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What is a certified public accountant?

A Certified Public Accountant or CPA is a special type of accountant. Officially, it is 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 obtain this certification. This test is grueling and requires more than 150 hours of special education.

But what does this mean to you as a small business owner? Do you need a CPA or a regular accountant or even a bookkeeper will suffice for your business?

Most people use the term CPA and accountant interchangeably, but there is a 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 that are provided to a company by contract, a CPA attests and gives assurance that the financial statements are reasonable and accurate and adhere to generally accepted accounting principles (GAAP). They also attest to the reasonableness of the disclosures and that the statements are free from “material errors.”

As an auditor, CPAs are required by professional standards and federal and state laws to maintain the independence of 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. These consultants generally do not work as auditors for a company at the same time as they act as consultants.

As part of the certification, a CPA must complete 40 hours of continuing professional education (CPE) each year to keep up with 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 with the accounting community and taking continuing education classes. Of course, tax laws change frequently and any good CPA will take the time to keep abreast of changes in financial areas. As a member of a local association, they have access to the latest ideas and rules in the accounting area.

Why do you need a CPA

If it is for no other reason than tax planning, it is good to have the advice of an accountant. And when it comes to business management and financial advice, access to a good accountant is highly desirable.

But does that mean you need a CPA?

In general, you can assume that anyone who has taken the time to become certified as a CPA and maintain that certification is at the higher levels of an accountant’s skill set. It is a clear credibility booster to be a CPA. If your business can afford the best of a CPA, it is worth the money.

But does that mean they are better than a typical accountant? Of course, no. But it does indicate a level of commitment worth considering. Certainly, if legal procedures are required, a CPA’s assurance will carry more weight than a typical accountant. Again, a lot depends on the reputation of the CPA in the community. Certainly, an audit performed by a CPA has an implicit level of credibility.

And CPAs do a lot more than audits these days. They provide general financial planning and consulting not only for small and large businesses, but also for wealth planning, investments, and strategic planning.

So if you want to run your business at the highest level, you should certainly consider hiring a certified public accountant like those at Clearwater Accountants.

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