It is a common belief that accountants and CPAs are the same individuals. CPA is just a fancy way to say that you are an accountant. But that is not so.
Who are CPAs?
CPAs are Certified Public Accountants who have been recognized by the state to be capable of handling the duties of a CPA. They have to pass a four-part examination to be qualified for the title.
How are they different from the other accountants?
Other similar job positions are those of accountants and bookkeepers.
- Bookkeepers can be considered as the lowest level in the accounting hierarchy. They take care of the day to day transactions of the company. They are responsible for keeping account of every sale and purchase.
- Accountants are on a higher level. They are capable of everything a bookkeeper can do and more. Auditing financial documents, financial analysis and preparing of tax reports can be done by them.
- Certified Public Accountants (CPA) are often considered as the highest level in the hierarchy. The education qualifications allow CPAs to do actions that the other two positions are not certified to do. They can create and file a financial report of a company. They can also represent their client in front of the Internal Revenue Service (IRS).
What are the daily responsibilities of a CPA?
- Although they do not need to, they can still oversee the bookkeeping activities of the company. They do not need to enter all the entries individually. CPAs could just check them regularly to make sure they are all in order.
- Organizing and keeping track of the financial records of the company.
- They are also capable of creating budgets for a company. Budgeting requires the CPA to go through the reports of the previous year or quarter. They need to analyse the profit margins and predict the revenue the company should earn in future. All these factors are taken into account when the CPA works on the budget.
- A CPA is also expected to keep up to date with all the latest policies and regulations. Any change in the current regulations must be noted by the CPA. Unless they are aware of the current rules and guidelines they cannot be expected to produce accurate documents. A single mistake in the financial documents can cost the company a lot of money in damages.
- The previous point is also important because a CPA is in charge of setting the financial guidelines and processes for the company.
- Since the CPA is aware of the financial condition of the company, they can be asked to brief senior officials or board members about it.
Apart from all these, a small business owner can really benefit from hiring a CPA. They will prove to be useful during the launching stage as well as to boost the growth of the business. From setting up the business structure to determining the payments processes of the employees, hiring small business CPA California region can really lessen the load on the owner.