The Layman's Guide To Hiring A CPA
The world of accounting may seem cryptic and foreign to the average person, so it can be hard to know when exactly you need to hire a professional to help with finances. Here are a few answers to some common CPA questions to help guide you through the hiring process.
What is a CPA?
A certified public accountant is the highest standard of achievement within the accounting profession. A CPA will advise their clients on any number of financial issues ranging from tax filing to business investment to estate planning.
Qualifying to become a CPA is an extensive, challenging process. First the individual must have a bachelor's degree, typically in accounting or finance. There are also a number of classes that must be taken, depending on what state you're applying in, before you can qualify for certification. In general, states ask that the individual have taken at least 150 semester credits from an accredited university, as well as a specified number of courses in both accounting and business. If you meet these qualifications, you then must pass 4 exams within 18 months. Only half of the people who qualify for these exams will end up passing them, so it is a very competitive field.
When do I need a CPA?
The two main reasons people choose to hire a CPA are:
- For taxes – Filing your taxes is a frustrating process, and many may feel like they aren't receiving what they're rightfully owed. CPAs will help you receive the best possible tax return available. In a CBS case study, they found that the CPA was able to raise the tax refund by a couple hundred bucks compared to tax software. And even though the tax software cost less than the CPA, there were still more savings with the CPA.
- For Business Planning – Whether you're an individual or a business owner, CPAs can help you map out the best financial course you should take to become more profitable. This may include helping you make investments or set up savings accounts. For businesses, CPAs may help diversify their financial portfolio and determine profitable new products.
What should I look for in a CPA?
Because all CPAs need to be certified, many will have the same qualifications. What may vary, however, is what they are known for and what they charge. Some CPAs may charge a few hundred dollars for their services, while others charge thousands. You must find one that is feasible for you, taking into account that many charge by the hour.
Another way to save money is by finding a CPA you're compatible with and sticking with them. When you have a relationship with your CPA, they will be able to more easily scan through your financial records and know if anything is amiss. If you find a new financial planner each year, they may not have all of the pertinent knowledge to help you make the wisest investment of receive the largest tax refund.