Many business owners assume that Certified Financial Planners (CFPs) and Certified Public Accounts (CPAs) are the same. When they need assistance recording and tracking transactions, business owners may use the services of a CFP or CPA. CFPs and CPAs offer their services to business owners. While both CFPs and CPAs focus on financial services, though, they aren’t the same. What’s the difference between a CFP and CPA exactly?
What Is a CFP?
A CFP is a professional financial advisor who offers strategic advice on how to budget, pay down debt, invest and manage assets. As their name suggests, their goal is to help clients “plan” their finances. CFPs are financial planners. Their clients can consist of business owners as well as consumers. Business owners and consumers who need help planning their finances may partner with a CFP.
What Is a CPA?
A CPA, on the other hand, is a professional accountant. CPAs are typically regulated by the state in which they practice. To work as a CPA, for instance, individuals must obtain a license from their respective state’s regulatory board. CPAs perform accounting tasks on behalf of their clients. Some of the accounting tasks performed by CPAs include tax preparation, expense and revenue tracking, generation of financial statements and consulting. CPAs offer their services primarily to business owners, but some consumers may use their services as well.
Differences Between a CFP and CPA
CFPs and CPAs aren’t the same. CFPs offer financial planning services, whereas CPAs offer accounting services. As a business owner, you can partner with either of them. When choosing between a CFP and CPA, though, you must consider your business’s needs.
If you need help tracking your business’s expenses and revenue — or help preparing your business’s taxes — you should typically partner with a CPA. CPAs specialize in accounting. Taxes, of course, are an essential part of accounting. A CPA can provide accounting services for your business to ensure all its expenses and revenue are properly tracked.
A CFP is a better choice if your business needs help planning its financial strategy. If your business is struggling with poor cash flow, for instance, you may want to partner with a CFP. CFPs can provide consultation services that allow you to pay down your business’s debt and, ultimately, increase your business’s cash flow.
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