I’m a CPA, but I don’t do my own taxes. I have a CPA who files my taxes. Few business owners know this, but there are different types of CPAs. Hiring the wrong type can prevent you from getting insight into your business.
First, what’s a CPA? A CPA is a certified public accountant. We’re licensed by the state, and we have to take an exam to get our license and take continuing education courses each year to maintain it.
There are two types of CPAs: tax CPAs and financial CPAs. Picking the right one is important because they offer two different kinds of insight.
Most people are familiar with tax CPAs. They help you stay compliant with tax filings. They can do tax planning and strategy. They’re good to have on your team, but their objective is completely different than a financial CPA.
A financial CPA specializes in financial reporting and GAAP accounting, providing insight into your business’s financial performance. They’re the type of CPA your investors are looking for — see your investor agreements, they usually specify GAAP financial statements.
A financial CPA can also help with financial planning and analysis, often referred to as FP&A. We can help you build out a cash forecast model for your business.
You can have a CPA who does both, but it’s really hard. There are too many tax rules and financial reporting rules. It is rare to find a CPA who does both well.
Before you hire a CPA for your business, ask what type of CPA they are so you know exactly how they can help you.