Accounting is an essential part of any business. Whether you're an online seller, a small business owner, or the head of a big company, making sense of your business numbers through thorough accounting will show the state of your business's financial health.
However, finances are not many people’s strong suit, and selecting the best expert to assist you is essential. For example, do you need an ecommerce accountant or a CPA? Additionally, are these two professionals even different? This blog post will help you decide who you should hire. We'll differentiate their roles, so you’ll know which professional is suitable for your ecommerce business.
Spotting the Difference: Ecommerce Accountants vs. CPAs
Many people use the term accountant and CPA interchangeably. The confusion is understandable since both jobs involve accounting. But the two roles differ greatly from one another. Although not all accountants are CPAs, all CPAs are accountants.
To help you tell the two apart, consider these significant differences.
Training and Licensing
Licensure is the primary distinction between an accountant and a CPA. Accountants don't need to take and pass a state-mandated exam to offer their services. However, before becoming a CPA or a certified public accountant, they must first obtain a license.
Furthermore, before CPAs are qualified to take their licensing exam, they should earn a bachelor's degree in financing and accounting. They must also complete rigorous training with specific hours in advanced accounting, auditing, and business courses.
Accountants can have a bachelor's degree in related courses like finance, business management, and accounting. From there, they will gain experience and training from school internships. After getting their diploma, accountants can expand their careers by getting certifications from accredited accounting organizations.
Knowledge on Taxation
There is no doubt that both professionals can help you with tax planning, returns, and filing. These basic tax services are covered in their training. However, when it comes to taxation laws and codes, a CPA has a more in-depth understanding.
Also, only CPAs can represent a business in front of the IRS. There are times, especially with big companies, when a business gets audited. Only CPAs can answer for your business and sign tax documents when necessary.
Code of Ethics
A governing body handles certified public accountants. Naturally, organizations have strict regulations and requirements to follow. The American Institute of Certified Public Accountants establish these professional standards, which fall under five broad categories and include:
- Due care
- Public interest
- Objectivity and independence
A key CPA responsibility that accountants cannot do is act as fiduciaries for their clients. This means that an individual or an organization is legally allowed to represent and has authority on behalf of their client's best interest.
If you need representation in front of banks, board members, and government auditors, you should hire a licensed CPA.
Key Roles of Accountants for Ecommerce Businesses
Although ecommerce accountants don't have the exact detailed and rigorous training as CPAs, they still have significant roles to play that could benefit ecommerce business owners. Here are some duties they do so you can see if they are suited for your business.
Managing Financial Data
There are many financial statements accountants should handle. There are the balance sheets, profits and loss statements, sales and expense reports, tax return forms, and many more. An accountant should be able to organize financial documents, create copies, and keep them secured and prepared for analysis.
Data Analysis and Consultation
Small business owners can rely on accountants to do accurate financial analysis for their businesses. Since small businesses don't involve many departments, owners can ask for financial advice from their accountants. In addition, ecommerce clients often turn to professionals when it comes to decision-making involving finances, and accountants should be able to help with situations like that.
Timely Business Reports
Financial reporting is essential for an ecommerce company to know the status of its business health. It is an accountant's duty to make these reports in a timely manner. For example, inventory management reports should be done at least once a month to know the exact number of your products.
Reports like these can also determine which products are fast selling and which stay in storage longer. As a result, timely financial data assists businesses in making better corporate decisions. Furthermore, in some situations, these reports are presented to board members, so they should always be prepared beforehand to ensure their accuracy and validity.
Key Roles of Certified Public Accountants
You can expect that CPAs can cover the roles and responsibilities of accountants. But with more training, they can offer more services. Let's look at the duties that CPAs can provide for your business.
Overseeing the Overall Accounting
Accounting services are broad, but a CPA understands and can perform all of the tasks if needed by the business. CPAs are interested in the company's bigger picture and focus their expertise on ensuring that their client's financial and business goals are achieved. Furthermore, CPAs ensure that the money circulates around the business well, so that all business functions are running.
CPAs spend most of their time researching the business and diving into financial data to analyze its performance. Research can identify the strengths of a business and develop them. Furthermore, it can pinpoint weaknesses and potential issues.
Communication and Project Management
You can think of the CPA as the head of all the accountants in one company. Naturally, bigger companies will need a team of accountants to handle their finances. You can think of the CPA as the head of all the accountants in one company. CPAs make sure they delegate responsibilities properly for the accounting system to function.
Furthermore, it's a CPAs duty to talk with the members of the business. They directly report to higher-ups and different business managers, and update and make them understand the business plans moving forward.
Making a Choice: Ecommerce CPA or Accountant
Now that you know the difference between CPAs and accountants, you can decide which professional to hire for your business. There is no doubt that both professionals can help with your finances but choosing the right one can affect your business greatly.
If you're a small business owner, you'll need an ecommerce tax accountant more. Sales tax can be a handful for new business owners, but since the number of financial transactions is not significant, accountants can handle accounting for you.
But when your company expands, it will be advantageous to work with a certified public accountant. They can do more, and backed with their accounting expertise, you will be sure that your business finances stays in good hands. However, allocate money in your budget for CPA. Because of their training and expertise, they will cost more than professional accountants.
Hiring a professional is beneficial for every business. It is just a matter of choosing the correct one for your needs. Accountants and CPAs are almost similar in work, but to ensure that your resources are used effectively, be sure to understand what exactly your company needs.
If you're looking for a reliable accounting firm that will handle the needs of your ecommerce business, Unloop is the ecommerce accounting solution for you. We have a team of dedicated professionals that can help you with your business’s finances. Book a call with us today and learn more about our services now.