What is a CPA firm?: What They Are, What They Do, and Why You Need One!

What is a CPA firm? If you are an American business owner, then you must know the perfect definitions. Now you could ask me why. Well, every accounting term has a cost of investment. Little bit confused, but don’t worry, I will explain it in simple language.

You are reading this article so that you could be a business owner or a business executive, right? Say you have read this article for three minutes, so your cost is three minutes. Read for what? You are reading about finding a money-worthy CPA firm for your accounting tasks. So, a CPA firm would be your investment.

If you are my regular reader, then you know I don’t write about bullshit. I value every moment of my readers because time is money.

So, if you are looking for a CPA firm for your business but can’t decide how to select it, then you are in the right post. You are going to read an article that will help you to make a financial decision on hiring a CPA firm because it covers every question related to CPA firms in the USA.

Let’s start with the following.       

Key takeaways:

• You don’t need to pay flat fees besides the hourly rate for CPA services.
• Modern CPA firms nowadays use advanced AI tools & software to smooth accounting services. If your business needs digitalized services, then you can pick such types of CPA firms.
• Choose a firm that is transparent, responsive, and easy to reach because businesses need regular updates and clear explanations of financial matters.
• Pick a CPA firm for a long-term partnership. It will help you to get fast services by reducing hiring time.
• Check whether the CPA firm adheres to updated professional standards and ethical practices.

As a business owner, you perhaps know the academic definition of a CPA firm. You are reading this article, which means you are struggling to figure out its corporate definitions. So, let’s first learn about a CPA firm from an entrepreneur’s perspective.

CPA firm meaning?

Say you are an owner of a growing retail store in Dallas, Texas. You are juggling sales copy, inventory, payroll, customer records, and sales tax. At the closing months or year-end, you need a clear statement that displays what your business does & what you earn. Why? It will help you to make a strategic business expansion plan & also save your retail store from the IRS.

Now the question is, how can you do it? You don’t understand heads of accounts, ledger, trial balance, or financial statements. Okay, you are an educated person; is it not wise to learn accounting to save operating costs?

Accounting is the father of business. Why? It smooths financial communication within business entities by identifying economic activities & removing events. Perhaps your store needs economic product orders that help you allocate funds according to the market demand ratio. I was an accountant, and that is why I can understand your recording challenges, which are not possible to describe in a few lines. Entrepreneurs encounter unpredictable accounting challenges daily that are really a headache.

Now, think about an entity that takes accounting responsibilities on behalf of your retail store. You get a readable business report during the closing period & if you face legal difficulty from the IRS, then they will handle it. Even if you don’t understand any accounting terms, you can ask for clarity. Also, this entity can save you thousands of dollars by identifying unused tax deductions related to retail products. What does this entity should we call? A CPA firm.

Now, let’s clarify the idea of learning accounting to replace CPA firms. I don’t know your background, but assuming you are not from the accounting field. You should learn the basic accounting so that you can understand what is going on with your store. I will not suggest you sit for a CPA exam because a successful business needs diverse leadership skills. A CPA will make you a superman in accounting, but successful startups require marketing, management, finance, and IT, including Accounting. Therefore, hiring a CPA firm would be a better decision from the perspective of startups.

So, in a simple line, any entity that specializes in professional accounting services, namely, auditing, tax preparation, Bookkeeping and financial consulting, is called a CPA firm.

Woo, time-consuming discussion, right? Perhaps you understand CPA firm but are still confused about the difference between a CPA & an accountant. Look, I am not an angel; I am guessing from my professional perspective that could be wrong. However, let’s learn how you can separate a CPA from an accountant.   

What’s the difference between a CPA and an accountant?

There is a minor difference between Accountant & CPA based on tasks. Both can perform all types of accounting work, such as Bookkeeping, preparing financial statements, managing payroll, basic tax preparation, and internal auditing.

However, a CPA can perform external audits & represent clients before the IRS besides the above task, but an Accountant can’t. A CPA holds legal rights to perform accounting tasks, whereas an accountant doesn’t have any legal rights.

Keep in mind that both are important for business. An accountant, often called a private accountant, increases internal business efficiency & a CPA, which is also called a public accountant, can help you with internal & external accounting tasks.

Therefore, a CPA could be an accountant, but an accountant can’t be a CPA based on tasks. Common certification for accountants is CMA from IMA & CPA from AICPA for Public Accountants.

You could run a hospitality or other business. So, asking about what type of industries a CPA firm serves is usual.

What industries do CPA firms serve?

CPA firms could serve any business for financial and accounting guidance.

The table below gives its details.

If you are here by reading my article patiently, then your next question should be about the hiring cost of a CPA.

How much does it cost to hire a CPA firm?

Minimum $150 to maximum $10,000. However, the cost to hire a CPA firm in America depends on some factors such as location, deadline, service complexity, experiences & how you take the services, such as in hourly rate or flat fees.

For example, in metropolitan areas or high-cost-of-living regions, it costs more to hire a CPA firm for higher operating expenses.

The table below will give you an insight into the expensive regions in which to hire a CPA firm.

Now, it is high time to figure out an estimated cost budget to hire a CPA firm for your business.

Note: The more complex your services are, the more CPA firms will charge.

Need clarification between hourly rate & flat fees. Then, read the following questions.

What is the difference between the hourly rate & flat fees of a CPA firm?

The hourly rate is the amount of money spent on total hours worked. For example, you have hired a CPA firm for self-employment tax returns service at the cost of $150 hourly. Imagine, the firm works two hours for tax returns, so you have to pay = 2× $150, i.e., $300.

On the other hand, flat fees are the amount of fixed money that you will pay for a complete service. In the above example, if a CPA firm agrees to complete your full self-employment income tax returns at $350, then it would be a flat fee.

In short, $300 is the total hourly charge & $350 is the flat fee.

I can understand your confusion. It is really a complex matter to understand when I should pick the hourly rate & when flat fees. I hope the next questions will clear up your confusion.

Is the hourly rate better than Flat fees for CPA firm services?

It depends on service types. The hourly rate is economically a better option for uncertain CPA services, but flat fees are better for predictable. The table below will give a better understanding of deciding between hourly rates & flat fees.

Now, the last but most important question you could ask me is, can a CPA firm serve me in international tax laws? Let’s see how they can help you.

Can a CPA firm help with international tax laws?

Yes, a CPA firm helps with international tax laws. They can help your business to navigate complex international tax regulations & cross-border financial strategies.

However, keep in mind that it could vary depending on countries. The table below provides details on their services:

Concluding Thought

What is a CPA firm? My article not only gives you a business definition but also gives a deep understanding so that you can apply it to your business. Whether you are a solopreneur or a complete entrepreneur, you can improve your company’s financial health.

Keep in mind that a CPA firm can save you from time & business risks. Therefore, choosing a perfect CPA firm is crucial for business success.  I hope my article guides you through everything, but if you still have questions, you can ask me in the comments section.

Share this article with your colleagues to increase awareness of CPA firms if you found useful.

Frequently Asked Questions About CPA Firms (FAQ)?

Do I need a CPA firm if I use accounting software?

No, if you are doing basic bookkeeping tasks. Anyone with basic accounting knowledge can do it by knowing software operating skills.

However, if you are looking for professional tax planning and strategic cost planning, then a CPA would be a better option.

How many CPA firms are in the US?

There are 88,652 CPA firms in the US. A recent study conducted by NASBA found that 671,855 actively licensed CPAs are in the United States.  

Some CPA works as an employee, some are independent & some quit or pass CPA exams. Therefore, it is difficult to predict the exact numbers based on CPA practice.

Can a CPA firm help with business growth?

Yes, because a CPA holder has legal power to perform financial, budgeting, and multi-sector performance evaluations.

How can a CPA firm help during tax season?

A CPA firm can help during tax season by preparing exact tax returns, identifying sources of tax deductions, complying with States’ tax laws, and even helping to avoid or minimize tax audits or penalties.   

What does CPA mean?

CPA means Certified Public Accountant, regulated by AICPA (American Institute of Certified Public Accountants).  

How do I verify a CPA’s credentials?

You can verify a CPA’s credentials by checking your state’s “Board of Accountancy,” such as NASBA (the National Association of State Boards of Accountancy). You can also check CPA’s credential on CPAVerify.org, which store data from NASBA & all 55 states’ accountancy data.

Just enter the name or license number & you will get every detail, such as status, issue date, and even any disciplinary actions.

This method is the most reliable and convenient one. CPAVerify.org is the official, free, single-source national database of licensed CPAs in the United States.

Disclaimer

This is not a Sponsored post & the purpose of this article is only education. By reading this, you agree that the information of this blog article is not investing advice. Do your own research before making any financial decision. Therefore, if you lost any money, FinanceIdeas.org will not be liable for this.