CPA stands for Certified Public Accountant. It is a designation provided by the American Institute of Certified Public Accountants (AICPA). To earn this position, you have to meet state qualifications and other criteria.
Be it signing tax returns, financial planning, or representing taxpayers before the IRS for audits, a certified public accountant has many roles and responsibilities. Read on to know more about them.
What Do CPAs Do?
Tax Advice and Planning
During the audit, CPAs are responsible for representing the client in front of the IRS. They also help in answering questions related to the state or local tax board. Not only this, but they also provide tax advice to reduce the tax burden on the clients.
Management and Consulting
CPAs provide complete assistance in management operations while taking care of various parameters including budgeting, financial planning, cash management, and a lot more. They are also responsible for preparing financial statements for shareholders. They are also known for coordinating risk management and helping with estate planning.
Also called investigative accounting or fraud auditing, forensic accounting is another thing that CPAs excel at. But what exactly is their role in forensic accounting? They will examine the books and pick up some evidence of criminal conduct including embezzlement or tax evasion. If you feel you are being cheated by your business partner or some fraudulent cases, your CPA will help you.
What is the Difference Between A CPA and An Accountant?
CPAs are required to pass rigorous testing which is not mandatory for accountants. A comprehensive test of business, tax, and auditing need to be passed by the candidate aspiring to become a CPA.
Financial Statement Audit
Only a CPA can perform fiduciary responsibility by conducting a financial statement audit or a review. While a normal accountant cannot conduct such kind of audits.
Taxes and Regulations
CPAs have extensive knowledge of the tax codes owing to the hard licensing exam which they pass. Also, they can represent the clients before the IRS whereas an accountant cannot do that.
Other Responsibilities of a CPA
CPAs also act as payroll administrators by ensuring that the team is paid on time. They also make sure that payroll taxes, insurance, and retirement withholdings are deducted on time. They also take care of expense reimbursements or profit-sharing disbursements.
A CPA provides complete assistance in keeping a track of the money used for various businesses. Be it sending out invoices, clearing out bills, or reconciling financial documents, they performs multiple functions.
Head over to our guide on bookkeeping if you want to know more.
Long-Term Financial Planners
Whether it is short-term or long-term, CPA takes care of the financial goals. He will help you manage the money you have so that you can execute your financial goals.
CPAs will help you in preparing tax returns along with getting a filing extension. They will ensure that your quarterly taxes are filed accurately within the stipulated time, saving you from late penalties. With CPAs by your side, you no longer have to worry about any tax issues.
How to Become a CPA?
If you want to become a CPA, you need to meet certain requirements. Firstly, you need to complete a program of study in accounting from a college or a university. Students with at least 150 semester hours of college coursework are recommended by AICPA. Once this is achieved, they will have to appear for the Uniform CPA examination. The exam is created and graded by AICPA.
The eligibility criteria to appear for the exam is different for every state. Most of the states require 150 credit hours of education at an accredited college or university.
After passing the exam, students will receive the CPA certificate. However, this is not enough to get the license. Other educational and professional work experience requirements vary according to the state they are applying in.
After getting the CPA license, students are required to take professional education courses annually so that their licenses can be retained.
Skills Required to Become a CPA
To become a CPA, you have to inculcate a broad spectrum of skills and a thorough understanding of accounting and business concepts.
Problem- Solving and Analytical Skills
You should have the ability to interpret and analyze various facts and figures to provide a structured solution to the problem that may arise. Creative thinking will act as an asset as it will help you to provide innovative solutions. You should be able to research effectively to win the game.
Strong Communication Skills
For becoming a CPA, you need to be adept at your communication skills. It is very important to represent the ideas in front of the clients and co-workers. Also, you can be presented with various questions and issues that need to be resolved and responded to. So, having strong communication skills can help a lot in these cases.
Well-versed in the Latest Technologies
Becoming a CPA is not easy as it seems. You need to be updated with the emerging technologies including e-commerce, workflow technology, and a lot more. Being well-acquainted with the latest spreadsheet, database, accounting, etc., can be helpful in the long run.
Strict deadlines, unexpected requirements, contradicting demands, family obligations are some of the common issues that a CPA might have to face. Having project management skills can help you to combat this situation quite well.
How Much Does a CPA Make?
Based on an AICPA survey, a CPA with less than one year of experience can make around $66,000 per year. In the US, the average salary of an experienced certified public accountant is around $119, 000 per year. Besides, CPAs can expect an increment of 10% approximately every year.
The salary varies according to the experience and industries that have been worked upon. Undoubtedly, an experienced CPA would have a better salary as compared to the one who is a novice in the industry.
CPAs play a major role in the growth of a business as they are adept at handling various tasks. Whether you have a small or a large public accounting firm, they can help you. They act as financial advisors and help in taking important monetary decisions that can take your business to the next level.
Here’s a recap of the main points that have been discussed in the article:
- CPA refers to Certified Public Accountant, a designation given by AICPA.
- CPA performs many roles including tax advice and planning, management and consulting, forensic accounting, and a lot more.
- There is a lot of difference between CPA and accountants. A CPA performs many roles other than accounting including tax filing, bookkeeping, payroll administering, and long-term planning.
- To become a CPA, you need to meet certain requirements and acquire certain skills.
- An experienced CPA can make around $119, 000 per year.