It can be helpful to consult with a tax attorney and a CPA when starting and running a business, as they each bring different skills and expertise to the table. Who do you need between a tax attorney vs. CPA? This article explains the difference between a tax attorney and a CPA, and everything you need to know.
Tax Attorney Vs. CPA: What Is A Tax Attorney
A tax attorney is a legal professional who specializes in tax law. They offer legal advice and representation on tax matters, such as compliance with tax laws, tax planning, and tax controversies. They can also help with business formation, structuring, contracts, and other legal documents.
How to become a Tax Attorney
To become a tax attorney, you typically need to follow these steps:
- Obtain a bachelor’s degree
There is no specific major required to become a tax attorney. However, a bachelor’s degree in a related field, such as finance, economics, accounting, or business, can be helpful.
- Take the LSAT
The Law School Admission Test (LSAT) is a requirement for admission into law school in the US. You must score high on this exam to get accepted into a top-ranked law school.
- Enroll in a law school
Once you have your LSAT scores, you can apply to law schools that offer a JD program. JD stands for “Juris Doctor,” a professional law degree. You will need to complete three years of full-time study in order to earn your JD.
- Pass the bar exam
After you graduate from law school, you will need to pass the bar exam in order to become a licensed attorney. The bar exam is a standardized test administered by the state which you wish to practice law.
- Gain practical experience
Many tax attorneys gain experience through internships with law firms, government agencies, or non-profit organizations. It can help you develop the skills and knowledge needed to practice tax law effectively.
- Consider earning a specialized degree
Many tax attorneys choose to earn a Master of Laws (LLM) in Taxation. It is a one-year program that provides advanced training in tax law. An LLM in Taxation can be helpful for those who want to specialize in tax law or gain a competitive edge in the job market.
Becoming a tax attorney requires a significant investment of time and resources. However, it can be a rewarding career for those interested in helping clients navigate the complex world of tax law.
Duties Of A Tax Attorney
- A tax attorney offers advice and representation to individuals and businesses on taxes. Some duties of a tax attorney may include:
- Advising clients on tax-efficient ways to structure their business.
- Helping clients prepare and file their tax returns, including individual, corporate, and real estate tax returns.
- Represent clients in tax audits, appeals, and litigation.
- Advising clients on tax planning strategies to minimize their tax liability.
- Helping clients resolve tax disputes with the Internal Revenue Service (IRS) or state tax authorities.
- Providing legal advice on tax-related issues, such as deductions, credits, and exemptions.
- Assisting clients with compliance with tax laws and regulations.
- Give clients tax advice regarding business transactions such as mergers, acquisitions, and divestitures.
- Representing clients in negotiations with tax authorities to settle tax disputes or reduce penalties.
Tax Attorney Vs. CPA: What is a CPA?
A Certified Public Accountant (CPA) is a financial professional who specializes in accounting. CPAs offer services such as, filing business tax returns, analyzing financial statements, and consulting. They can also help with budgeting, forecasting, and financial planning for a business.
How To Become a CPA
To become a CPA, you must follow the specific requirements of the state in which you plan to practice. Here are the steps you need to take to become a CPA:
- Meet the education requirements
Most states require that you have a bachelor’s degree in accounting or a related field and have completed at least 150 semester hours of college education. Some states may allow you to substitute work experience for education.
- Pass the CPA exam
To be a licensed CPA, you must pass the uniform CPA examination. The examination consists of four sections: Financial Accounting and Reporting, Auditing and Attestation, Business Environment and Concepts, and Regulation.
- Meet the experience requirements
Most states require at least one year of public accounting experience before you can receive a CPA license. You must get this experience under the supervision of a licensed CPA.
- Meet any additional requirements
Depending on the state in which you plan to practice, you may be required to complete extra education or experience requirements, such as an ethics course or a certain number of hours of continuing professional education.
Duties of a CPA
A CPA offers financial services, such as accounting, auditing, tax preparation, and financial planning. Some duties of a CPA include:
- Prepare and review financial statements, such as balance sheets and income statements.
- Providing tax planning and preparation services to individuals and businesses.
- Conducting audits of financial statements and records to ensure accuracy and compliance with laws and regulations.
- Advising clients on financial matters, such as budgeting, cash flow management, and investment planning.
- Assisting clients with the preparation of financial reports for stakeholders, such as shareholders and board members.
- Providing consulting services on financial and business strategy.
- Assisting clients with compliance with financial reporting standards and regulations.
- Reviewing and analyzing financial data to identify trends and potential problems.
- Assisting clients with the implementation of financial systems and processes.
Who Do You Need Between A Tax Attorney Vs. CPA?
Both tax attorneys and CPAs are professionals who offer tax-related and financial services to clients. But they are not the same. Know when to hire a CPA or a tax lawyer. A tax attorney concentrates on the legal aspects of tax preparation, while a CPA deals with the financial aspects of tax preparation.
One key difference is that tax attorneys are licensed to practice law, while CPAs are not. Tax lawyers can provide legal representation in tax matters, including representing clients in tax audits and litigation, while CPAs are not.
Another difference is that tax lawyers typically have a more comprehensive understanding of the legal aspects of tax law. CPAs tend to have more expertise in accounting and financial management.
Generally, you can hire a tax lawyer if you have a legal issue related to taxes, such as a tax dispute or an audit. A tax attorney can offer legal representation and advice on the legal process.
On the other hand, if you need help with tax planning, preparation, or compliance, a CPA may be a better choice. They can advise on how to minimize your tax liability, prepare and file your tax returns, and ensure that you comply with tax laws and regulations.
Ultimately, whether to use a tax attorney or a CPA will depend on your specific needs and the nature of the tax-related issue. It may be helpful to consult with both professionals to determine the best action for your situation.
Conclusion: Tax Attorney Vs. CPA
While choosing between a tax lawyer and a CPA, you must first consider your needs. Know the difference between a tax attorney and a CPA, as it will help you make decisions. A tax lawyer may be more appropriate for legal matters related to taxes and business formation, while a CPA is more suitable for accounting and financial services.
It’s a good idea to consult with both professionals to get a well-rounded understanding of the financial and legal aspects of your business.