CPA vs. Tax Preparers: Understanding the Differences and Who to Hire

Tax preparation requires sound knowledge of federal and Texas state laws and regulations. Hence, it might be inconvenient for an individual to prepare taxes. Hiring a professional to prepare your taxes can save you time and headaches. However, deciding whether to hire a tax preparer or a CPA to prepare your taxes may be a challenge.

While both can prepare taxes, the knowledge and expertise of a CPA in Brownwood, TX, may be very beneficial for individuals seeking quick yet precise tax preparation solutions.

Key differences between a tax preparer and a CPA

While CPAs and tax preparers are both finance professionals, their roles and responsibilities differ.

A tax preparer’s expertise is unlimited to assisting in preparing and filing taxes only. However, a CPA is a licensed professional with a higher level of knowledge and skill set in tax, finances, accounting, auditing, etc.

Jobs and responsibilities of a tax preparer

Collecting income, allowances, investment, and expense information from the clients.
Fill out forms and file them as per state and federal codes.
Organizing paperwork, operating accounting software, managing client data, etc.
Offering tax-related advice, guidance, and recommendations to clients and computing taxes for them.
Staying current with state and federal laws, credits, deductions, and adjustments.
Auditing clients’ tax forms and signing tax returns on their behalf.
Acting as a communication link between clients and tax authorities.

Primary responsibilities of a CPA

Preparing and filing clients’ state and federal tax returns.
Financial auditing and preparing financial statements.
Assist clients with budgeting, taxation, auditing, investment, and other financial activities.
Filing reports with the SEC (Securities and Exchange Commission).
Help companies with professional insight on mergers and acquisitions.
Provide estate planning and bookkeeping services to clients.

Hiring a CPA ensures better solutions.

Hiring a CPA for preparing and filing tax returns can be more beneficial due to the following reasons:

CPAs are experts in minimizing tax liabilities, optimizing cash flow, and ensuring compliance with local, state, and federal taxes.
They facilitate professional accounting solutions to maximize credits, deductions, and profits while minimizing penalties and liabilities.
CPAs can provide expert guidance to clients on tax planning strategies, profit and loss, tax filing, and much more.
A CPA is up to date with knowledge of tax laws and regulations and can easily handle all tax filing forms, such as Form 1120, 1120S, 1065, 1120-F, etc.
CPAs can help businesses with help like payroll tax compliance, withholdings, miscellaneous calculations, tax returns, tax remittance, etc.
CPAs act as tax audit representatives for their clients and aid in negotiation with the IRS audit process while also protecting the interest of the business.