What is the Difference between an Accounting Company and a CPA Firm?

Accounting company vs CPA firm – what’s the difference? There’s a lot of confusion regarding this topic among non-accountants, so we’re going to answer it for you by breaking down the differences and explaining the similarities.

While they may sound similar (and some people may even use them interchangeably), an “accounting company” is distinctly different from a “CPA firm.” Often, the confusion results when people refer to a CPA firm as an “accounting firm,” which makes it sound very similar to an “accounting company.”
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So, how do they differ? The main differences are seen across credentials, regulations, services, and price. 

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​Required Credentials
As the name would imply, CPA firms employ CPAs (which are licensed professionals who have passed the CPA exam and met additional certification requirements, where applicable). Accounting companies may also employ CPAs, but they have other types of accountants on staff as well. Often, these other types of accountants have specialties across areas where having a CPA license isn’t required, such as management accounting, nonprofit accounting, cost accounting, government accounting, or audit. That doesn’t make them less qualified, it just makes them differently qualified.

Regulations & Legal Authority
CPA firms are comprised of CPAs, which means they must adhere to AICPA (American Institute of Certified Public Accountants) standards. In exchange for these stricter regulations, CPAs have the legal authority to sign audited financial statements for the purposes of approaching investors and securing funding.

While accounting companies are not bound by these same regulations, they must still adhere to GAAP (Generally Accepted Accounting Principles) best practices and exhibit high ethical standards. Reputable accounting services companies will take this responsibility very seriously – encouraging the ongoing professional development of their employees and facilitating collaboration across different skillsets and industries to keep staff well-informed of the latest industry changes.

Services Offered
Remember, just because a CPA is legally allowed more responsibility when filing taxes than a non-CPA doesn’t mean that they are going to do a better job with the functions you’re looking to outsource if what you need help with doesn’t fall into the tax bucket. For instance, if you need help cleaning up your books or improving internal controls, an accounting services company will likely offer the same benefit as working with a CPA firm.

While accounting companies are often perceived as only being able to handle routine bookkeeping tasks and transactional accounting activities, they are also adept at providing a wide range of accounting services that are customized to the individual needs of each client. For this reason, cost-conscious small and mid-sized companies will often utilize an accounting services company to not only meet their bookkeeping and accounting needs now, but to scale with them as they grow.

Price for Value
Don’t let the perceived prestige of a company full of CPAs distract you. There is a misconception that a CPA firm will do a better job because they are legally allowed to undertake more activities than an accounting company. However, the truth is that most businesses don’t need a CPA for the kind of work they are looking to have done. And when this is the case, it doesn’t make any sense to pay the premium that a CPA firm will charge.

In most cases, businesses can save on costs significantly while still having high-quality work done by utilizing an accounting services company instead. As a result, using an accounting services company is often a far better value than hiring a CPA firm to support your ongoing financial management efforts.

When you need an experienced accounting company to handle your outsourced accounting needs, we can help! Our team of US-based accountants offers accounting and bookkeeping services to keep your company’s day-to-day financial operations running efficiently so you can focus on growing your business. If you only need interim accounting help while you work on hiring a full-time accountant, we can help with that too! Our accounting and finance recruiters can help you bring in the right candidate for an in-house role. Contact us to find out more today!