A Certified Public Accountant or CPA is a special type of accountant. Officially it's the title of someone in the United States, who has passed the Uniform Certified Public Accounting Examination and has met some additional state education and experience requirements to get this certification. This test is grueling and requires upwards of 150 hours of special education.
But what does this mean to you as a small business owner. Do you need a CPA or will a regular accountant or even a bookkeeper be sufficient for your business?
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Most people use the term CPA and accountant interchangeably but there is a very big difference. The CPA designation carries a lot of weight within the financial community and certainly within the accounting profession.
Services Provided By Certified Public Accountants
In public accounting, those accounting services provided to a business on a contract basis, a CPA attests to and gives assurances that financial statements are reasonable and accurate and adhere to generally accepted accounting principles (GAAP). They also attest to the reasonableness of disclosures and that statements are free from "material misstatement".
As an auditor, a CPA's are required by professional standards and Federal and State laws to maintain independence from the entity for which they are conducting an audit and review, often called an attestation.
A CPA can also work as a consultant, advising companies on acceptable business practices and making recommendations on financial management. Typically these consultants do not work as auditors for a company at the same time they are acting as consultants.
As part of the certification, a CPA must complete 40 hours of continuing professional education (CPE) every year to keep up with the new rules and regulations in the financial, accounting, and business world. This is proof of the high level of expectations of the accounting profession for a Certified Public Accountant.
Typically a Certified Public Accountant will belong to a state association with the goal of keeping up to date with the accounting community and taking continuing education classes. Of course tax laws change frequently and any good CPA will spend time staying abreast of changes in financial areas. As a member of a local association they have access to the latest thinking and rules in the accounting area.
Why You Need A CPA
If for no other reason than Tax Planning it's good to have the advice of an accountant. And as far as business management and financial advice access to a good accountant is very desirable.
But does that mean you need a CPA?
In general you can assume that anyone who has taken the time to get certified as a CPA, and maintain that certification, is at the upper levels of the skill set of an accountant. It's a clear credibility booster to be a CPA. If your business can afford the best than a CPA is worth the money.
But does that mean they are better than a typical accountant. Of course not. But it does indicate a level of commitment that is worth considering. Certainly if legal proceedings are required, the assurance of a CPA will hold more weight than a typical accountant. Again much depends on the reputation of the CPA in the community as well. Certainly an audit by a CPA has an implied level of credibility.
And CPA's do much more than audits these days. They provide consulting and overall financial planning not only for small and large businesses but also for estate planning, investments, and strategic planning.
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