Accounting

What is a CPA?

By
Shamal Asnani
on
March 28, 2022

Here at Asnani CPA, we often get asked questions like "what is a CPA" or "what is the difference between a CPA and an accountant?" While there are several good articles out there that cover these topics (like this one for instance), we thought we would put together an article to answer these questions as well as a few other ones that we commonly hear from our clients.

What is a CPA?

Here at Asnani CPA, we often get asked questions like "what is a CPA" or "what is the difference between a CPA and an accountant?" While there are several good articles out there that cover these topics (like this one for instance), we thought we would put together an article to answer these questions as well as a few other ones that we commonly hear from our clients.

With that being said, let’s dive right in to those very questions.

What is the difference between a CPA and an accountant?

All CPA’s are Accountants, but not all Accountants are CPA's. Being a CPA is an optional step for an Accountant to take that allows them to advertise that they have reached a specific level of expertise and experience.

What does CPA stand for:

First off, let’s talk about what CPA stands for.

CPA is an acronym for “Certified Public Accountant.”

“Certified”, means it is a license that has to be applied for, typically in the state that they do business in, while “Public Accountant” just simply means they provide accounting services to the public.

CPA Requirements:

Each state’s requirements will vary, but most states require the following to qualify to apply to become a CPA:

·        Minimum number of accounting specific college credits (often in the Master’s Degree range)

·        Minimum amount of experience working under a CPA(typically 1+ years)

·        Passing a rigorous exam that tests your knowledge in various fields of accounting

·        Conducting a minimum number of ongoing education courses to make sure your knowledge stays up to date

For an example of what to expect (and what Asnani CPA must maintain) check out how to become a CPA in California here.

Code of Ethics

In addition to this you must pass and follow a strict code of ethics.

This is beneficial because it gives any potential clients who are harmed, a way to be made whole. Most states have a CPA board where clients can file grievances and seek to hold the CPA accountable.

It’s also important because it covers some important ethical issues that an individual might not otherwise know to be concerned about. We won’t get into specific instances in this article, but suffice it to say there are some situations that aren’t as easy to spot as you’d think.

CPAs have a Fiduciary Duty to their clients

A “fiduciary duty” is a legal term that means that they have a legal responsibility to act in the best interest of their clients.

This means that a CPA may be sued under a civil suit for violating their fiduciary duty, and it opens a whole host of potential claims that the injured party can pursue.

While normal accountants are still liable to a civil suit, it will be more difficult to recover from them because they don’t have a “fiduciary duty.”
What is the same?

Other than what we mentioned above and a few other exceptions, CPA's and Accountants do the same things. They are both, after all, accountants. Typically this means they can do some or all of the following:

Services both offer:

  • Tax preparation (business & personal)
  • Bookkeeping
  • Payroll

CPA’s tend to offer a few extra services that most accountants don’t. This doesn’t mean that they can’t, you just normally won’t see them:

Typically, CPA Only:

  • Tax planning: This is where you pro-actively look at your tax liability and consider how to reduce it BEFORE it is already due
  • Financial advising: Not only keeping the books up to date and accurate, but advising on what they mean and giving insight to the business’ health
  • Outsourced CFO: This is similar to financial advising, but involves the CPA taking a more direct role in the business and offering more specific guidance and help

These services are just the things that CPAs do for individuals and smaller sized businesses, but for a more complete write-up of all their potential roles you can check out this article from Ramsey Solutions.

How much does a CPA cost?

After discussing all of the different advantages that a CPA has, you might find yourself asking, how much does a CPA cost?

The answer – it depends.

It depends on what you want to use them for. Here at Asnani CPA, we work specifically with businesses, and we’ve done our best to offer packages that appeal to businesses of all sizes.

You can view pricing and specifics here on our website, but we try to offer three different options for potential clients.

The first is just an advisory session where we do a one-time meeting for 2 hours and help show you everything you need to do.

This is great for people who are just starting and can’t justify any ongoing expense but would like some help to get started in the meantime.

Once a company gets a little bigger and needs some more consistent help, we offer what we call the “Pocket CPA Service,” where we provide a basic suite of services for a small monthly fee that ranges from $150-$1500 a month, depending on your needs.

Finally, for someone who wants a more in-depth relationship and for us to be more involved in doing the bookkeeping and playing more of an advisory role, we offer the “Pocket CFO Service,” where we step in and act as an Outsourced CFO. Pricing on this varies between $500-$2500 per month.

This, however, is just what Asnani CPA charges. More generally, CPAs charge differently depending on how they bill. They may bill hourly (typically between $100-$250/hour), or they may bill using what is called "flat rate,” meaning it is always a set price (i.e. $500 for a tax return, etc),or they may charge a quarterly or monthly fee as a “retainer” of sorts.

We can’t speak specifically for all CPAs, but we can say that we try very hard to make sure that we keep our rates at a place where the value we offer our clients is also reasonable and affordable.

How to Find a Good CPA

If you’re in the market for a CPA, it's important that you find a good one. While meeting the requirements isn’t an easy thing to do to become licensed, not all CPAs are equal.

Look for one that is going to be customer focused and looking out for your best interests.

Also, as we discussed earlier, CPAs can work in a lot of different fields and have specializations. Make sure you are looking for a CPA that specializes in the field your needs are in.

Asnani CPA

If you are looking for a CPA for your small business to help with advising, taxes, payroll, bookkeeping, or any other random questions that come up along the way, then we would like to ask for a chance to earn your business.

Here at Asnani CPA, we know that you didn’t get into business because you wanted to do all of the accounting, but instead because you wanted to focus on what you are passionate about. We LOVE stepping in and helping business owners like you do just that by giving you peace of mind that all of your accounting needs are met.

If this sounds like a great idea to you, please don’t hesitate to reach out and schedule a free consultation with us.