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Proper financial accounting is foundational to the success of every business. Yet the financial responsibilities and functions of an enterprise can be daunting, especially for small businesses. Typically, there needs to be at least one bookkeeper who handles the day-to-day financial functions including entering data and making reports, sending invoices, recording payments, managing accounts payable and receivable, making payments, running payroll, and paying state taxes.

An accountant operates at a higher level, verifying the accuracy of the bookkeeper’s work, managing cash flow, making financial projections, and providing business planning advice. A CPA is essentially a higher level of accountant. So, when getting the level of strong financial services that your business needs, which do you choose—CPA vs accountant?

What is a CPA?

In comparing the role of CPA vs accountant, know that a Certified Public Accountant (CPA) is an individual with an accounting degree who has passed the rigorous Uniform CPA exam which includes many aspects of financial and tax expertise. A CPA must complete educational requirements and become licensed by a state. He/she is also required to meet continuing education requirements to maintain their license and to adhere to a strict code of ethics.

Why Choose a CPA?

To evaluate the need for a CPA vs accountant, a business should consider that a CPA can do more. A CPA can:

  • Provide tax planning and filing advice and file taxes.
  • Manage tax and financial compliance.
  • Offer consulting expertise on important financial aspects including budgets, financial risk management, financial services, and complicated financial matters.
  • Provide forensic accounting—monitoring books and preventing fraud.
  • Help create and maintain bookkeeping systems and processes.
  • Create audit reports and review financial reports.
  • Legally represent the business before the IRS.

When there is a consideration for the need for a CPA vs accountant, it is appropriate to ask if what is needed is data or analysis, if tax support is needed, if legal representation is important, or what degree of financial expertise is needed.

When Should You Hire a CPA?

Here are some specific situations that should indicate the need to hire a CPA vs accountant:

  1. Before you start a business. A CPA can recommend the best business structure, select a business entity, set up bookkeeping, and plan tax responsibilities.
  2. As tax time approaches. A CPA can prepare the required tax documents and file tax returns. He/she can provide tax planning advice and assist with strategies to minimize tax payments in the next year. A CPA will be up to date on tax changes and will help a business understand what deductions the business may qualify for.
  3. When special circumstances take place and superior accounting expertise and advice is required. For example, if the business needs to take out small business loans, or when personal events in an owner’s life could affect the business.
  4. When a decision is made to sell, close, merge, or acquire.

How to Choose a CPA

Use these tips:

  • Select a CPA that is experienced in your industry and in the areas that you need assistance.
  • Select the size of firm that is best suited to you.
  • Understand their costs of service for what you need.
  • Check their credentials and capabilities.
  • Meet them in person. Know who you will work with.
  • Understand their availability.

Get Expert Accounting and Financial Assistance

Contact Doerhoff & Associates, CPA, based in Jefferson City, MO for professional accounting and financial assistance that you can count on. Doerhoff & Associates has one goal in mind, to provide comprehensive business accounting services designed specifically for your success.