Bookkeeper, Enrolled Agent, CPA, or Attorney?

Posted on Oct 21, 2019 in Entrepreneur, San Diego Lawyer, Setting up a Small Business, Small Business, Success, Taxes, Tips for Entrepreneurs | Comments Off on Bookkeeper, Enrolled Agent, CPA, or Attorney?

Bookkeeper, Enrolled Agent, CPA, or Attorney

You’re thinking about starting a business, or you’re already in business, and now you have to decide – who do I look for to help me with my financials and taxes?  The answer is – it depends.  The answer on who you should hire is entirely dependent on the situation that you’re in.

 

If you’re just starting a business – going to a CPA or an attorney or preferably both is your best option.  A CPA, typically, has a well-rounded background.  They have gone to school studying business and have worked as an auditor – gaining experience with different types of companies.  Typically the CPA has been exposed to various business environments and can provide valuable information on best practices.  An attorney on the other hand – has experience through law school, internships, and practice with the fallout when best practices are not followed.  Attorneys also have an understanding of interpreting and explaining legal requirements for running a business.

 

If you’re already in business and are encountering business issues – broken contracts, unpaid payroll liabilities, notices from the IRS or Franchise Tax Board – going to an attorney is your best option.  When you encounter an issue in business you should research the experience that the attorney has.  Is the attorney in the practice of contract law?  Tax law?  Typically you can find this out by reviewing their website.  Another source of information is the State Bar of California website: http://www.calbar.ca.gov/.  You can look up an attorney by name and see if they are a member of any specialty sections.  The attorney typically has to pay to be a member of that section and has access to developments in that particular area of the law.

 

Another way to think about which professional to choose is by function.  The bookkeeper has experience and on the job training with regards to maintaining the financials for a company.  Typically, with a professional bookkeeper you can use them to do account reconciliations, prepare financial statements, prepare invoices, and sometimes they can assist in tax preparation and running the financials of the business.  All so you can focus on what you – the entrepreneur do best – drive the business.

 

An enrolled agent’s function on the other hand is focused on tax preparation and filings.  The enrolled agent has gone to school and learned about all the federal and applicable state tax forms in preparation for the enrolled agent exam.  The enrolled agent is a taxation specialist.  The enrolled agent is there to get your taxes done and filed.

 

The CPA’s function is typically more varied.  The typical CPA has gone to school and studied accounting; they then land an internship at a CPA firm where they either choose to pursue taxes or auditing.  After acquiring the requisite number of practice hours the CPA takes a four part exam that covers auditing, business environment and concepts, financial accounting and reporting, and regulation.  Upon passing the CPA exam the candidate must pass an open book ethics exam.  When the CPA looks for work they can fill a variety of positions – from tax preparers to company controllers. 

 

The attorney’s function is to provide advice and guide you through whatever legal complication has arisen in your business.  Attorneys come in all shapes and sizes.  They may have had a prior career in a completely different field or they may be fresh faced professionals looking to make a difference.  The path to become an attorney starts with an undergraduate degree, which can be in any field.  Then there’s the LSAT test which determines which school will accept the law student.  During law school the student is exposed to various concepts – constitutional law, civil procedure, criminal procedure, and most importantly - legal writing.  Then there’s a closed book Multistate Professional Responsibility Examination (MPRE).  The law student can choose when to take the MPRE.  After graduating law school the juris doctor then sits for the bar.  In California the bar exam is two days and covers over 13 topics.  Upon successful completion of the bar exam the professional can then call themselves an attorney and choose which field to practice. 

 

There’s one more consideration to make – the privilege of confidentiality.  A bookkeeper is not typically under any legal responsibility to keep information confidential – unless there’s a contract in place between you or your company and the bookkeeper.  A professional bookkeeper will adhere to professional standards but typically there is not a legal requirement.  Professional standards impose obligations to keep client information confidential but the level of privilege varies.  With enrolled agents the privilege of confidentiality only exists in situations in which the taxpayer is being represented in cases involving audits and collection matters.  In all other matters the enrolled agent may be forced to disclose confidential information – including through subpoenas or government requests. A CPA has a broader privilege of confidentiality, but this can be overcome as well.  The attorney on the other hand is only required to break the privilege of confidentiality when there’s a threat of imminent harm of bodily injury or death to another. 

 

To determine who to seek help from consider what type of work you need done and whether the privilege of confidentiality is of utmost importance.  Your business has needs and there is a professional out there who can provide the services you require.  You can also choose to engage the services of Christina Hebert – the best of two worlds – CPA and Attorney.

 

 
 

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