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 by a state to perform such tasks 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

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.

When May You Need to Work With a CPA?

You may need to work with a CPA when your tax situation stops being straightforward. This often happens when your income comes from more than one source, your filing status changes or you experience a major financial event such as selling a business, exercising stock options or inheriting assets. At that point, filing correctly matters as much as filing on time.

The decisions involved are often transactional and time-sensitive. You may need to decide how to report income from self-employment, rental properties or multiple states, whether to recognize capital gains now or later, or how to classify expenses to reduce taxable income. These are not abstract planning choices; they affect what you owe for the current tax year and whether penalties or interest apply.

A CPA helps you evaluate how the tax code applies to your specific facts. That includes reviewing source documents, determining which income is taxable and when, identifying deductions or credits you qualify for and confirming that reporting aligns with IRS rules. A CPA also checks whether elections or forms need to be filed by specific deadlines to preserve future options.

The value of a CPA increases when mistakes are costly to unwind. Errors involving depreciation, carryforwards, net operating losses or multi-year transactions can affect more than one return. Fixing them later often requires amended filings, correspondence with the IRS or professional representation during an audit.

You might ask targeted questions such as: How should this income be reported to avoid reclassification? Does taking this deduction now limit future tax benefits? What records do I need to support this position if questioned? How long should I retain documentation for this transaction? These are compliance questions with concrete consequences.

Working with a CPA becomes most relevant when accuracy, timing and documentation intersect. As your finances grow more complex, the downside of misreporting increases, while the benefit of getting it right compounds over time through lower audit risk, cleaner records and fewer corrective filings.

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 a professional 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 website ¹ .

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.

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.

How to Find a CPA

One of the most common ways to find a certified public accountant is by asking for recommendations from people you trust. Friends, family members or colleagues who have experience working with accountants may be able to refer you to a qualified professional. Personal referrals can provide insight into an accountant’s communication style, reliability and overall quality of service.

You can also find CPAs through professional directories maintained by accounting organizations. For example, the American Institute of Certified Public Accountants offers tools that allow users to search for licensed CPAs by location and specialty. These directories can help you identify professionals who provide services such as tax preparation, auditing or financial consulting.

CPAs may specialize in different areas of accounting and finance, such as individual tax preparation, business accounting, auditing or financial planning. When evaluating potential candidates, consider asking about their experience and the types of clients they typically work with. Choosing a CPA whose expertise aligns with your needs can help ensure you receive appropriate financial guidance.

Bottom Line

A CPA is a licensed accounting professional who provides services such as tax preparation, financial reporting, auditing and business consulting. Because CPAs must meet education, examination and licensing requirements, they are often trusted advisors for individuals and businesses managing complex financial matters. Whether you need help with taxes, financial planning or business accounting, working with a CPA can provide professional expertise and guidance.

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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