Keeping track of income and expenses is essential, even if you don't own a business. And if you do own a business, things get even more complicated. There are paychecks to issue, taxes to track, and subcontractors to pay out. All of these details are a whole lot less challenging when you hire an accountant to oversee them. However, it is still important to know a little bit about accounting yourself. Dig into the articles on this website, and you'll gain a better understanding of accounting principles, what services accountants really offer, and the benefits of hiring these professionals to assist with your finances.
When looking at certified public accountant firms to help you personally or to deal with the financial concerns of a business, it can be helpful to understand what they do. Equally important, it can be helpful to understand what distinguishes certified public accounts from bookkeepers and even regular accountants.
The CPA's Toolbox
A CPA is someone qualified to deal with a wide array of financial concerns for individuals and businesses. They can help clients assemble tax returns and to provide supporting documents. Likewise, they can handle more complex tax matters, such as filing amended returns or issuing forms to employees and contractors. It's normal for CPAs to help companies produce financial reports, too. Auditing is party of the job, and some certified public accountant firms even offer forensic accounting services.
Firms also are increasingly offer Chief Financial Officer and controller services. These are jobs that are more tightly integrated with a company's overall operations. One advantage of having an outside company do this work, though, is that it provides a greater assurance of independence and fairness. Individual CPAs also frequently take on these roles as employees of companies.
One of the big distinguishing factors for a CPA versus a bookkeeper or a typical accountant is licensing. Each state has its own licensing regime, but being licensed is what allows someone to put "CPA" on their business cards.
A prospective accountant who wants to become certified must take the Uniform CPA Examination, a test that's administered by the American Institute of Certified Public Accountants, often referred to as the AICPA. After passing the AICPA exam, the individual must then apply for licensing through the Board of Accountancy, an entity that operates at the county level in most states.
Depending on the role an accountant is playing, they may or may not have a fiduciary responsibility to look out for the client's best financial interests. Generally, when a CPA is operating in a role as an auditor, they are not fiduciaries because impartiality is critical. Conversely, they become fiduciaries when they're providing financial and investing advice.
Notably, this means you might have to hire two certified public accountant firms. The reason is that one firm mostly can't operate in good fair as both an auditor and an advisor. If you're concerned that your situation might eventually produce these sorts of conflicts, it's wise to discuss them with the CPA early on in the relationship.