Tax consultants and accountants don’t do the same job even though they’re usually used interchangeably. They’re actually quite different, but without knowing how, it’s easy to get them confused. To help you understand the way consultants and accountants differ, here are 10 of the top differences between the two:
Tax consultants typically have more tax law experience than accountants. This allows them to understand tax law better and provide more comprehensive tax advice. You might find a tax consultant in a law firm, working as an independent contractor, or even advising tax examiners at the Internal Revenue Service (IRS).
Tax consultants provide clients with tax-planning services and tax advice, while accountants generally don’t. This tax planning might include advising on tax-efficient ways to organize your business or structure a transaction.
It’s important to seek out tax advice before you make big decisions since the tax consequences can be significant. As your needs might vary, you’ll need to determine who you need. They help individuals and businesses minimize their tax liability by using tax laws and regulations to their advantage.
3. Different Business Models
Tax consultants often have experience working with tax authorities, such as the IRS, while tax accountants typically don’t. This can be helpful if you’re being audited or are facing a tax dispute.
Tax consultants may also work with businesses of all sizes, while accountants usually work with smaller firms. At Tax Alliance, we’ve worked with a variety of business models and know we can help any size business.
4. Specializations And Knowledge
Tax consultants may specialize in a particular tax area, such as international tax or estate tax, while tax accountants are more likely to be generalists. Tax consultants need to have in-depth knowledge of tax law and regulations to specialize in these areas.
5. Fees And Pay Rate
Tax consultants typically charge by the hour, while tax accountants may charge a flat fee or an hourly rate. According to Payscale, the average hourly rate for a tax consultant is $54.73, while the average hourly rate for a tax accountant is $33.24. Annual salaries for tax consultants range from $60,000 to $75,000, while annual salaries for tax accountants range from $50,000 to $70,000.
6. Different Tax Situations
You might need a tax consultant if you’re self-employed, have a complex tax situation, or are facing a tax audit. You might need a tax accountant if you have a simple tax return or are looking for tax-planning advice. Tax compliance can also come into play. Tax compliance is ensuring that you pay the correct amount of tax and file your tax return. Tax consultants work with individuals and businesses to minimize their tax liability by using tax laws and regulations to their advantage.
Tax consultants and tax accountants both must have a bachelor’s degree, although a tax consultant may also have a law degree. Tax consultants and tax accountants both must complete continuing education requirements to maintain their licenses. Tax consultants also typically have a four-year degree in accounting or tax law, while accountants generally have a two- or four-year degree in accounting.
8. Exam Requirements
Tax consultants and tax accountants must both pass the CPA exam, although tax consultants may also need to pass the bar exam. A passing score is 75 on each CPA exam section for tax consultants, while a passing score is 65 on each CPA exam section for tax accountants. You can retake the CPA exam as many times as you need to pass, although you must wait 18 months between exam attempts.
9. Professional Designations
The American Institute of Certified Public Accountants (AICPA) offers the tax consultant designation, while the National Association of Enrolled Agents (NAEA) offers the tax accountant designation. To join the AICPA, tax consultants must have a bachelor’s degree, two years of tax experience, and pass an exam. To join the NAEA, tax accountants must have a bachelor’s degree, two years of tax experience, and pass an exam.
10. Job Outlook
The job outlook for tax consultants and tax accountants is good. The Bureau of Labor Statistics projects that the employment of tax consultants will grow by 11 percent from 2018 to 2028, and the employment of tax accountants will grow by 10 percent from 2018 to 2028.
Tax consultants work with clients to ensure they are compliant with all aspects of tax regulations. They offer advice on how best to handle their returns, whether that’s via filing or paying homage when necessary. Suppose you’re an individual who owns a business. In that case, preparing these documents can be legally complex and require guidance from professionals over multiple years because there is so much paperwork involved.
Both tax consultants and tax accountants are tax professionals who can help you with your tax return. But there are some critical differences between the two, from their experience and services to their fees and education requirements. Choose the professional that’s right for you and your tax needs. If you need assistance, Tax Alliance is happy to help.