Accountants
Educational requirements and certifications
An accountant typically holds a bachelor’s degree in accounting or a related field. While this provides a solid foundation in accounting principles, there’s no standardized certification required to call yourself an accountant.
Day-to-day duties
Both accountants and licensed tax professionals can handle many of your basic accounting needs. They can:
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Help set up your accounting systems and processes
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Manage your general bookkeeping and maintain accurate financial records
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Create standard financial statements and reports
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Assist with budgeting and cash flow management
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Prepare tax returns if they have the proper credentials (a PTIN, Preparer Tax Identification Number)
When to hire an accountant
An accountant might be the right choice if you:
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Need help organizing your basic bookkeeping and financial records
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Want someone to manage routine accounting tasks so you can focus on running your business
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Are looking for general financial guidance but don’t need specialized tax or audit services
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Have a relatively straightforward tax situation
Licensed tax professionals
Educational requirements and certifications
A licensed tax professional takes it several steps further. They have completed not just a bachelor’s degree but also additional coursework in advanced accounting topics. They’ve passed a rigorous licensing exam. It’s a four-part test covering auditing, business concepts, financial accounting, and regulation. And what’s more, they maintain their certification through continuing education every year to stay current with tax laws and accounting standards.
Day-to-day duties
Licensed tax professionals bring specialized expertise and additional authority to the table. They can:
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Perform certified audits and review financial statements
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Represent you before the IRS for audits, appeals, and other tax matters (a right they share with enrolled agents, who are tax specialists licensed by the IRS)
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Provide expert testimony in court regarding financial matters
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Offer high-level business advisory services, from succession planning to business valuation
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Lead strategic tax planning initiatives across multiple business entities
This wider scope is why many growing businesses eventually transition from working with an accountant to partnering with a larger accounting firm, especially as their financial needs become more complex.
When to hire a licensed tax professional
You might want to consider working with a licensed tax professional if you:
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Are facing an IRS audit or have complex tax issues
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Need strategic tax planning to minimize your tax burden legally
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Are considering a major business transition like buying or selling a company
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Require certified audits or reviewed financial statements for investors or lenders
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Want advanced financial planning and business advisory services
Cost differences between accountants and licensed tax professionals
Now let’s talk about the cost. Generally, accountants charge less per hour than licensed tax professionals. This makes sense given the different levels of expertise and liability involved. But consider this: while a licensed tax professional’s hourly rate might be higher, their specialized knowledge could save you significant money in the long run through better tax planning and financial strategies.
Making the right choice
The decision between hiring an accountant or a licensed tax professional really comes down to your business needs and goals. If you’re just starting out and need help with basic bookkeeping, an accountant might be the perfect fit. But if you’re growing quickly, planning major changes, or dealing with complex financial situations, a licensed tax professional’s expertise could be invaluable.
We recommend starting with a clear assessment of your needs. What specific financial tasks are taking up too much of your time? What financial challenges keep you up at night? Once you know what you need, you can make a better decision about the type of financial professional who can best help you achieve your goals.
Remember, many businesses work with both, using an accountant for day-to-day operations and consulting a licensed tax professional for more complex matters. The most important thing is finding someone you trust who can help your business thrive.
Ready to get more financial support for your business? Learn how we can help your small business with accounting.