In this post, we want to provide you with some more clarity on CPA services.
Now, CPAs can provide a number of services to small businesses.
But no other professional can provide all of the services that CPAs provide.
So then… what are CPA services? And what makes them so complicated?
Today, we’re going to break this all the way down.
What are CPA Services?
CPA services are accounting services that are provided by a Certified Public Accountant, also known as a CPA.
What is a CPA? CPAs are individuals that passed the hardest professional exam in the world while meeting rigorous educational and experience requirements.
Most CPAs have Master’s Degrees in Business or Accounting with at least a few years of experience under a CPA.
Now let’s take a look at some specific CPA services.
We’re going to break down CPA services into 2 categories – services that ONLY CPAs can provide and services that CPAs are best to provide.
1. Services That Only CPAs Can Provide
CPA accounting services most commonly include compilations, reviews, audits of financial information, and certain tax services.
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Compilations
Compilations are basically financial statements that are prepared by an outside accountant.
So for example, if you’re self-employed and are applying for a loan, the lender might require you to see financial statements that are prepared by a CPA.
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Reviews
Reviews are where a CPA merely reviews financial statements for accuracy.
So if you prepared your own financial statements, for example, you might hire a CPA to review your financial statements for accuracy.
The CPA would then be required by law to provide you with a limited assurance that your financial statements are accurate, and if it’s not, disclose it in their report.
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Audits
Audits are services where CPAs are required to audit your financial information in accordance with accounting and auditing standards set by the government.
It is the highest level of assurance that a CPA can provide.
The CPA must apply certain procedures to test for the accuracy, completeness, and existence of certain financial information to ensure that there is no fraud or material mistakes.
Audits are commonly performed for nonprofit organizations, publicly traded companies, as well as small businesses that may be applying for business funding or grants.
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Tax Services
And lastly, there are very specific tax services that CPAs can provide that other financial professionals cannot unless you’re a tax attorney.
For example, a lot of people do not know this but CPAs can represent you in court in a tax matter with the IRS.
That’s how powerful the CPA designation is.
So those are services that ONLY CPAs can do for the most part.
Basically, the gist here is that if you want to make sure that your financial information is correct, hire a CPA.
And if you want the best tax advisor for your business, hire a CPA.
But there are other services that CPAs can provide that are not limited to their profession, but their credentials make them the most qualified for.
So let’s get into the services that CPAs are best at providing.
2. Services That CPAs Are Best To Provide
CPAs are best at providing… almost ALL accounting services,
Seriously, CPAs were tested on all facets of accounting including:
- bookkeeping,
- tax preparation,
- tax planning,
- budgeting,
- pricing,
…and even more technical stuff that we’re sure you’re not interested in.
They know the rules of accounting and can act as a trusted advisor to help you plan for taxes, manage your finances, and overcome business challenges that you’ve never experienced before.
But does this mean you need a CPA to do your bookkeeping?
Well, not necessarily. CPAs can be quite expensive, and you may not need to pay a CPA $150/hour to do more tedious work.
For example, at LYFE Accounting, you may speak to one of our CPAs.
But to offer you the best price, we hire bookkeepers to perform much of the bookkeeping work for our clients, giving you the best of both worlds at the lowest price possible.
How Does a CPA Differ From a Bookkeeper, Tax Preparer and Accountant?
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Bookkeeper
A bookkeeper is someone who keeps track of your business income and expenses throughout the year to generate financial reports.
They basically record all financial transactions that occurred in the past. Hence, the name, book-keeping.
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Tax Preparer
A tax preparer is someone who is qualified to file your tax returns.
This person accepts no responsibility for the accuracy of your tax return, as they are simply taking the financial information you provide and filing it with the IRS.
So for your business, your tax preparer would take the books that your bookkeeper prepared to file your taxes.
And if that financial information is wrong, it can be costly. This is why it is very important to make sure you hire the right person to do both, your bookkeeping and your taxes.
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Accountant
An accountant is a broad term but they could also do your bookkeeping, taxes, and more advanced accounting items.
Accountants typically have a degree in accounting, which means they can do more big-picture stuff for your business.
For example, accountants might handle complex transactions that your bookkeeper may not know how to do.
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CPA
And then there’s the CPA – the highest level in the accounting profession.
CPAs are required by law to keep up with accounting changes, tax laws, and other continuing education requirements to maintain their license.
Therefore, they can provide you with the highest level of assurance and guidance for your business.
Do You Need a CPA?
Here are some questions you should ask yourself to determine this:
- Have you read the tax code?
- Do you keep up with changes in the tax code?
- Are you 100% certain that your business entity is the best entity to save on your taxes?
- Do you have a budget?
- Is your budget working for you? Are you profitable?
- Are you sure your employees are classified correctly?
- Do you understand your financial statements?
- Do you have enough time to take care of all these accounting duties?
- And if so, is it worth your time?
In our experience, it’s always good to have a CPA in your corner when needed.
As you run your business, you will encounter challenges and a CPA can not only help you with those challenges, but they can give you the financial advice you can rely on.
With that said, let’s go ahead and wrap up today’s post.
Wrapping Up
Today, we discussed CPA services and what they are.
Again, CPA services are just accounting services provided by a Certified Public Accountant.
Then we discussed the types of CPA services.
There are some that only CPAs can and should do, like compilations, reviews, and audits.
But there are others that CPAs are really good at providing.
Since they are fully trained on all accounting principles required by law, they are more likely to provide the highest level of quality for most accounting services.
And if you need help from reliable and credible CPAs, LYFE Accounting got your back. We have CPA consultants and offer CPA services so don’t hesitate to contact us today!