What does a CPA do?

"CPA" is a regulated credential, not a job description. CPAs do many different things, and one CPA rarely does all of them well. Knowing the scope helps you ask the right questions and find a fit for what you actually need.

Tax preparation and planning

The most common reason individuals and small businesses hire a CPA. Preparation is the annual return: 1040 for individuals, 1120 for C-corps, 1120-S for S-corps, 1065 for partnerships, 1041 for trusts. Planning is the year-round work: estimated tax payments, retirement contributions, entity restructuring, equity comp timing, S-corp elections, and major transactions. Most of the value sits in the planning side, because the return mostly records decisions already made.

Business advisory and consulting

Entity selection (sole prop, LLC, S-corp, C-corp), pricing decisions, budgeting, cash flow management, debt versus equity, owner compensation, and exit planning. For growing businesses, this often takes the form of a monthly retainer with a CPA or fractional CFO who sits in on operating decisions.

Audit, review, and compilation

Three levels of assurance on financial statements, only the first two of which require a CPA license:

• Audit: reasonable assurance the financials are free of material misstatement. Required for many SBA loans, investor reporting, and some regulatory contexts.
• Review: limited assurance through analytical procedures and inquiry. Less expensive than an audit, often accepted by smaller lenders.
• Compilation: the CPA prepares the statements from management's records without assurance. The lowest level and the cheapest.

IRS representation

CPAs have unlimited rights to represent clients before the IRS in audits, appeals, and collections. With Form 2848 power of attorney, the CPA becomes the IRS's point of contact. For back taxes, audits, or collection matters, this representation is the single most valuable service a CPA offers. Full detail in IRS audit representation and CPA for back taxes.

Financial statement preparation

For small businesses, CPAs prepare monthly or quarterly financial statements (income statement, balance sheet, cash flow statement) from underlying bookkeeping. For larger businesses, this includes GAAP-compliant statements with notes and disclosures suitable for lenders, investors, or potential buyers.

Forensic accounting and litigation support

A specialty area. Forensic CPAs investigate fraud, trace assets in divorce or partnership disputes, value businesses for legal proceedings, and serve as expert witnesses. The Certified in Financial Forensics (CFF) credential identifies CPAs who focus here.

Common specializations

• State and local tax (SALT): multi-state apportionment, nexus, residency.
• International tax: FBAR, FATCA, foreign business interests, expatriate filings.
• Industry-specific: real estate, ecommerce, physicians, crypto, cannabis, nonprofits.
• Transactional: M&A due diligence, deal structuring, post-acquisition integration.
• Estate and trust: Form 706, 1041, generation-skipping, beneficiary planning.

What a CPA doesn't do

• Legal advice. Contracts, estate documents, and litigation require an attorney.
• Investment management. CPAs can advise on tax-efficient investing, but actually managing assets requires a different registration (RIA).
• Insurance sales. Insurance licensing is separate. Some CPAs are also licensed; most are not.

Find a CPA for the specific work you need

Frequently asked questions