Tax Advisor vs. CPA: Comparing the Careers

Managing financial records and preparing tax returns can be daunting for a business. The economic ramifications involved only add to the stress. Any missed deductions or credits could have a negative impact on the company’s tax payments. A reporting error could result in audits or penalties, disrupting the company’s bottom line and potentially affecting its growth and stability goals.

Bringing in a tax advisor or a certified public accountant (CPA) to manage these responsibilities can reduce the company’s chances of making costly mistakes. These tax professionals understand the intricacies of the ever-shifting world of taxation, which can make them valuable assets for a business. While tax advisors and CPAs have similar roles, they differ in some significant ways.

Individuals who are considering pursuing an advanced degree in taxation and are comparing a tax advisor versus a CPA career should explore the differences between the two positions to help them chart a course that best suits their interests.

Tax Advisor vs. CPA: Definitions

To understand the differences between a tax advisor and a CPA, it’s important to first have a thorough understanding of each role. This not only includes knowing what they do, but also knowing how their work can impact a business.

What Is a Tax Advisor?

Tax advisors, also known as tax consultants, counsel individuals and organizations on financial strategies that can minimize their taxes while strictly adhering to all federal, state, and local regulations and laws. Tax advisors fall into two groups: personal tax advisors and business tax advisors.

Personal tax advisors help individuals navigate the intricacies of unique tax scenarios, such as managing capital gains tax or mitigating retirement tax liability. Business tax advisors help new and existing companies navigate the complexities of business taxes, ensuring they remain compliant with changing regulations.

Business tax advisors’ advanced knowledge of IRS rules and tax regulations across various government agencies allows them to spot opportunities for a company to reduce its tax liability, which can enable the company to optimize profitability. They also help companies identify legal or regulatory changes that they may not know about, which can potentially help a company lower its risk of making costly mistakes.

What Is a CPA?

CPAs are licensed accountants who analyze, interpret, and explain financial data to businesses and individuals. They help advise clients on ways to reduce their tax liabilities, prepare and file returns and reports, and audit financial data.

From an organizational standpoint, CPAs can oversee a company’s financial activities such as budgeting and cash flow. They can also manage a company’s accounting department. On some occasions, they may act as witnesses in mergers, acquisitions, and other legal cases.

CPAs can help an organization stay financially efficient and legally compliant through their duties. They can also be an integral part of a company’s organizational structure through their management obligations. By handling tax preparation, they can also help alleviate the pressures of filing tax paperwork accurately and on time.

Tax Advisor vs. CPA: Similarities

Both tax advisors and CPAs are well-versed in the legal side of taxation, and their knowledge can help organizations remain compliant with current tax laws and regulations. This common ground makes them both valuable assets in business.

Both tax advisors and CPAs can work with businesses or individuals. Because of the differences in the rules for these two types of clients, tax advisors and CPAs must have expertise in the taxation and compliance needs of whichever type of client they advise.

Tax advisors and CPAs both can work independently. Those who choose to do so can take on additional tasks apart from their core duties. These tasks typically pertain to elements needed to run a business.

Tax Advisor vs. CPA: Differences

The biggest difference between a tax advisor and a CPA is the scope of their duties. Tax advisors primarily concentrate on tax law. CPAs can handle a wider range of financial services. These can include auditing, financial planning, and different forms of accounting, such as management, public, government, or forensic accounting.

The second difference when comparing a tax advisor versus a CPA is their certification. While many tax advisors do earn the CPA credential, it is not generally a requirement for the job. CPAs must earn the credential, which involves completing the necessary requirements before taking the required CPA exam.

While both tax advisors and CPAs need to have a bachelor’s degree, one of the CPA requirements is completing 150 semester hours of education, which typically extends their education beyond a bachelor’s degree program. This means that many CPAs hold master’s degrees or have completed undergraduate CPA exam preparation courses. Tax advisors also often pursue graduate degrees to advance in the taxation field.

Salaries for tax advisors and CPAs vary based on their professional duties. According to the U.S. Bureau of Labor Statistics (BLS), accountants and auditors had a median annual salary of $79,880 in 2023, while personal financial advisors had a median salary of $99,580.

Start Your Journey to Success

For individuals considering a tax advisor versus a CPA career, it’s clear that professionals in both positions can play a vital role in an organization. By guiding a company’s tax strategies, tax advisors and CPAs can help the business streamline its tax obligations. This can help the company reach its growth and stability goals with greater efficiency, while also transforming the tax professional into a trusted leader within the organization.

At California State University, Northridge, the Tseng College’s Master of Science in Taxation program can help you cultivate the knowledge and skills you need to succeed regardless of the occupation you choose to pursue. Our award-winning program is specifically designed to provide you with the flexibility to juggle your academic aspirations and your professional obligations. The program is taught in a cohort format to facilitate optimal faculty interaction and networking with other tax professionals, and it has options to learn online or in person.

Learn how we can help prepare you to advance your career.