If you’re building your name as an esteemed accounting firm, getting the right talents onboard will greatly boost your credibility among your prospects. Among the F&A professionals in the field, why should you hire a CPA?
Let’s take it little by little. In the finance and accounting (F&A) arena, various professions are present. We have bookkeepers, tax accountants, management accountants, financial managers, financial analysts, and auditors, to name a few. But how do they differ from one another?
In this article, we’ll be giving light on these titles: bookkeepers, accountants, and CPAs. What are their roles and what makes them different?
Bookkeeper vs. Accountant vs. CPA
Bookkeepers are responsible for recording financial transactions and maintaining company records that reflects the money going in and out of the business. Other bookkeeping services include:
- Entering transactions into the ledger (or in the accounting software),
- Providing billing for rendered services,
- Paying suppliers,
- Handling payroll-related tasks, and
- Creating financial reports.
Accountants are required to have a degree, as it is the minimum requirement for the role. Their tasks are somehow similar to those of the bookkeeper, but in a way, they are ideal for higher level services such as reviewing business finances, and offering financial advice so you know what areas of the business generates profits, and those that need improvement. To put it, accountants attend to the more complex and analytical side of the job.
Here are some of their main tasks:
- Offering tax advice,
- Preparation of financial statements,
- Filing income tax returns,
- Finding accounting discrepancies, and
- Budget forecasting
Certified Public Accountants (CPAs) are not your regular accountants. They are professionals who are academically and professionally tested to carry out finance and accounting tasks who have gone through rigorous training in school, and passed an exam set by a professional regulating body established by the government.
How does one become a CPA in the US?
CPA title holders need to obtain an Accounting degree from an academic institution, pass the Uniform CPA exam, and the state licensure exam. As they are bound by stringent industry standards, they are also required to take continuous professional education units to keep them updated on the latest developments on finance and accounting.
CPAs stay on top of these matters regularly:
- Preparation of tax returns for businesses and individuals
- Sign tax returns
- Represent taxpayers before the IRS for audits
- Performing detailed audits
How much does it cost to hire a CPA?
Depending on your entity and your requirements, the costs in hiring a CPA to do your taxes can also vary. The complexity of your numbers and the amount of money you’re willing to spend on a licensed accounting professional help narrow down your options.
According to Investopedia, hiring a CPA to prepare and submit your Individual Tax Return (ITR) or Form 1040 and state return with no itemized deduction averagely costs $176. Doing an itemized Form 1040 and a state tax return is on an average of $273. However, for self-employed individuals, hiring a CPA to prepare your itemized ITR with Schedule C and state tax return form increases the average CPA fee to $457.
While these are all at a reasonable level, you may want to note that these are only average fees. If you need special filings, or have more intricate financial needs, CPAs can charge more for consultation and overtime work.
Benefits of hiring a CPA
Aside from the level of expertise they have, what are the other advantages you get when you hire a licensed Accounting professional?
CPAs are licensed by the government and must keep up with the current tax laws and other regulations to maintain their license in that state. They do this by obtaining units of continuous professional education provided or accredited by the regulating body.
A CPA is more familiar with tax laws than non-CPAs. Knowledge on tax laws is a big part of the licensure exam that an accountant must take before becoming a CPA. Aside from which, updates on tax laws are also discussed during their continuous education. Lastly, CPA’s have greater ability to represent clients before tax agencies (e.g. IRS, ATO, BIR) compared to the limited capacities of an accountant.
As previously mentioned, CPAs more capable of representing you before tax agencies should you be lucky to be selected for a tax audit. Pair that with their familiarity with the different standards during the preparation of financial statements and financial reporting, and you now have an all-in-one expert!
Financial Analysis and Guidance
CPA’s are not just capable of maintaining books, proper tax filing and financial statements/reporting. As professionals, they can give you suggestions on how to lower your tax liabilities, where you can better invest your money and where you can implement cost-cutting.
You need the best help to chart the course of your business, and a big part of that is making sure your finances are on track- that’s why you should hire a CPA. Whether you’re a self-employed individual, a startup, or a corporation, having a CPA prepare your books, file your taxes, and do your audit, you know you’re in safe hands.
Interested in having a CPA help your business? We’re here to help. You can contact our growing team of CPAs at D&V Philippines today, or download our latest whitepaper Finding the Right Talents: D&V Philippines Modern Accounting Firm Solutions to know how we can create a robust back-office support for your business.