What Exactly is a CPA Firm?
You might here some offices called 'tax offices' or 'tax firms', or 'accounting firms' or 'CPA firms' or any number of other names. And while often these are used interchangeable to describe the same thing, there is actually a difference.
CPA Firm / Accounting Firm
Calling your business a 'CPA firm' specifically means it is owned exclusively by CPAs. If even just one of the owners of the firm holds a different license, such as an EA license or attorney's license, then the business cannot be called a 'CPA firm'. This is typically the only difference between an accounting firm and a CPA firm, that one or more of the owners have different licenses. However, while most accounting firms have a CPA on staff or as a partner, not all do. Be sure to ask about their licensing if you are specifically needing a CPA.
If an accounting firm lacks a CPA, generally the only things they cannot provide are reviewed or audited financial statements. A tax attorney or enrolled agent is usually otherwise comparable to a CPA, and in their own areas have certain specialties.
Tax Offices / Tax Firms
Within the world of accounting, there is included 'taxation'. Taxation includes tax preparation of individual and business taxes as well as other entity types, IRS problem solving, and tax planning. Typically, a tax office only provides tax preparation, and tends to be limited in the types of preparation it can provide. Licensed Enrolled Agents or Certified Public Accountants are required for entity tax returns like partnerships, non-profits, and corporations, which not all tax offices have. Typically when the establishment refers to itself as a 'tax firm' over using the word 'office' they're adding a level of prestige that usually means they hold some kind of professional license and can do more than just basic tax prep. A tax firm usually offers tax planning and can help with solving IRS problems.
So, Do I Need the CPA Firm Then?
If you need reviewed or audited financials, you don't need a CPA firm specifically, you just need an accounting firm or CPA firm with a CPA who is familiar with audited and reviewed financial statements. With us, Ken Germany, CPA regularly prepares these types of statements and is able to help.
The Nuts and Bolts of It
In our opinion, any firm that lacks having both an EA and CPA on staff cannot provide the best service to its clients. Enrolled Agents special more in taxation, where CPAs focus more on general accounting. We believe it is important to have both sides of the same coin, at least one Enrolled Agent and one Certified Public Accountant, for a firm to truly be a full-service accounting firm. To find a firm with an Enrolled Agent on staff, search the IRS directory for local enrolled agents.
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Want to learn more about the differences between an EA and a CPA? We have a great article for that.