It’s hard to follow the money. Numbers and legalese appear over hundreds of documents, making it almost impossible to track finances.
That’s where an accountant comes in. More than 1.4 million accountants spend their days examining financial statements and computing tax forms. They’re essential to keeping a company’s financial picture rosy.
But not all accountants come alike. Many people are familiar with CPAs, even if they don’t know exactly what one does. Fewer people are aware of the different types of accountants.
Understand the types of accountants, and you can save money today. Here is a quick guide.
Certified Public Accountant
A certified public accountant (CPA) is a more generalized kind of accountant. Most work on federal and state taxes, but some manage more responsibilities.
Companies can hire CPAs to oversee their internal accountants. The CPA becomes a financial advisor of sorts, managing audits, and reviews.
CPAs are highly trained. They must earn a Bachelor’s degree from an accredited college, majoring in accounting. They then must pass the Uniform CPA Examination, which focuses on four accounting areas.
The responsibilities of a CPA differ. A San Diego CPA may take on more duties than a rural CPA because San Diego is a highly-saturated area. The more businesses that surround the CPA, the more clients they have and the more duties they carry out.
A financial advisor has the same goal as a CPA. They want to improve the finances of their clients.
But a CPA is primarily focused on taxation and internal measures. Financial advisors have expertise in risk management, corporate finance, and investments. They advise their clients on how to use their resources and grow their profits.
Some financial advisors may have no accounting background. But accountants can become advisors. Their specialization sets them apart from their competition, which can help them win clients.
An auditor supervises an organization’s financial documents. They ensure that everything is correct and conforms to the law. Auditors examine a range of documents, including account books and fiscal records.
Many organizations must have one external audit every year. Most auditors run independent practices to avoid conflicts of interest. Auditors file reports with recommendations to the organization on what to do in the future.
A forensic accountant is similar to an auditor, in that they analyze records to determine if everything is correct. But forensic accountants are investigators. A court or lawyer hires them to find evidence of fraud in financial records.
Many forensic accountants testify in court about their findings. They can be prosecution or defense witnesses. Some of them work for the government or inside a law firm.
The Four Different Types of Accountants
Hiring an accountant is a terrific way to know if your company is going in the right direction. But it can be hard to tell who to hire because there are so many different types of accountants.
CPAs are general business accountants who look at tax documents. If you want more perspective on your financial picture, you can hire a financial advisor.
If you need to ensure compliance with the law, you can hire an auditor. A forensic accountant analyzes records in a court setting. If someone is suing you, hire a forensic accountant as an expert witness.
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