Every small business owner is—or should be—thoroughly acquainted with the necessity of having an accountant. An accountant can handle far more than just a bookkeeper. You’ve probably heard the term ‘CPA’ thrown around a good deal as well. You may even already have one. But you might have wondered: what can a CPA do that a regular accountant can’t? That’s what we’d like to address today.
Before we get started describing the duties of these distinct financial experts, let’s get this out of the way: all CPAs are accountants. But not all accountants are CPAs. CPA stands for ‘certified public accountant,’ and the accountant at the end of the acronym is there for a reason. (We’ll explain what the ‘certified’ part signifies later.)
If you’re a small business owner, you’re probably already aware of some of the basic functions of an accountant. Still, here are a few for us to consider:
- Documents financial transactions
- Audits financial documents
- Request disbursements and verifies documentation in preparation for a payment
- Provides overview of the financial status of an organization by synthesizing statements of profit and loss, balance sheets, and other miscellaneous documents
This is just scratching the surface of the duties your typical accountant must carry out. To put it simply, your accountant is your go-to person for information about your business’ finances. They can synthesize a wealth of knowledge to give you a sense of the financial position of your organization, as well as to forecast how things will look in the future. A good accountant will also provide recommendations as to how you can maximize your business’ financial growth.
But in all of this, you may have noticed one conspicuous absence: taxes.
If you can only remember one tidbit of information, let it be this: CPAs are especially qualified for handling taxes. It’s not that regular accountants don’t understand taxes. In fact, they are in all likelihood quite knowledgeable. But only a CPA can represent your business before the IRS in the event of an audit.
Let’s return to the acronym, ‘certified public accountant.’ What exactly is the certification a CPA has? To be officially certified as a CPA, an accountant must pass the Uniform Certified Public Accountant Examination. Most people will refer to this as the ‘CPA exam’ for short. It is administered by none other than the American Institute of Certified Public Accountants.
Unlike an ordinary accountant, a CPA has the distinction of providing you with tax planning and tax preparation. If you are wary of a tax audit from the IRS, there are few smarter moves you can make than hiring a CPA. They can use their expert knowledge of taxes to minimize the chances of such an audit—and if there is one, they can represent you. They will also be able to provide you with invaluable tips on how to minimize the amount of taxes you owe each year.
Contact Bowman & Company Today
Bowman & Company CPA, PC provides all of our individual and small business customers with experienced, accurate, and affordable financial services. Our financial services aim at decreasing your taxes and increasing your net worth through responsible, timely, and accurate recordkeeping. We offer our services to clients throughout the Washington, D.C. metropolitan area including Maryland and Baltimore County, Columbia, and Howard County. For more information on our offerings, contact us online or call us at (410) 381-8121. You can also find us on Twitter, Linkedin, Facebook, and Youtube.