Home Accountants Difference Between Accountant And Chartered Accountant

accountant at work
Can you tell if they're a chartered accountant?

Well…

Like me, you've seen the phrase ‘chartered accountant' thrown around a lot recently.

Seriously, it's like I'm being stalked.

Everywhere I turn, someone is talking about it.

Anyway...

I know you're wondering what it actually is.

Is it an actual type of accountant - or just someone with a big head trying to sound fancier?

Before I became a bookkeeping expert - (back when I was a bookkeeping amateur) - I had no idea what one was either.

I assumed it was the same as me putting the word ‘expert' at the end of my title.

Yes, I am an expert (that sounds bigheaded, I just mean I know a lot about it) - but it sounds cooler now it's my official title.

Anyway.

Let's get back to discussing accountants.

Luckily for you, I've been asked this question before.

We actually had a client last year, who hired a chartered accountant, without asking what they were.

They only needed a quick glance over a short financial report - something one of our accounting assistants would have been able to do in less than 10 minutes.

They were too embarrassed to admit they didn't know what they were, so ended up paying for a service they didn't need.

They also purchased one of their package deals - don't ask me why.

If they'd queried the title beforehand, they could've saved themselves so much wasted time and money!

I put in hours of research following this mistake, to ensure I could answer any questions thrown my way - and hopefully prevent this issue occurring again.

Anyway, you're not going to make that same mistake, are you?

Not with my help anyway.

So read on, and find out if a chartered accountant is beneficial to you!

Chapter 1

What's An Accountant?
confused and thinking
You deep in pensive thought cause you don't know the answer...

Anyone can call themselves an accountant.

Yep, seriously.

Your nan could turn up tomorrow saying she's an accountant now.

And no one can dispute her.

(It's not even illegal to do that.)

Yeah, that's how easy it is to become an accountant.

Just say you are one and ignore anyone who says otherwise.

Though everyone who calls themselves an accountant must follow the standard code and conducts of accountancy, they're not actually required to have any formal training on the subject.

Which can be pretty dangerous if you end up hiring someone who doesn't know what they're doing.

(You'll never know if your accountant walked in off of the Harvard campus, or the streets.)

That's not always the case, however.

Plenty of people (especially virtual assistants) have worked in some sort of financial team, before labelling themselves as an accountant.

They're a lot cheaper than chartered accountants, and complete simpler tasks like:

- Taking Part In Budget Meetings

- Preparing Tax Returns

- Balancing Your Books

- Data Entry

Essentially, they're the person who keeps an eye on and maintains your financial documents!

All for a budget price!

Chapter 2

What's A Chartered Accountant?
twins who are accountants
Can you tell the difference?

Well, being called a Chartered Accountant (or Certified Public Accountant in the US) is pretty cool.

It's actually a worldwide credential!

So, no matter what country you decide to work in, citizens will understand that you're thoroughly trained in what you do.

It sounds great, but just how easy is it to become a CA?

Well…

If the definition of an ‘accountant' is anything to go by, surely anyone can do it?

Wrong.

It actually requires years of training, loads of qualifications and plenty of work experience to be able to call yourself a chartered accountant!

Before we get onto what makes a CA so special, let's go in-depth about what it takes to become one!

Before they even think about applying to university, a wannabe accountant should have plenty of work placements under their belt - including volunteer work and shadowing!

Getting onto an accredited accounting course is hard - there's a lot of competition out there, after all - so anything they can do to bulk up their CV is essential.

If they're lucky enough to get approved for a course, the next step is ensuring they pick the best one.

If their course isn't approved by their countries accountancy regulatory body, they may as well not bother taking it at all.

Only an accredited course (usually a BA (Hons) at a minimum) with at least 120 hours of coursework would give them the qualification they need to become a CA.

Of course, if you don't quite make it to uni, a HND should suffice in a lot of firms.

But, to be on the safe side, an actual degree is the way to go.

Guess what.

There's another step to this too.

(See, this is why we don't recommend doing your own accounts - so much training goes into being qualified enough to do them successfully.)

Usually, around the end of your third year at university, you'll have to undergo a placement at an accredited accounting firm.

Yep, the firm you work for has to be approved by your countries accountancy regulatory body too!

Plus…

Those placements aren't short either - no 3-month internships here.

They actually last around 3-5 years.

A long time right?!

At least you know they're experienced!

And, as if that wasn't enough, it's also recommended that they complete a CFAB or AAT certificate as well!

If they're lucky - I question the term lucky here though - enough to get the chance to complete one of these courses, they better brush up on their maths skills.

Yep, it doesn't matter if you're 42 and already have your accounting degree, you'd still have to do a maths test!

You can see why chartered accountants are trusted with more complicated financial tasks - like corporate financing and taxation - after going through all that effort to get their credentials.

Oh!

And because they're so skilled, they can actually offer you financial consultations too!

Due to CA's being so obsessed with learning - you would be after spending 400 years of your life in education - they continue their development long after receiving their qualifications.

After all, they need to stay up to date with laws and trends etc if they want to be the best accountant ever!

Chapter 3

Which One Will Benefit My Business?
accountant at work
What kind of accountant do you think they are?

Well…

It depends on what you actually want to be done.

If you only need a couple of non-sensitive financial reports taken care of, by all means - go for an underqualified accountant!

It won't take much skill to take care of this, and it'll take so much weight off your workload if you use a third party to complete the job - (instead of doing it yourself.)

But it's extremely rare for a financial problem to be this easy.

In 99.9% of cases, a chartered accountant is the best way to go.

If you're still not 100% though, here are my top 5 reasons to pick a chartered accountant!

You Have A Complicated Financial Task

Chartered accountants cover more than just a few numerical equations, from debt relief to taxation, they can do it all.

Not only is it possible that an underqualified accountant isn't too educated in tasks such as auditing, they legally can't perform them.

Their lack of qualifications prevents them from even thinking about doing your audit.

So, if you do require a complicated task completed, there's a chance that you won't have any other option than to hire a chartered accountant!

You Hold Sensitive Financial Information

It sounds scary.

But not everyone can be trusted.

If you're holding a lot of sensitive financial information, a chartered accountant is your best bet.

There are certain laws and ethics they have to stand by, if they want to keep their credentials.

Wouldn't you rather hire someone you can trust?

You Need Financial Advice

Accountants who aren't chartered, simply aren't qualified to offer financial advice.

Of course, they still offer it.

And sometimes, they could even be right.

But, honestly…

That's pretty rare.

I don't know about you, but I'd rather get my advice from someone I know for sure knows what they're talking about.

You Need Help In A Specific Industry

Most (unchartered) accounts provide quite a generalised service.

And, if your business situation is quite unique, that's no good.

A cake shop in serious financial debt obviously doesn't require the same advice as a travelling business coach, whose profits are higher than ever.

They both require an accountancy team that's specialised in their area!

You Know Nothing About Accounting

It's a real shame to say it.

But there are plenty of people out there who want to, well, mug you off.

An unofficial accountant may try to take advantage of your lack of knowledge.

But, again, a chartered account must follow a certain code of ethics - which includes not ripping you off.

Chapter 4

What Can They Actually Do?

Well…

Accountants and chartered accountants perform very similar tasks.

Except, chartered accountants can also perform more complicated jobs - like taxation.

Let's compare the two below!

Accountant Chartered Accountant

Financial Planning

?

?

Budget Meetings

?

?

Ensuring You're Legal

?

?

Balancing The Books

?

?

Prepare Financial Documents

?

?

Preparing Tax Returns

?

?

Data Management

?

?

Auditing

?

?

Taxation

?

?

Financial Investigation

?

?

Management Accounting

?

?

Investment Planning

?

?

Assurance Services

?

?

Cost Accountancy

?

?

Share Valuation

?

?

I imagine you know a little bit about financing…

I highly doubt that I need to tell you what a budget meeting is.

Let's talk about some of the more difficult things instead.

(Not many people know what assurance services are, after all.)

So, let's go in-depth about the things that only chartered accountants can do!

Auditing

Honestly, this is one of the main reasons people hire chartered accountants.

Paying for an audit actually adds a sense of authority to financial statements - and can actually encourage other companies (or the bank) to lend to you.

But what is it?

Well, it's a way to assess your financial records to see if they're accurate and truthful.

Your accounts would be assessed to ensure no fraud or unusual trends are discovered!

Taxation

Accurate and timely tax records are essential for every business - no one wants a huge fine, do they?

A CA is well experienced in the preparation and compliance of tax services.

They can ensure that your records are not only 100% accurate, but completely legal too.

Financial Investigation

Chartered accountants can investigate a number of things surrounding your finances.

This can be anything from management efficiency, to share capital.

A CA has the right to access and assess the majority of your company's documents, if it helps their investigation in any way.

Management Accounting

CA's are perfectly equipped to manage your accounting department.

Not only can they conduct daily control over your team…

But they can also enforce new policies and do performance evaluations!

Investment Planning

Not only can a chartered accountant develop plans that strengthen your financial security, but they can enforce them too.

Seriously…

From the development of the concept, to the implementation of it into your company's structure - a CA can actually do everything!

Assurance Services

To put it simply, a CA will assure you about any decisions you make.

They thoroughly dissect any loans, contracts etc to make sure they're legitimate and worth your time.

They ensure that, whatever document they've reviewed, is one you can put your trust in.

Cost Accountancy

Chartered accountants are basically know-it-alls.

No, seriously.

You name it, they'll know the cost of it.

If you want to start a new project ASAP, they'll assess how much the operation, implementation and development of that project will cost.

And give pretty good predictions (I swear they're actually psychic) on how that'll affect your profits in the future!

Share Valuation

If you take over another business in any way (by becoming a partner or buying out a failing company etc) a CA can value the shares of that company.

It's a way to find out whether it's actually worth taking over!

Chapter 5

How Much Do They Cost?
asking for bill
Don't forget to tip 'em!

It depends.

Not just on whether you're hiring a chartered accountant or not - (that can majorly affect the price though.)

But there are so many other things that can affect how much they charge you, quite significantly too.

I mean, seriously.

Prices can range from £25 to a few thousand!

Insane, right?!

Anyway...

I've found there are actually four things that have the biggest impact on the final price.

And, lucky for you, here they are:

The Payment Method

Yep…

The way you pay your accountant affects what you pay.

It sounds weird, but hear me out.

When you pay your accountant, you're usually given the choice of three payment plans;

- Hourly.

- Monthly.

- Package

They all come with their pros and cons, but I really recommend the package deal.

Let me tell you why.

Let's say you're paying the £25 minimum, for every hour-long session.

If your team is using 100 hours a month, that's £2500.

And, I don't know about you, but I wouldn't want to spend that much money on an accountant every month.

(Sorry, but it's rarely worth it.)

If you purchase a package deal, you could actually end up paying the same price for an entire year!

More hours equals bigger discounts - result!

If You Do Any Work

Some accountants charge an extra fee for bookkeeping services, while others don't offer it at all - which usually results in you hiring a bookkeeper too.

But you can actually cut your finance costs down quite significantly by balancing your books yourself.

It's not that hard - you basically need to organise your receipts every month.

If you're a freelancer, or small business, this should be fairly straightforward.

The Services You Actually Need

If you require specialised services - like auditing - you should expect to pay more.

Not only because you'll definitely have to hire a chartered accountant to do the job, but also because the job itself will actually be more complicated and time-consuming!

How Often You Require Help

I'd be extremely worried if you told me you needed to see your account once an hour, every day, for the next 11 years.

Your accounts must be showing some serious issues if you need that much help.

(Or you're basically paying them to move in with you - which is so weird.)

Anyway…

If you're seeing your accountant quite frequently (outside of your packaged hours), it's going to cost you a bomb.

I guarantee that you don't need to be seeing your accountant more often than your own mother.

If you think you will, you can negotiate a new package deal to be on the safe side!

Conclusion

thinking about business
Accountant? Sorted. Now back to your business...

Well…

There we go then!

You finally know the difference between accountants and chartered accountants.

The only thing left to do now you actually know what th

Do you know your rough budget and what you actually need them to be doing?

Great!

All you have to do for us is fill in this short form - (it only takes 2 minutes, trust me.)

We can get back to you ASAP with up to four top quotes!