Tax Accountant vs. Tax Preparer | Molen & Associates

Stay Ahead of Law Changes & Protect Yourself Against Being Audited: Corporate Transparency Act and Reasonable Compensation

Accountant vs. Tax Preparer
You wouldn’t use a hammer to tighten a nut, would you? I also hope you don’t use a screwdriver to brush your teeth. For every task there are several different tools that we could use. Some are better than others, but there is usually one that stands out as the best solution. The best solution is achieved by maximum efficiency, best fit, ease of use, cost, or even knowledge.

The same concept applies to taxes.

I almost cringe whenever I ask someone, “Who does your taxes?” and they respond, “My buddy who is a CPA takes care of them for me. He’s been doing them for years.” While I am glad that this individual has been getting their taxes taken care of, they may be using the wrong tool. Don’t get me wrong, a CPA CAN do taxes and probably does them better than most people. But this is like me saying I can put a screw into a piece of wood with a hammer. It would work, but there is a better tool out there.

CPAs generally have a good education and background in accounting and have passed an exam that certifies them to practice certain skills such as performing audits, preparing financial statements for businesses, understanding corporate governance structures, and dealing with various types of business regulation. This allows CPAs to prepare taxes, but their specialties usually lie with businesses. Tax preparers and especially Enrolled Agents, commonly referred to as EAs, are tax specialists. They are required to have a mastery of the tax code and be able to work closely with the clients they represent. While they may not have the same broad educational background as a CPA, everything they do is geared towards tax law. EAs are required to pass a three-part exam through the IRS that covers representation as well as individual and business tax returns. Because tax laws are ever changing, Enrolled Agents must be detail-oriented and ensure their knowledge is up to date.

Accountant Job Duties:

  • Prepares asset, liability, and capital account entries by compiling and analyzing account information.
  • Documents financial transactions by entering account information.
  • Summarizes current financial status by collecting information; preparing balance sheet, profit and loss statement, and other reports.
  • Substantiates financial transactions by auditing documents.
  • Maintains accounting controls by preparing and recommending policies and procedures.
  • Reconciles financial discrepancies by collecting and analyzing account information.
  • Prepares payments by verifying documentation and requesting disbursements.
  • Complies with federal, state, and local financial legal requirements by studying existing and new legislation, enforcing adherence to requirements, and advising management on needed actions.
  • Prepares special financial reports by collecting, analyzing, and summarizing account information and trends.

EA/Tax Professional Job Duties:

  • Help individuals and prepare personal income tax returns.
  • Work with small businesses in specific industries.
  • Organize businesses with a certain tax structure, such as partnerships or LLCs.
  • Work with corporations to prepare corporate tax returns.
  • Help estates and trusts, dealing with their unique tax obligations.
  • Preparing documents and filing them with the IRS.
  • Communicating with the IRS on behalf of a taxpayer about the taxpayer’s rights, privileges, or liabilities under the tax code.
  • Attending meetings, conferences, or hearings with the IRS on the taxpayer’s behalf.
  • Advising the taxpayer and acting on the taxpayer’s behalf.

I am not inferring CPAs are bad. There is just a right tool for every job. CPAs are a tool for certain functions. Tax Professionals have another function. There is a common misconception that being a CPA makes you an income tax expert, or if you present yourself as a tax professional that you’re a CPA. This doesn’t give CPAs the credit they deserve in their certification and what they are truly experts in. It also falsely assumes that they have an expert understanding of the income tax code. Many CPAs seek our help in preparing their taxes because we are experts in income tax law. Tell us about the problem you are having, and we can help you better understand which is right for you.

Clark Boyd
General Manager

The Molen & Associates Difference

Mike Forsyth

“Super helpful and timely. This is our first year with them and we look forward to trusting them with our taxes and business books for years to come.”

Caitlin Daulong

“Molen & Associates is amazing! They run an incredibly streamlined process, which makes filing taxes a breeze. So impressed with their attention to detail, organization, and swift execution every year. Cannot recommend them enough!”

Sy Sahrai

“I’ve been with Mr. Molen’s company for few years and I felt treated like family respect and dignity. They are caring, professional and honest, which hard to find these days. Love working with them.”

Gig Economy Taxation: a Detailed Overview

Gig Economy Taxation: a Detailed Overview Reporting Income as a Gig Worker Gig economy workers must report all income earned from their endeavors. This includes, but is not limited to: Earnings from part-time, temporary, or side gigs. Income not reported on...

Standard Deduction vs. Itemizing: A Comprehensive Guide for Small Business Owners and Self-Employed Individuals

Standard Deduction vs. Itemizing: A Comprehensive Guide for Small Business Owners and Self-Employed Individuals   As tax season approaches, one of the most significant decisions you’ll face as a small business owner or self-employed individual is whether to take...

Real Estate and Taxes: A Comprehensive Guide

Real Estate and Taxes: A Comprehensive Guide Real estate taxation is a multifaceted topic that encompasses various forms of taxes, including income tax, property tax, and sometimes even sales tax. Whether you’re dealing with personal or business real estate,...

Steps to Filing a Tax Extension

Is Filing an Extension Bad?   We get this question probably a thousand times a year. An extension is not inherently bad, it is truly personal preference. An extension will not increase your risk for an audit or red flag your return with the IRS. In fact, it is...

How to Pay Your Child From Your Business

How To Pay Your Children From Your Business Paying your children through your business can be a strategic way to manage your business's taxable income, while also providing your children with income and potentially teaching them about the value of work.  While it is a...

Tax Tips for Newlyweds

Tax & Financial Tips for Newlyweds in Houston Marriage is a significant milestone that not only unites two individuals in partnership, but in most cases, also merges their financial and tax situations. For newlyweds in Houston, understanding the tax implications...

Self-Employment Taxes: A Deeper Dive

Self-Employment Taxes: A Deeper Dive Self-employment taxes are a critical component of the tax system in the United States, impacting individuals who work for themselves. Understanding the nuances of these taxes can help self-employed individuals plan and manage their...

Education Tax Benefits: Maximizing Savings with Credits and Deductions

Education Tax Benefits: Maximizing Savings with Credits and Deductions Navigating the complexities of tax season can be daunting, but for those bearing the costs of higher education, there are valuable tax benefits that can ease the financial burden. Among these are...

How to request Individual Penalty Abatement

How to Request Penalty Abatement Penalty abatement is a great way to help reduce your client's tax debt. Here's how you can request apenalty abatement from the IRS. Let’s say you’ve determined that your client is eligible for a penalty abatement to help reduce their...

Understanding the Child Tax Credit for 2023

Understanding the Child Tax Credit for 2023 The Child Tax Credit (CTC) is a significant provision in the U.S. tax code designed to offer financial relief to families with qualifying children. As we navigate the 2023 tax year, it’s crucial to understand the current...

Request an Appointment Today

3 + 1 =

Call us at

Pin It on Pinterest

Share This