Running an eCommerce business can be a complex endeavor, where you often juggle many facets of your operation. While the task may seem daunting initially, you can arm yourself with the right tools and team members. For example, one question that many online business owners have is whether or not they need a certified public accountant (CPA) for their venture.
In this blog post, we’ll explore what exactly a CPA does and why you might only need to work with one for some of your accounting needs.
Do I Need a CPA?
While many eCommerce businesses may assume they need a Certified Public Accountant (CPA) to stay afloat and on track with financial planning, that’s not necessarily the reality. Accountants can provide valuable insights into tax preparation, budgeting, bookkeeping, and other day-to-day business operations, but for most small to midsize eCommerce companies, the accounting team can handle most of the tax and accounting tasks.
If you find yourself in dire straits from a financial perspective, consulting a CPA is never a bad idea; they are pros at digging out any buried costs or savings you may overlook.
CPAs are most commonly employed by large businesses organized as C-Corps. Even larger companies often have accountants in-house and only consult with CPAs a few times throughout the year. You have plenty of other options if you don’t need a CPA.
CPA vs. Accountant: Explained
There’s substantial overlap between CPAs and accountants. After all, a CPA is a type of accountant. However, CPAs typically cost much more than their uncertified counterparts.
Accountants come in many forms, but CPAs are much more specialized. In the next section, we’ll compare and contrast the two roles in detail.
What is a CPA?
A CPA is a professional accountant who performs a variety of services related to taxes and financial record keeping.
To be recognized as a CPA, one must have completed extensive coursework in accounting. A CPA must also have extensive work experience in accounting, and have passed the Uniform Certified Public Accountant Examination.
Accounting services provided by CPAs include tax preparation, auditing, estate planning, budgets, and financial projections for their clients. CPAs are also qualified to advise their clients on managing finances.
CPAs adhere to specific professional standards and ethics. Plus, they’re also held to a fiduciary standard. As such, any CPA has an obligation to put their client’s interests first.
A CPA works with the public and usually consults with numerous clients, although some take in-house roles.
What is an Accountant?
An accountant is typically a professional who has earned a bachelor’s degree in accounting. It’s important to understand that while all CPAs are accountants, not all accountants are CPAs.
Accountants are qualified to manage day-to-day financial activity. These activities include organizing and recording financial transactions, reconciling accounts at the end of each month, analyzing financial statements, and preparing budgets.
Accountants in large accounting departments often specialize in certain aspects of accounting. Specialties include internal auditing, accounts receivable, accounts payable, payroll, or sales tax.
Should I Use a CPA or an Accountant?
Figuring out whether you need a CPA or an accountant depends on your situation. One of the most important things when finding an accounting professional for your eCommerce business is ensuring they understand interstate commerce’s complexities.
Several circumstances require a CPA. First, CPAs are required to prepare audited financial statements and conduct company audits. Accountants without a CPA designation cannot sign audit reports. Not everyone has the education and experience necessary to complete an audit. Luckily, most small to medium-sized businesses do not require independently verified audits.
A CPA can also represent taxpayers in front of the IRS. However, Enrolled Agents, lawyers, and other professionals can also perform this task.
You should also consider a CPA for forensic accounting, business valuations, or personal financial planning.
CPAs have various specialties, including auditing, forensic accounting, and many others. If you have a specialized project like this, make sure your CPA specialties match your goals.
If you don’t know exactly what you need, discuss your project with your prospective CPA to ensure they’re a good fit. They’ll let you know If they cannot handle your request, and they may even refer you to another CPA who is a better fit for the job.
You can work with an accountant if you don’t require any of the CPA specialties above.
Accountants can provide general bookkeeping, tax advice, budgeting, and financial planning. In addition, accountants are often more involved in the day-to-day operations of businesses. As a result, it’s more common to find accountants working in-house instead of consulting.
If you don’t need full-time accounting staff, you can find a part-time accountant with intimate knowledge of your books without a full-time salary. These accountants often market themselves as bookkeepers or part-time CFOs. The benefit of working with a consultant is that their role can expand as your business grows.
Do I Need a CPA for eCommerce?
You probably don’t need a CPA for an eCommerce business. However, the day-to-day operations, including recording transactions, paying bills, and processing payroll, can be handled by an accountant.
Most eCommerce businesses are small operations, and many have small amounts of transactions. Therefore, paying CPA prices for tasks that an accountant can easily handle is usually unnecessary.
Instead, most eCommerce businesses should consider using a bookkeeper or accountant to keep costs down. You can always hire a CPA to create audited financial statements or to prepare your tax returns.
CPAs and accountants both have extensive accounting knowledge, but they serve different purposes. Most small businesses don’t need a CPA regularly, so they can save on their accounting costs by working with an accountant.
Most small business will find that an accountant is sufficient, and you can always reach out to a CPA for specific tasks if needed.