What Is a CPA and Why Is It Key for Businesses in the U.S.?

If you're starting a company in the United States, you've probably come across the acronym CPA. But what does it actually mean, and why is it so important for businesses like LLCs, CORPs, or S-Corps?

In this article, we explain what a CPA is, what their role involves, and why having one can make a strategic difference in the growth and tax compliance of your business.

What Is a CPA?

A CPA (Certified Public Accountant) is an accounting professional who has earned a state license after meeting specific education and experience requirements and passing the rigorous Uniform CPA Examination.

In other words, a CPA is not just any accountant. They are recognized experts by the U.S. legal and tax system, with the authority to perform critical tasks such as audits, sign financial statements, file complex tax returns, and represent clients before the IRS.

What Does a CPA Do?

While the work of a CPA can vary by company and industry, here are some of their most common responsibilities:

1. Tax Filing

The U.S. tax code is complex and constantly evolving. A CPA helps prepare, file, and optimize both corporate and individual tax returns, minimizing risk and maximizing tax benefits.

2. Signing Financial Statements

Companies seeking investors, funding, or internal structure often need financial statements reviewed or audited by a CPA. Their signature not only certifies accuracy but also builds trust with third parties.

3. Issuing Comfort Letters

When applying for credit, banks may request a comfort letter signed by a CPA to validate the company’s financial information. This is key for securing financing.

4. Audits and Reviews

A CPA can conduct formal financial audits—either by legal obligation or strategic choice—ensuring compliance with standards such as GAAP or IFRS.

5. IRS Representation

Alongside attorneys and Enrolled Agents, CPAs are among the few professionals authorized to legally represent taxpayers before the Internal Revenue Service (IRS).

When Does Your Business Need a CPA?

Not all businesses are legally required to hire a CPA, but in many cases, it's highly advisable or even essential. Here are common scenarios where a CPA is necessary:

• Filing complex corporate tax returns
• Applying for loans that require a CPA comfort letter
• Presenting financials to third parties
• Going through due diligence or acquisition processes
• Responding to IRS audits or notices
• Developing long-term tax planning strategies

CPA vs. Accountant: What’s the Difference?

All CPAs are accountants, but not all accountants are CPAs. While any accounting graduate can prepare basic financial reports, only a CPA can legally perform specific tasks under U.S. law, such as:

• Signing external audits
• Issuing certified financial documents
• Representing a business before the IRS

This makes CPAs essential for businesses aiming to scale and operate formally in the U.S.

Benefits of Having a CPA on Your Team

Hiring a CPA isn’t just about ticking a regulatory box—it can truly boost your company’s financial health and credibility. Here are some clear advantages:

1. Expert Advice

CPAs provide specialized tax and financial guidance to help you structure your business efficiently.

2. Regulatory Compliance

They ensure compliance with federal and state regulations, helping you avoid costly penalties or reporting errors.

3. Credibility with Third Parties

Reports signed by a CPA carry legal and reputational weight, whether you're dealing with investors or financial institutions.

4. Legal Support

In case of disputes or audits, a CPA can act as a qualified expert witness, defending your financial decisions with credibility.

How to Become a CPA in the United States

To earn a CPA license, a candidate must meet what is known as the "Three Es":

• Education: At least 150 semester hours of university-level education (equivalent to a bachelor’s plus some graduate coursework).
• Experience: Minimum of one year of supervised practical experience in public or private accounting.
• Examination: Passing the Uniform CPA Exam, which includes four demanding sections: Auditing, Financial Accounting, Regulation (tax), and Business Environment.

Each state has its own additional requirements, so it's important to check local regulations.

Conclusion

A CPA is more than just an accountant—they are a strategic ally for your U.S.-based business, essential for legal compliance, financial strength, and credibility. If you're forming an LLC, Corp, or S-Corp, consider making a CPA part of your core team.

Starting a business in the U.S. and need reliable accounting support?
At Openbiz, we connect you with Certified Public Accountants who understand the needs of international entrepreneurs and businesses. Let’s talk!

FAQs About CPAs

What does CPA stand for?
CPA stands for Certified Public Accountant.

Are all accountants in the U.S. CPAs?
No. Only those who meet state licensing requirements and pass the national exam can use the CPA designation.

When is a CPA legally required?
A CPA is required for audits, issuing certified financial statements, comfort letters, and IRS representation.

How much does a CPA earn in the U.S.?
Salaries vary by state and experience, but the average annual income ranges from $90,000 to $150,000 USD.

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