SMB Owners: Do You Need a CPA?

It’s very likely you’ve been told before to go find yourself a CPA. In fact, you’ve probably read this advice in numerous articles, ones that were written by supposed experts in business and finance. But should you? Do you really need to hire a CPA for your business?

You might be surprised to learn that many accountants aren’t CPAs, and, in actuality, your company would likely benefit most from the services of an accountant who specializes in small business accounting rather than simply having a CPA designation. Moreover, many folks use the terms CPA and accountant interchangeably, which causes confusion all around. Keep reading to find out more.

What Exactly is a CPA Anyway?

As you probably already know, CPA stands for Certified Public Accountant. To become a licensed CPA, one must take upwards of 150 hours of academic courses (the required number of hours varies by state but generally comes to around four to six years in total) either at an undergraduate or graduate level and complete one to two years of relevant work experience, in addition to passing a challenging four-part exam that usually takes about 16 hours to finish. And then to maintain the license, CPAs must complete about 20 to 40 hours of continuing education credits every year.

Accountants who are not certified as CPAs, on the other hand, usually study accounting for two to four years. They also frequently specialize in a particular area like forensic, tax, or management accounting.

What Type of Accountant Should You Choose?

Despite the constant refrain that you should hire a CPA, if you’re just starting out or in the early stages of your business, a good accountant is likely all your business really needs.

When is it necessary to hire a CPA? In these situations:

• Your non-profit has revenue that exceeds $750K and requires a financial review or an audit. Only a CPA can conduct a financial review or audit. (Note that compliance requirements for these vary by state.)

• Your business is an S-Corp, C-Corp, or partnership that issues dividends, stock, or distributions. Read more about the different types of business structures here.

• Your business is ready to sell stock or go public.

• Your business is profitable and its gross revenue exceeds $2M. In this case, the financial management of your company has likely become complex, and utilizing a CPA will help you save on taxes, structure employee benefits, and pinpoint investment opportunities. (Check out this post for more information about choosing the right tax preparer for your business.)

A Final Word From Tuesday P Brooks Owner of AJOY

This is good news! You can certainly consider hiring a reputable accountant who isn’t CPA licensed if your small business doesn’t fall into any of the categories mentioned above. More than likely they will do a splendid job of supporting the growth of your business, which is exactly what you need. So the next time you hear someone saying that you really need to hire a CPA, rest easy in the knowledge that they might not know what’s right for your business – but you do! Until next time!