There are almost 700,000 licensed CPAs in the United States. Work is abundant in this career, meaning the demand is stable. The industry is also seeing fast yet steady growth.
However, have you ever wondered what does a CPA do? Are they doing work behind their desks and calculating taxes?
The public perception of CPAs has some truth to it. After all, they provide a lot of tax services. However, they are more crucial to businesses than you think.
A certified public accountant offers more than filing tax returns. Keep on reading to learn more about their specializations.
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What Does a CPA Do?
A certified public accountant earned a designation as a licensed accounting professional. They met the required education, experience, and examination to obtain a license.
The Board of Accountancy of each state provides the license. They help enforce professional standards across the accounting industry.
Audits and Reviews
CPAs perform audits most of the time. They review the books, adhering to the Generally Accepted Accounting Principles (GAAP).
Their audits are not the same as the IRS, though. Companies may hire a CPA to avoid catching the attention of the federal agency.
CPAs make sure the financial statements are up to date. They look for inaccuracies in financial records, expenses, and savings.
A CPA audit is the highest level of financial statement service, but some companies may prefer a review instead. It’s a lesser form of audit and thus costs cheaper.
Taxation Services
One of the primary service areas of certified public accountants is taxation. They may prepare reports and tax returns for businesses and individuals alike. They do the following tasks:
- Analyze financial records for tax purposes
- Compute total taxes
- File forms for claiming deductions
- Ensure clients make on-time payments
CPAs also sign tax returns and represent clients before the IRS during audits. These are the primary factors that differentiate licensed professionals from accountants.
The federal agency classifies an accountant as an “unenrolled preparer.” Even if they sign your tax return, they have no standing with the IRS.
Management and Consulting
CPA jobs go beyond on-call services. Businesses can also involve a certified public accountant in their day-to-day operations.
A CPA can help supervise or manage financial operations, such as the following:
- Cash management
- Financial planning
- Budgeting
- Preparing financial statements
- Coordinate risk management
- Provide investment advice
Licensed accounting professionals may analyze the financial documents of businesses. Doing so, they can recommend the next steps for improving operations. They can also provide advice for lowering tax liabilities or transferring assets.
Public accountants may help businesses manage their accounts and identify discrepancies. At the same time, they help individuals strategize for long-term goals, such as retirement.
Forensic and Litigation Accounting
Public accountants may specialize in forensic accounting. As the name suggests, this career path focuses on uncovering criminal conduct through audits and investigations.
A CPA looks for evidence of embezzlement, tax evasion, fraud, and other financial crimes. They go through the books or perform a detailed analysis that an attorney can present in court.
Experienced professionals may also serve as a witness and provide testimony. Some examples of where their skills are essential are below:
- Divorce settlements
- Bankruptcy proceedings
- Business financial disputes
Whenever necessary, forensic CPAs may also provide accounting expertise for law enforcement. Should a business partner suspect foul play, they may hire a professional to get to its root.
Career Paths for CPAs
Certified public accountants have many specialization options. They have work opportunities all year-round beyond tax season.
Those in accounting careers may also pursue CPA licensure to gain new skills and provide additional services. The most common ones include financial advising and forensic accounting. A license also boosts their credibility and opens new opportunities.
Below are some examples of CPA careers you can take.
Finance CPAs
Certified public accountants specializing in finance provide planning services and strategic financial recommendations. They can assess the financial condition of assets or businesses to provide investment advice.
In the financial sector, CPAs can offer cash management services. They can provide budgeting advice by reviewing the books of businesses.
Also read: Reasons Why Online Cash Management is Important in Today’s World
Tax CPAs
These professionals prepare tax returns for both individuals and businesses, file appropriate claims, and so on.
Tax CPAs have deep knowledge of tax. It allows them to advise on mortgage tax deductions, child expenses, and other related topics. Some specializations include rental property, business expenses, and investment income.
People wanting to specialize in tax do not need to take more exams. A CPA already met the requirements of the agency bypassing the Uniform Exam. It means a CPA can represent clients before the IRS.
Government CPAs
A CPA can also pursue a job with the IRS, General Accounting Service, or even the FBI. State and local government units employ licensed accountants.
A public accountant in a government office holds the usual roles. They conduct audits, manage government finance, and review financial statements.
Nonprofit
CPAs may also choose to use their skills for nonprofit organizations. The jobs in this sector are nothing different, as well. Still, accountants must be aware of tax laws concerning NPOs, which makes it a separate field.
Self-Employed
Around 8% of public accountants work for themselves. They work independently, offering services to both individuals and businesses.
Licensed professionals choose how to get paid – hourly or per project. They may provide one or more of the following services:
- File tax returns
- Offer long-term financial advice
- Provide savings and budgeting advice
- Help with bookkeeping
Like employed CPAs, freelancers also have specializations. People looking to hire them must ensure the professional can handle their specific issue. Taxfyle helps both customer and accountants find their niche.
Learn More About CPA as a Career
What’s next after learning what does a CPA do? If you want to pursue this career path, you must research how to become one. Regardless of your goal, never stop learning new things related to your chosen profession.
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