The short answer here is that a CPA is someone who has passed the Uniform CPA Exam and achieved licensing through the state, district, and sometimes county Boards of Accountancy in which they work.
Sounds pretty simple, doesn’t it? Well, maybe not as easy as you might expect.
Typically, a CPA has achieved a Master’s Degree in Accounting (or Accountancy, depending on the language used at the institution attended) prior to sitting for the exam. Although there is no legal requirement at the national level to obtain a degree of any kind in order to sit for the exam, some states do require evidence of education (as much as 150 semester hours in some cases), completion of approved self-study courses, or both.
Even with all of the required education and/or experience, pass rates for all four parts of the CPA Exam tend to be below 50%. What exactly does that mean? It means that the test is hard, and if someone passes it, you can have confidence in their ability to help manage your business’ bookkeeping, accounting, tax preparation, and more.
What Makes A CPA Different Than An Accountant?
Education. Accounting experience and services. Does this sound like a regular old accountant to you? Well, you’re at least half right, and the half that is correct is that anything an accountant can do, a CPA can do as well, and likely better. However, there are numerous services that a CPA is legally authorized to provide that an accountant cannot. The most common and important are performing audits and providing tax services.
The SEC requires that a publicly-traded company provide audits, reviews, and opinion letters from CPAs. And while a privately held company, such as many small businesses are, can have an audit done by a standard accountant, Innovative Accounting stands behind our recommendation that using a CPA is always the best way to go when reviewing your company’s financials.
Tax Preparation & Representation
Another important difference between a CPA and anon-certified accountant is the allowances given by the IRS. When it comes to signing off on tax preparation or getting representation in the case of an IRS audit or other action, only a CPA, an IRS agent, or a certified tax attorney can provide services.
What Kinds Of Services Can A CPA Provide?
The entire list of financial accounting and preparation services that a CPA can offer is quite exhaustive, so here are the ones that tend to be most commonly used and are applicable across a wide range of industries and business sizes.
This is probably the single most common service provided by CPAs. Acting as unbiased third-party assessors, CPAs evaluate financial statements prepared by businesses and provide official opinions as to the accuracy of the reports. This can help a business find misstatements, before providing the information for loan, tax, or other financial purposes.
Another common service provided by CPAs is tax preparation. From end of year statements to filings to tax planning for the coming year, a CPA is certified and qualified to help your business with all federal, state, and sales tax accounting.
Some CPAs, such as those who work for Innovative Accounting, also provide consulting services to the companies they are hired by. Consulting can range from recommendations for maximizing cash flow to cost-saving operational improvements and beyond.
Sadly, theft and embezzlement are a risk of running a business, or in the case of the thief, a benefit. Once embezzlement is discovered or suspected, a CPA — or in many cases, a team of CPAs — can work back through years of financials to discover the way in which theft was conducted, the amount stolen, and where exactly the money went, helping to protect owners and investors alike.
Businesses rarely remain in one set of hands for a long duration, and when it comes time to sell or transfer ownership, a CPA is a necessary piece of the puzzle. A CPA can help provide an accurate evaluation of your business, shed light on tax consequences of a sale or transfer, and help you navigate the process smoothly from start to finish.
CPAs are not lawyers, but they often work in tandem with lawyers as forensic accountants and expert witnesses in the case of white-collar crimes, divorce, business mergers and sales, and bankruptcies.
Find The CPA Services You Need With Innovative Accounting
Innovative Accounting employs CPAs nationwide and can help provide your business with a full range of certified accountancy services whether you are a start-up or an established and growing company employing hundreds of people. Best of all, we take an individualized approach to your needs, allowing you to choose from one of our accounting and bookkeeping packages, select accounting services al a carte, or create your own custom package based on your business’ unique needs. Get started with the full-service, professional accounting solutions from Innovative Accounting today.