Like most products and services, accountants aren’t created equal. The title of Chartered Professional Accountant (CPA) comes only after the completion of a rigorous set of examinations. In contrast, non-certified accountants require relatively little education to open up shop. Some small business owners may assume they need a CPA to run the books, while others believe they can get away with the non-certified variety. Depending upon your business needs and circumstances, both could be correct. The complexity of your business could be a significant factor in determining which type of accountant to hire, but other factors such as cost should be considered.
CPAs Are Typically Held to a Higher Standard
Most CPA candidates need to obtain their accounting degrees before even sitting the CPA exam. The exam itself consists of a total of 14 hours of testing split over four different parts. Candidates must pass all four sections within 18 months and meet certain continuing education requirements to earn the designation. This type of educational background tends to enhance the quality of financial analysis that comes with hiring a CPA. While many non-certified accountants are just as capable as CPAs, generally speaking, going with a non-CPA accountant can involve more risk of poorer quality work. CPAs also tend to be more familiar with and knowledgeable of a broader range of business needs.
CPAs Tend to Be More Expensive
As you can probably imagine, using a CPA can be much more costly. A CPA can cost as much as 30% more than a non-certified accountant. Many small businesses don’t have huge budgets, so if you’re just starting out or are trying to get through some leaner times, hiring a non-CPA accountant can be a more cost-effective method of managing your company’s finances.
Do You Need Reviewed or Audited Financial Statements?
Financial statements prepared by accountants come in three types compiled, reviewed, and audited. Compiled financial statements, which are developed with data directly from the company and go through no formal review or verification, can be done by any accountant. Only CPAs can prepare reviewed or audited financial statements.
Many small businesses only need compiled financial statements. If you need to apply for a business loan or have shareholders, a more thorough audited set of financial statements may be required.
Assess the Complexity of Your Business
CPAs often cost more, but can be more than worth it if you have a larger or more complex business. CPAs generally tend to be more qualified to provide business advisory services and tax planning, and can offer a more comprehensive set of business services. A smaller business with a simpler structure may only need a prepared set of financial statements in the beginning. If this is the case, a non-certified accountant will likely serve most of your needs. If you think your business might be entering a new phase of growth or expansion, and anticipate needing a greater level of attention from your accountant, a visit with a CPA might be a wise move.