So what is a CPA, you ask?
A Certified Public Accountant, or CPA, is more than just a tax preparer. There are four requirements for becoming a CPA: education, exam, experience and licensure:
- Education: A CPA candidate must have a college degree and, in general, 150 hours of education (according to the Uniform Accountancy Act).
- Exam: A CPA candidate must prepare for and pass the Uniform CPA Examination, a rigorous 4-part exam.
- Experience: A CPA candidate must have 1-2 years experience working as an accountant or within an accounting-related position, depending on which state he or she seeks licensure.
- Licensure: A CPA candidate must obtain licensure through a state board of accountancy.
CPAs are obligated by most states to complete annual ethics training. CPAs who are members of the AICPA are held to a code of conduct that solidifies their commitment. Ethics play a large role in the profession because of the fiduciary nature of the work CPAs perform. Clients rely on and trust the information CPAs provide, so adherence to the profession’s ethical standards are imperative.
As licensed professionals, CPAs offer services that encompass more tasks than filing your annual tax return. Whether it’s business, freelance, or personal taxes, a CPA can provide crucial guidance to ensure compliance and financial well-being.
Hiring a CPA before tax season is a strategic move that will save you time, stress, and potentially a significant amount of money. With ever-changing tax regulations and potential deductions that you might miss out on, a CPA will make sure you don’t pay more than you should. Preparing early with a CPA allows for a comprehensive review of your financial situation, enabling proactive planning and optimization of your tax strategy.
CPA Vs. Unlicensed Preparer
The marketplace for tax services can be a confusing place. Thousands of people advertise as tax preparers. And with taxes, and money being such a delicate topic to handle, you must choose your expert, wisely.
Some of them participate in a voluntary program created by the IRS called the Annual Filing Season Program. This helps those who are not CPAs, attorneys, or enrolled agents establish a minimum level of tax education for
There are some important distinctions between CPAs and unlicensed preparers to keep in mind. One is that the unlicensed preparer has limited practice rights. This means that they may only represent clients whose returns they prepared and signed. Additionally, they can only represent before revenue agents, customer service representatives, and similar IRS employees. In addition, they can’t represent clients in regards of appeals or collection issues, even if they did prepare and sign the return.
CPAs have unlimited representation rights, meaning they can represent their clients on any matter including audits, payment/collection issues, and appeals. One exception is a Tax Court preceding – in that case, an attorney generally takes over.
Also, CPAs are regulated by a state board, which provides a venue for consumer grievances, and they must comply with strict ethical standards or face disciplinary action.
What does a CPA Do?
What are the responsibilities and scope of work of a CPA?
CPAs are mostly known to handle taxes, that’s why individuals and businesses resort to them around tax season. However, Certified Public Accountants can handle various aspects of your financial life year-long.
As CPAs, we know that over a person’s lifetime, there will come to moments in life where the choices they make have significant financial implications. These include getting married, having children, getting a divorce, pursuing higher education yourself, or sending a child to college and preparing for retirement. These events are key times to start working with a CPA because these moments are even more complicated than most clients realize.
For example, having a child is on its own a miraculous event to celebrate. However, from a CPA’s perspective, having children provides some tax savings opportunities and considerations like:
- The child and dependent care credit
- Adoption credit
- Special benefits/incentives for special needs children
- Ability now to use Sec. 529 plans for private school tuition
The sheer volume of choices often leaves most taxpayers confused, and many don’t take full advantage them, or even pick the incentive that results in the most value. Available incentives vary by year, type of education, age of child and nature of expense. Working with a CPA ensures that the taxpayer will take advantage of the right incentive at the right time in order to take full advantage of the tax benefits!
What Else is a CPA Responsible For?
The list of a CPA’s responsibilities can be tailored based on the agreed-upon scope of work, it can be quite long and covers various areas of your life or business. Which we will cover in detail later on, but for now here are some of the main tasks a CPA can assist you with:
- Preparing financial statements
- Filing and planning taxes
- Conducting audits
- Ensuring compliance with laws
- Managing budgeting and forecasting
- Designing internal controls
- Offering advisory services
- Investigating fraud (forensic accounting)
- Representing clients during tax audits
- Providing financial analysis and consulting
Do You Need a Professional Accountant?
So what is a CPA again? Or why do You need one?
A CPA helps ensure your finances are accurate, in compliance with tax laws, and eligible for deductions. They provide advice on tax planning, audit representation, and financial strategies. Whether for personal or business needs, a CPA.
Some of you may be thinking, wow, a CPA sounds great, but I’ve been using tax software and haven’t had any problems. And have been saving some money along the way. That may be true for some, but I will give you some things to think about.
Even if your return is done accurately, that doesn’t mean it’s done efficiently. We talked earlier about education incentives — knowing what your current and future plans and goals are can help a CPA advise you on which one is best for you. CPAs provide expertise and guidance based on their knowledge and experience.
Tax law changes mean added complexity, even if there is discussion around making taxes simpler. A CPA tax practitioner is well versed in these changes. CPA tax practitioners are prepared to help you navigate through the complicated new laws so you can make the most of them.
As already mentioned, CPAs are available year-round for tax planning and other needs, not just around tax season. So you can rely on professionals like ZAOUK CPAs to help you secure your financial future.
