Running a creative business can be insanely complex, from finding clients, to delivering, to billing. But this is especially true when small business owners have to deal with all the complex financial stuff, from accounting to taxes.

This is where a Certified Public Accountant (CPA) can be incredibly helpful. A CPA is a licensed accounting professional who can help individuals and businesses navigate complex financial matters, save money, and stay compliant with regulations.

But when exactly do you need a CPA? While they can be very helpful, they may not be necessary for every business. In this guide, we’ll break down what a CPA does, when to hire one, and how to find the best option for your needs.

Fast Facts About CPAs

• Accountants must pass the Uniform CPA Exam and meet state-specific education and experience criteria to become a CPA.

• CPAs are required to adhere to a strict code of ethics, ensuring transparency and trust. They must also pass the ethics portion of the CPA exam!

• CPAs work in various fields, including taxation, auditing, forensic accounting, bookkeeping, financial consulting business consulting, and more.

• Businesses using CPAs often benefit from tax savings, improved compliance, streamlined accounting practices, and better financial planning.

What is a Certified Public Accountant?

A CPA, or Certified Public Accountant, is a licensed accounting professional who has met stringent educational, experience, and examination requirements in the United States. They are considered highly qualified and trusted advisors in the field of accounting and finance.

Certified Public Accountants must complete 150 semester hours of education, which generally means earning a Bachelor's degree in accounting or higher. They must complete all sections of the CPA exam: Financial Accounting and Reporting (FAR), Regulation (REG), Auditing and Attestation (AUD), Taxation (TAX), and Ethics. The topics covered in this exam include..

• Financial Reporting

• Balance Sheet and Income Statement Accounts

• Financial Transactions

• Federal Taxation of Entities, Individuals, Nonprofits, and Property Transactions

• Business Law

• Professional Responsibilities and Federal Tax Procedures

• Assessing Risk and Developing a Planned Response

• Performing Audit Procedures and Obtaining Evidence

• Ethics, Professional Responsibilities, and General Accounting Principles

• Business Analysis

• Financial Security, Confidentiality, and Privacy

Because of their advanced training, CPAs are authorized to perform specialized tasks like preparing and signing tax returns on behalf of clients, auditing financial statements, representing clients before the IRS, and providing attestation services. They are recognized as the highest level of accounting professionals in the United States, and they are generally respected worldwide for their knowledge and expertise.

What Do CPAs Do?

CPAs can offer a wide range of financial services, including accounting, tax, auditing, bookkeeping, advisory services, forensic accounting services, and more, depending on their specialization. Here are the most common roles:

Tax Accountants

One of the most common types of CPA is a tax accountant. These tax experts help individuals and businesses optimize their taxes, identify and maximize tax deductions and credits to minimize liability, handle IRS audits and disputes, provide tax planning strategies, calculate and pay estimated taxes, and prepare & file tax returns on behalf of clients.

A CPA tax accountant could be right for you if your taxes are becoming too complicated to handle on your own, or if you feel like you aren't fully optimizing your tax situation to maximize savings. Hiring a tax accountant could also be necessary if you perform various freelance services, have multiple income streams (freelancing, selling products, hosting events, etc), or are running your own creative business.

Auditors

CPAs who specialize in auditing have the job of closely examining financial records to ensure accuracy and compliance. Typically, they compare these financial records to any real-world evidence that supports the financial information, like inventory storage, real estate appraisal records, purchase receipts, invoices sent out, etc. There are several different types of auditors, such as..

• Internal Auditors, which is where a company hires auditors to assess and improve its own financial controls. Essentially every large, publicly traded corporation utilizes internal auditors in some way.

• External Auditors, which is when an outside entity, such as a regulatory body (like the IRS or SEC) or an accounting firm, provides independent reviews of financial information for both investors and regulators. All public companies are audited by external auditors at least annually.

• Forensic Accounting, which is when accountants work to investigate potential financial fraud or embezzlement. This could happen during the process of a lawsuit or regulatory investigation.

It's typically rare for small businesses to need to hire an auditor. However, if your business needs financial verification for investors, lenders, or legal compliance, hiring a CPA to audit your financials is important.

Accountants and Bookkeepers

One of the most common types of CPA are those who handle accounting and/or bookkeeping for their clients. These CPAs keep track of financial records, manage day-to-day transactions, review financial statements, and ensure compliance with GAAP (Generally Accepted Accounting Principles). They may even offer strategic financial advice for some clients.

A Certified Public Accountant (CPA) is a highly qualified accounting professional who is licensed by a state board and who has passed the CPA Exam.

How to Find a CPA

Choosing the right CPA for you and your business is important. You'll need to find someone who you can work with easily, who you understand and get along with, and most importantly, who you can trust. It can also be helpful to find a CPA in your town, so you can visit them in person if necessary. Here’s how to find a great CPA:

1. Ask for Referrals: Get recommendations from trusted individuals in your network: other creatives who have been where you are, fellow business owners, or your financial advisor or attorney (if you have one).

2. Check the CPA's Credentials: Verify their license on your state board of accountancy website (if they're located in your state), or with the CPA's state board (if they're based somewhere else).

3. Review Experience: Look for CPAs with expertise in your industry (e.g., photography, web design, architecture, music, etc).

4. Interview Candidates: Ask about fees, communication style, and availability.

5. Read Reviews: Look up reviews on Google or TrustPilot to get an understanding of the experience clients have had.

6. Use Online Directories: Platforms like CPAVerify.org or the AICPA (American Institute of Certified Public Accountants) directory can help.

7. Sign Up For Our CPA Partner Program: We're currently building out our CPA Partner Program to help creatives find the right accountant for their business. Click here to sign up, and we'll let you know when CPAs get officially added to the program.

How Much Does a CPA Cost?

CPA fees vary based on several factors, including your location, the type and complexity of your needs, your CPA's experience and reputation, and more. We break down common costs below, but it's important to note that not all of these will apply to all accountants, as different CPAs and CPA firms structure their fees differently.

• Hourly Rates: $150–$400+ per hour. This is generally higher in major cities and for popular accountants.

• Flat Fees: $500–$5,000 for tax returns, depending on complexity.

• Retainer Agreements: Monthly fees ranging from $200–$1,000+ for ongoing services, depending on your needs.

Action item: Weigh the cost against potential tax savings and financial benefits. Hiring a CPA might sound expensive, but it can often pay for itself over time.

Difference Between CPA and EA

If you've heard of Enrolled Agents (EAs) before, then you might be asking, "What's the difference between a CPA and an EA?" First, let's explain what an EA is. An Enrolled Agent (EA) is a federally licensed tax professional authorized by the IRS to represent taxpayers in audits, appeals, and collections. EAs receive less financial education and a lesser certification than CPAs, and they specialize exclusively in taxation. Similarly to CPAs, however, EAs must pass a rigorous IRS exam or have relevant experience as a former IRS employee.

When do you choose a CPA or an EA? If you need auditing, business consulting, or complex financial services, a CPA is generally the better choice. CPAs are typically more trusted for their tax, auditing, and accounting expertise. EAs are a great choice for those looking to save money and receive expert advice on complex tax issues.

Conclusion

Hiring a CPA allows you to improve your financial strategy while staying creative. A good CPA could help save you money through smart tax planning, ensure compliance to avoid penalties, free up your time so you can focus on business growth, manage your bookkeeping and accounting, advise you on business decisions, and more. Whether you're a startup, freelancer, or established business, a CPA can provide expert financial guidance when you need it most. Check out our CPA Partner Program to find the perfect CPA for your creative business.

Frequently Asked Questions (FAQs)

When should a small business hire a CPA?

A small business should hire a CPA when facing complex tax issues, rapid growth, audits, financial statement preparation needs, complex accounting needs, or financial planning needs.

Can a CPA help with IRS audits?

Yes! CPAs are authorized to represent you before the IRS, negotiate settlements, and resolve disputes. You can also use Form 8821 (Tax Information Authorization) or Form 2848 (Power of Attorney and Declaration of Representative) to give your CPA an even greater ability to represent and support you in tax and financial matters.

Is a CPA worth it for personal taxes?

If you have multiple income sources, investments, or major life changes (like buying a home), a CPA can optimize your tax strategy, maximize your deductions as much as possible, and keep you out of trouble with the IRS. They may also save you money on taxes.

What’s the difference between an accountant and a CPA?

All CPAs are accountants, but not all accountants are CPAs. CPAs have higher qualifications, licensing, and broader legal authority. They are expressly recognized by federal and state governments as certified accounting experts who have passed the rigorous CPA examination.

How do I verify a CPA’s license?

Check your state board of accountancy website or use CPAVerify.org to confirm their license status. If the CPA is located in another state, check that state's board of accountancy instead. Google this: '(STATE) CPA lookup' or '(STATE) board of accountancy CPA lookup'.

Disclaimer: the information provided in this article is for educational purposes only and does not constitute tax, accounting, investing, legal, or financial advice. The information in this article does not take into account your unique financial or business situation or goals, and YCCPA cannot be responsible for reader's financial decision-making. YCCPA's goal is to educate and support you on your creative business journey.

Written by David Kindness, CPA

David is a CPA (Certified Public Accountant) and professional photographer, videographer, and designer based in San Diego, California. Learn more.

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