When choosing a professional to help you file your income taxes, whether you’re an individual or have a small business, choosing the tax accountant with the right credentials is key. When flipping through the phone book or browsing through online business listings, you are likely to come across a veritable alphabet soup of acronyms like CPA, CFA, CFP, CMA, ABA, and others. In fact, there are more than 46 different acronyms that relate to certifications in accounting, finance, and business. Of these accountant credentials, you are most likely to hold a CPA, ABA, or CFP. Here’s what each one means:
Certified Public Accountants (CPA)
CPAs are best known for preparing taxes, but they can also advise you on how to structure your small business and set up an accounting system, as well as help you plan for retirement, college, and estate planning. CPAs must undergo rigorous testing and continuing education to maintain their licenses. This means that accountants who are CPAs are highly qualified with up-to-date knowledge of the latest tax laws in their local area. That means a CPA operating out of Seattle or Bellevue must be well-versed in both federal tax law and Washington state tax law.
Certified Business Accountant (ABA)
An ABA is an accountant who has received additional training and has passed the Accreditation Council for Accounting and Taxation (ACAT) exam. This is a voluntary accreditation and means that this accountant specializes in accounting services for individuals and small and medium-sized businesses.
Certified Financial Planner (CFP)
A CFP can help you with your investment goals. CFPs are a good option if you are planning for the future, as they can offer a wide range of financial advice. So which financial professional should you choose? It all depends. Are you looking to file your individual income tax? Are you starting a small business? Or are you trying to build a reliable investment portfolio for the next 30 years? Different professionals serve different needs.
The best way to determine if a financial advisor is right for your needs is to schedule an interview or consultation. Many accounting firms have multiple specialties that work together to meet your needs. For example, some CPA firms also offer small business business consulting and can help you set up a QuickBooks accounting system or provide advice on incorporating your independently owned business. So take your time and interview at least three different accountants before deciding which one works best for you.