If you find yourself asking, "What does a CPA do?" you'll want to keep reading. First of all, CPA stands for "certified public accountant." These are accounting professionals who have passed the Uniform Certified Public Accountant Examination in addition to any state education requirements. In many states, this requirement includes 150 hours of college credit.
So What Does a CPA Do?When the average person thinks of a CPA, he or she usually associates it with accountants who do taxes. In reality, the scope of the CPA profession is much broader, covering every industry and trade. Here are some examples of what CPAs do:
Assurance and attestation services - As part of these services, CPAs commonly audit companies' financial statements (both public and private). In other words, the CPA is providing the public, investors, and whoever else is relying upon the company's financial statements, confidence and assurance that the financial statements fairly represent the company's financial condition. It's similar to the reason why you often need a doctor's physical before you can get health insurance - you're providing information to reduce the risk that the insurance company is taking.
- Retirement Planning - The thought of putting away money today so that you can have it (hopefully increased in value) when you retire is daunting to a lot of people. Where should I invest it? How can I minimize the taxes I'll need to pay later? These are all questions a CPA can answer when doing retirement planning.
- Income Taxes - This is what CPAs are commonly known for doing - your tax return. However, this is not the only area of tax that CPAs focus in. Many CPAs work at large public accounting firms and prepare taxes for multinational corporations, large partnerships, and high net worth individuals. In addition to tax compliance, there is a lot of consulting that occurs with clients. For example, a CPA might help a corporation plan which countries it should build its factories in, in order to minimize its tax liability.
Estate Planning - Although no one likes to think about death, a CPA can help a person plan what to do with their assets when they die, in order to minimize the tax impact. After all, even after you're dead (pardon the morbid comment), the government still wants to tax your assets. A CPA can structure your estate in such a way that taxes are minimized, leaving more wealth for your beneficiaries.