Finance Tips

CPAs – Answers To Frequently Asked Questions

Certified Public Accountants

What Is The Difference Between An Accountant & a CPA?

CPAs (Certified Public Accountants) are essentially accountants held to higher standards (by businesses, peers in the profession, and clients) for a number of reasons.

A CPA has to meet certain educational requirements and behavioral responsibilities. Not only do they have to pass a four-part exam – and it’s a grueling one! – but they are also bound by a specific code of ethics.

In terms of credentials, the CPA is the holy grail for accountants.

What Can CPAs Do That Normal Accountants Can’t?

Most accountants can handle the following tasks:

  • Accounting
  • Auditing
  • Tax services
  • Consultation for individuals, universities, governments, NPOs, small businesses, and corporations

What sets CPAs apart is that they can also:

  • Create financial statements and file reports to the SEC (Securities and Exchange Commission). Public companies are required to submit audited financial statements to the SEC and CPAs can take that burden off your shoulders.
  • Represent you in front of the IRS.

What Do CPAs Do?

CPAs are generally tasked with handling the federal, state, and local tax returns for businesses. They do a lot more than simply file returns; CPAs handle the following services:

  • Tax Strategy, Advice, & Planning – CPAs can represent you and your business in front of the IRS and take care of questions and concerns from state and local tax boards. A CPA can help reduce your annual tax burden and ensure there is no reason for a federal tax audit or questioning from state and local tax authorities.
  • Audit & Assurance Services – Don’t panic! – a business audit by your CPA is not a tax audit by the federal government. CPAs audit the financial/economic status of your business to help you avoid federal tax audits. As for assurance services, this involves the CPA getting the information they need to guide your business through financial decisions so you get the most out of your business.
  • Management & Consulting – Your CPA can help you throughout the daily financial operations of your business – risk management and insurance coordination, cash management and budgeting, financial planning, investment advice, estate planning, and shareholder financial statement preparation can all be done under the purview of a professional CPA.
  • Forensic Accounting – Your CPA can audit your books and accounting records to find evidence of tax evasion, embezzlement, and data that may indicate unethical financial moves from business partners.

What Can CPAs Do Outside of Public Accounting?

  • Company Management: Sometimes it takes someone with in-depth knowledge of finance to help you run your business.
  • Company Executives: A CPA can make a fantastic COO, CFO, or CEO.
  • Non-Profit Organizations: NPOs often require financial guidance just as much as for-profit organizations. CPAs can help NPOs organize their funds more efficiently.
  • Government: Government agencies can use CPAs in a variety of ways. CPAs work with the FBI, IRS, military, and Congress. Virtually every level of government uses CPAs in some way.
  • Education: Universities often have certified accounting professionals working with them, although this is not a requirement.

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