A Certified Public Accountant, or CPA, is a particular type of accountant. It is the name of an American citizen who has successfully passed the Uniform Certified Public Accounting Examination.
They also have to meet additional education and experience requirements in order to obtain this certification. This is a difficult test that requires up to 150 hours of special education.
What does this all mean for you, as a small-business owner? Is it necessary to have a CPA? Or will a regular accountant, or even a bookkeeper suffice for your business?
Although many people mistakenly use the terms CPA or accountant interchangeably, there is a significant difference. The CPA designation is very important in the accounting profession and the financial community.
Services provided by Certified Public Accountants
Public accounting refers to services from cpeguide.com/product/accounting-and-business-a-brief-business-law-overview that are provided to businesses on a contractual basis. A CPA attests and provides assurances that financial statements are accurate, reasonable, and consistent with generally accepted accounting principles (GAAP).
CPAs also attest that disclosures are reasonable and statements are not subject to "material misstatement".
CPAs, as auditors, are required by Federal and State laws and professional standards to be independent of the entity they are auditing and reviewing. This is often called an attestation.
A CPA can also be a consultant. They advise companies on business practices and make recommendations for financial management. These consultants are not usually auditors for companies while they act as consultants.
Why do you need a CPA
An accountant is a valuable resource, even if it is just for Tax Planning. A good accountant can provide financial and business advice as well as management services.
However, does this mean that you will need a CPA to help you?
It is generally accepted that any person who takes the time to become a CPA and keep that certification can be considered an accountant at the top of their skill set. Being a CPA is a great way to boost your credibility. A CPA is a great investment if your company can afford it.