Accounting Basics with Colette Melott

 I asked my personal accountant Colette Melott (CMA, EA) to join the Smart Cleaning Tribe for an Expert Call to help cleaning company owners understand their numbers and who to hire in their specific case. Colette starts this interview with the accounting basics. 

Bookkeepers helps you track transactions with your money coming in and your money coming out. In most cases, a bookkeeper does not help you apply what those numbers mean to anything. They are putting your puzzle together, but they're not telling you what the picture on the puzzle is. There are not too many certifications for bookkeepers. However a Quickbooks Pro Advisor is a great designation to find especially if your business utilizes Quickbooks. These certified bookkeepers are proficient enough to adapt your business numbers appropriately and legally to Quickbooks.

Accountants puts it all together for you. Bookkeeping is a task of accounting, but they don't stop there. They take those numbers and apply meaning to them to help you make business and tax decisions. There are several designations of accounting professionals.

• General Accounting - This is an accountant with a Bachelor's Degree in accounting that operates UNDER a CPA or CMA licence. For example, Colette used to work in two corporate positions where the company held the certified accounting license and Colette worked under it. This is exactly how I operated as an engineer. GE held the Professional Engineer's license and I was a general engineer under this certification.
• Certified Public Accountant (CPA) - This designation is granted at the state level. The accountant must pass a high-level exam to obtain their CPA license. Plus, they must maintain this high-level each year. There is a high standard. At the corporate level, they are qualified to take the numbers a publicly traded company provides and certify them to the public. They are on the company's external team. However, most CPAs operate out of smaller offices and work with small private companies. 
• Certified Management Accountant (CMA) - This is an international accounting designation. Therefore, their training must keep them familiar with domestic and international accounting standards. At the corporate level, they are qualified to be the comptroller or CFO to help the company compile the numbers to present to the public. They are on the company's internal team. The CMA must also pass a high-level initial and annual exam process to obtain and keep their license. There is a high standard.
• Enrolled Agent (EA) - The IRS has 3-part tax proficiency exam and certification process to enroll accountants in the IRS code. This allows them to prepare tax returns The Enrolled Agent is one of 3 designations that can legally represent you on an IRS audit. The other two designations that can do this for you are the CPA and the tax attorney.

Tax Attorneys are the only ones who can practice law. They help if you need representation in tax court. This is a high level professional that you need when you're in trouble! Therefore, study this episode and hire the right professional so you never NEED this pro!

That's part one of my interview with my accountant Colette. These are accounting designations I wised I knew 20 years ago. I hope that Colette helped you understand the landscape of accounting professionals. 

Would you like to connect with my accountant? You can find her at CMBA Solutions.