What Is a CPA, and What Do They Do?

Certified public accountants (CPAs) are accounting professionals who have passed both the privately issued CPA exam and public licensing requirements. The main service they provide is preparing and filing tax returns, and they can represent clients in audits and disputes as well. Beyond accounting, a CPA can also assist with tasks like auditing financial statements and financial planning, making them a potentially valuable financial professional to have in your arsenal.

Some CPAs also work as financial advisors. If you’re looking for financial advice, SmartAsset’s free tool can match you with up to three financial advisors.

What Is a CPA?

A certified public accountant is an accountant who has been licensed to file public-facing financial statements, such as:

• Tax returns filed on behalf of the client
• Audited financial statements required by law, such as those a company must issue when it seeks investors or buyers
• Financial statements issued to government regulators, such as the SEC or IRS

Only a CPA can file taxes for their client; this is not something a general accountant can typically do. This is why the government requires that CPAs receive a license from the state. The licensure scheme of the CPA is designed to ensure that the accountant who prepares that audit owes loyalty to more than just their employer. A CPA is incentivized to perform a tax audit honestly in order to preserve their own license.

What Services Do CPAs Provide?

Certified public accountants are licensed professionals who can handle a wide range of financial tasks for individuals and organizations. One of their most common roles is preparing and filing tax returns. Unlike general accountants, CPAs are authorized to represent clients before the IRS in audits and disputes. This authority makes them valuable for anyone with complex tax needs or potential legal exposure.

Beyond taxes, CPAs also conduct audits of financial statements. Companies seeking investors, applying for loans or reporting to regulators often need audited financials prepared by a CPA. These audits provide an independent check on the accuracy of a company’s financial position, which builds confidence for outside parties, such as lenders or shareholders.

CPAs can also advise on broader financial planning. Many help businesses design internal controls, manage cash flow and plan for long-term growth. For individuals, CPAs may provide estate planning guidance, retirement projections and advice on how financial decisions affect taxes. Their training covers both compliance and strategy, allowing them to support clients in different aspects of their financial life.

Some CPAs also specialize in forensic accounting, where they investigate fraud, mismanagement or financial disputes. In legal cases, CPAs may serve as expert witnesses.

How CPAs Get Licensed

The credential has two simultaneous components: It is both a professional credential issued by the American Institute of Certified Public Accountants (AICPA) and aprofessional license issued by each individual state. The AICPA writes and distributes the CPA exam. Readers should note that some outlets report that the AICPA requires 150 credit hours of relevant education to take the CPA exam, but this is technically not true. Rather, the AICPA recommends that this is what a candidate will need in order to pass the exam, but only individual states impose actual requirements for CPA candidacy.

While every state uses the AICPA-administered exam as part of its local license requirements to become a CPA, it also has its own requirements for licensure. These typically involve some combination of residency in the state, education requirements and minimum training and/or experience in accounting.

For example, to receive a CPA license in Massachusetts, in addition to passing the CPA exam, you must have:

• A bachelor’s degree
• At least 150 cumulative credit hours of relevant educationA master’s degree in financial accounting from an accredited or accepted college or university, or a graduate or undergraduate degree supplemented by requisite coursework hours in financial accounting, auditing, taxation and management accounting courses as well as business courses (excluding accounting courses)
• One year of experience at a public firm or three years at a non-public firm that includes no fewer than 2,000 hours, with demonstrated competency in providing services or advice using accounting attestation, compilation, management advisory, financial advisory, tax and consulting skills

Every jurisdiction also requires that CPAs complete a certain number of continuing education hours. This is often measured every two years, and each state has its own requirements. For a full list of each state’s CPA licensing requirements, visit  the AICPA’s website¹.

CPA Exam Costs

The CPA exam usually costs about $1,400 in total. Each of the four sections generally costs between $200 and $300, though fees vary by state. International candidates must also pay an additional fee per section. On top of that, registration fees range from $40 to $200 per section, or $160 to $800 overall, depending on how many sections you plan to take within six months. Applicants also need to pay an initial application fee to qualify for the exam.

In addition to exam fees, many candidates purchase review courses to prepare. These courses can cost between $2,000 and $5,000, depending on the provider. If a candidate needs to retake the exam or extend access to prep materials, those costs can increase.

Candidates also face costs beyond the exam itself. The CPA ethics exam costs about $250 to $320, depending on the state. Each state also charges a licensing fee for new CPAs, which adds to the total expense.

Once licensed, CPAs must complete continuing education each year to keep their certification active. These courses come with their own costs, which vary depending on the provider and program chosen. Over time, ongoing education can add significantly to the overall cost of maintaining a CPA license.

CPAs vs. Other Tax Professionals

To fully understand a CPA, you have to know that accounting contains many different skill levels. Generally speaking the field has three (very broad) categories of professionals: CPAs, bookkeepers/office managers and general accountants. Here’s a look at how these three categories within the accounting world compare.

CPAs vs. Bookkeepers/Office Managers

A bookkeeper manages financial records for an individual or organization. They record purchases, sales, payments received, debts and other obligations. They are also responsible for keeping track of the organization’s cash holdings, making any payments and collecting any payments.

Essentially, a bookkeeper deals with cash flow. Their job does not deal with issues of law or complex financial arrangements. While experience and education will help someone do this job better, anyone can be a bookkeeper. There are no legal requirements to do this job.

CPAs vs. General Accountants

An accountant and a CPA are not necessarily the same thing. General accountants typically handle advanced financial concerns for their clients. This can include preparation of financial statements and outlooks, advice regarding regulatory compliance and financial projections. An accountant will also often help a client manage their books, which helps the organization or individual understand their cash flow and overall financial position.

A general accountant will also typically prepare taxes—in fact, this is one of their most common duties. However, outside of exceptional circumstances, a general accountant cannot file their client’s taxes for them. Unlike a CPA, a general accountant can only handle internal advising for a client. They cannot conduct a public-facing audit, manage any government-facing concerns or file any financial documents with regulators.

While this may differ in your specific jurisdiction, as a general rule, there are no legal requirements to work as a general accountant. This professional will typically have a bachelor’s degree, usually in accounting or a related field.

Bottom Line

The CPA designation shows a degree of skill and training beyond what a general accountant has achieved. CPAs combine technical accounting knowledge with legal authority. They are not just bookkeepers or tax preparers; they are licensed professionals who can represent clients, sign off on official financial statements and provide guidance that affects both immediate finances and long-term planning.

Tax Planning Tips

• If you have concerns about both your finances and taxes, speaking with a financial advisor who’s also a CPA might benefit you. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Many people could use advice from an accountant from time to time. Even if you fill out a basic 1040 and trust your company’s 401k, it may be worth talking to someone about your spending habits and how you could better achieve your goals.

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