations where your business can grow to a point where this makes sense, in the vast majority of small business this won't make a lick of difference. Just another set of books for the accountant to charge you money for.

There are two alternative certifications in Canada, Chartered Accountant (CA), and Certified Public Accountant (CPA), each with slightly different qualifications.

Both require annual payment of a fee, and you may find that some semi-retired pros who do part-time work may no longer want to pay the fee to keep up their certification.

Successful CA just hands off bookkeeping stuff to their assistants. So you end up getting even lower quality of work vs CPA designation.

there are no difference with Accountant or CPA. The only difference is the cost.
You might get the same quality, but pay higher fee for CPA license.
Yes, CPA might have more knowledge regarding tax planing, financial analysis, but the issue here is you do not need it.
But public CPA could give your notice to reader, which is basic requirement from Bank in order to get a loan from them.

Scote64 wrote: ↑ There are two alternative certifications in Canada, Chartered Accountant (CA), and Certified Public Accountant (CPA), each with slightly different qualifications.

Both require annual payment of a fee, and you may find that some semi-retired pros who do part-time work may no longer want to pay the fee to keep up their certification.

Wrong.

The three designations (CA, CMA, and CGA) agreed to work toward a unified CPA designation from 2011 and on Oct 1st, 2014 the final step has taken place and the three designations were officially merged.

Until November 1, 2022, members must use their legacy designation(s) (CA, CGA, CMA) along with their CPA designation after their name.

Examples:
Member Name, CPA, CA
Member Name, CPA, CGA
Member Name, CPA, CMA

After that date, you can choose to use only the CPA designation or both your CPA and your legacy designations.

You get what you pay for...
Everyone and their dog becomes an accountant during tax period..

Having been in the industry for some time. My rule of thumb to friends is: if your family income is greater than $150k - you should be paying at least $500 for your tax returns in a given year.. $500 for the tax return, and $500 for tax planning into the future..