What does a CPA do? How to know that you need one for your business?

The CPA is not the same as an accountant – certification means quite a lot in the world of professional finance. The accountant knows how to follow the rules, but the CPA knows how to apply them. There are software accounting programs that can replace an accountant, but there is definitely no piece of software that can replace a duly licensed CPA.

What does a CPA do? How to know that you need one for your business? Let’s take a look at these questions now. If you want to dig deeper into the CPA and what they do, visit Crush the CPA Exam.

Image Source: myupdatestudio.com

What a CPA Does

A CPA has to keep up with Generally Accepted Accounting Procedures (GAAP) and the state laws, which change much more often and are much more stringent. Staying compliant with state law in real time means that a CPA will be able to help a business create strategic plans for its financials, not just put together basic reports.

CPAs also need to keep up with continuing education in order to maintain a license. This ensures that a CPA is always creating financial plans that are compliant with the most recent tax laws and state regulations. This kind of real-time support is invaluable for a business.

Financial Analysis

A CPA is also much more qualified than a baseline accountant to generate a viable and defensible financial analysis from accounting or bookkeeping documents. If a business is looking for startup rounds of funding or the money to expand, it will need a fully functional financial strategy to present to potential investors. Having a CPA behind the documents is a great way to get people to believe what you are saying on your documents.

Protection from the IRS

Another important reason to consider hiring a CPA is for protection from the IRS and to ensure that your company is following all of the relevant rules and regulations. No business wants to go up against the IRS by itself when it finally starts making money. A CPA is also able to represent you in court before the IRS should an investigation occur.

Weigh up the benefits

This article only scratches the surface, but ultimately having a CPA on your team has a number of clear benefits. There is so much more effort and education that goes into this exam process and certification that they can be a real asset to your business. In today’s world skills aren’t the only consideration however; and finding someone who fits in with the culture of your business is equally important.

It’s true that finance is an often overlooked area of any business. It can be costly and we don’t always see the obvious benefit straight away. However the more that you grow, the more that you will need a certified financial professional for planning & budgeting, organizing (and hopefully minimizing) your tax bill and monthly/annual financial reporting. It’s an investment, which is why you might want to hire a part-time or freelance CPA to begin with. However the time may come when having a full-time professional at your fingertips is essential.