"My CPA Handles the Financial Stuff"
The difference between tax compliance and strategic finance—and why you might need both.
Key Takeaways
- •CPAs focus on tax compliance and historical accuracy; CFOs focus on strategy and the future
- •Most CPAs don't provide CFO services, and most CFOs aren't CPAs
- •You likely need both: a CPA for taxes and a CFO for business decisions
- •Confusing the two roles leaves critical gaps in your financial management
"I have a great CPA. They take care of all our financial matters."
Your CPA might be excellent—at what they do. But what they do is probably not what you think. CPAs and CFOs are different roles with different focuses. Confusing them creates gaps that can cost you money.
Let's be clear about what each role does, where they overlap, and why most businesses need both.
The Core Distinction
CPA: "How do we report this correctly to the IRS?"
CFO: "What should we do about this, and how will it affect our business?"
What CPAs Actually Do
CPAs are licensed professionals with specific compliance expertise:
Core CPA Services
- Tax return preparation (business and personal)
- Tax planning and strategy
- Audit preparation and support
- Financial statement reviews/compilations
- Entity structure advice (tax perspective)
- IRS representation
CPA Focus Areas
- Historical accuracy (what happened)
- Regulatory compliance
- Tax minimization
- GAAP conformance
- Annual or quarterly engagement
This is valuable, essential work. Every business needs a good CPA. But notice the focus: it's about compliance with external requirements (IRS, GAAP, regulators) and ensuring historical records are correct.
What CPAs Typically Don't Do
Here's where most CPAs stop—and where CFOs begin:
Strategic Decision Analysis
Should you hire that VP? Expand into a new market? Raise prices? Acquire a competitor? CPAs don't typically analyze strategic business decisions. They report results—they don't help you shape them.
Ongoing Financial Management
Cash flow forecasting, monthly financial review, KPI tracking, variance analysis—this ongoing management work isn't part of most CPA engagements. You see them quarterly or annually, not weekly.
Fundraising Support
Preparing for investor presentations, building financial models for fundraising, managing due diligence, negotiating terms—this is CFO work, not CPA work. Different skill set, different context.
Operational Finance
Pricing analysis, unit economics, profitability by segment, working capital optimization—the day-to-day financial operations that drive business performance. CPAs don't typically work at this operational level.
Stakeholder Communication
Board presentations, investor updates, bank negotiations—these require business context and strategic thinking that goes beyond compliance expertise.
CPA vs. CFO: Side-by-Side
| Dimension | CPA | CFO |
|---|---|---|
| Primary Focus | Tax compliance | Business strategy |
| Time Orientation | Historical (what happened) | Forward-looking (what should happen) |
| Key Questions | "How do we report this correctly?" | "What should we do about this?" |
| Engagement Frequency | Quarterly/annually | Weekly/monthly |
| Primary Output | Tax returns, compliant statements | Business decisions, financial strategy |
| Who They Report To | IRS, regulators | CEO/Owner, board |
| Success Metric | Compliance, tax efficiency | Business performance, ROI |
The Dangerous Gap Between CPA and CFO
When you rely only on your CPA for "financial stuff," here's what typically falls through the cracks:
Common Gaps Without CFO Support
- No forward visibility: Your CPA tells you what happened last year. Nobody tells you what's coming next quarter.
- Reactive tax planning: By the time you talk to your CPA, the year is over. Strategic decisions during the year could have changed outcomes.
- No decision framework: Major choices are made on gut feel because nobody builds the financial models to inform them.
- Cash surprises: Your CPA isn't tracking weekly cash flow. You find out about problems when they're urgent.
- Poor stakeholder communication: When investors or banks ask questions, you scramble to answer because nobody is maintaining investor-ready financials.
These gaps aren't your CPA's fault—they're just not what CPAs do. Expecting CPA services to cover strategic finance is like expecting your mechanic to also be your driving instructor.
When Your CPA Really Is Enough
To be fair, some businesses genuinely only need CPA support:
- Business is simple and stable: Few strategic decisions, predictable revenue, stable operations
- You have personal finance expertise: You can handle strategic analysis yourself; you just need compliance help
- No external stakeholders: No investors, no board, no complex banking relationships
- No significant growth or change planned: Business is in maintenance mode, not growth mode
If all these apply, your CPA may genuinely be sufficient. But as your business grows or circumstances change, reassess. The inflection point often comes faster than expected.
How CPA and CFO Work Together
The best setup isn't CPA OR CFO—it's CPA AND CFO working together:
Entity & Tax Structure
CFO proposes strategic changes; CPA evaluates tax implications. Together, they optimize structure for both operations and tax.
Year-End Planning
CFO provides business context and projections; CPA identifies tax strategies. Together, they minimize taxes while serving business goals.
Major Transactions
CFO leads deal strategy and negotiation; CPA advises on tax structuring. Together, they optimize transaction outcomes.
Financial Reporting
CFO maintains management reporting; CPA ensures compliance reporting. Together, they provide complete financial picture.
The Ideal Relationship
A good CFO makes your CPA more effective (cleaner books, better planning) and a good CPA makes your CFO more effective (tax-efficient strategies, compliance confidence). They should talk regularly.
If You Need More Than Your CPA
If you've recognized gaps in your current setup, here's how to proceed:
Keep Your CPA
Don't replace them—they handle what they handle well. Add CFO support for what they don't do.
Identify Your Strategic Gaps
What decisions do you need help with? What visibility are you missing? Where do you feel uncertain?
Engage a Fractional CFO
Start with focused scope on your biggest gaps. Let the CFO coordinate with your CPA.
Facilitate the Relationship
Introduce your CPA and CFO. Ensure they communicate, especially around tax planning and major decisions.
Learn More
Return to our main guide for a complete assessment: Do You Really Need a Fractional CFO?
Frequently Asked Questions
Can my CPA also be my CFO?
Some CPAs offer advisory services beyond tax, and a few operate as fractional CFOs. However, most CPAs are trained for and focused on compliance—tax returns, audits, regulatory requirements. Strategic finance is a different skill set. If your CPA offers CFO services, evaluate whether they have the experience and bandwidth to provide genuine strategic value, or if it's tax work rebranded.
Should my CPA and CFO work together?
Yes, absolutely. A good CFO-CPA relationship is collaborative. The CFO provides strategic direction and management reporting; the CPA ensures compliance and optimizes tax position. They should communicate regularly, especially around year-end planning, major transactions, and entity structure decisions.
What should I keep going to my CPA for?
Tax returns (personal and business), tax planning and strategy, audit preparation and support, entity structure advice (from a tax perspective), and compliance matters. These are CPA core competencies. Don't ask your CFO to do your taxes, and don't expect your CPA to build your financial models.
My CPA gives me business advice. Isn't that CFO work?
Some CPAs offer informal business advice, which can be helpful. But there's a difference between occasional insights from someone who sees your financials once a year and ongoing strategic partnership from someone immersed in your business. The depth, frequency, and accountability are different. Appreciate your CPA's input while recognizing its limits.
Related Articles
"Our Bookkeeper Handles It"
Recording history vs. shaping the future
"Can't We Use Software?"
Tools vs. strategic leadership
What Does a Fractional CFO Do?
Understanding the full scope
Do You Need a Fractional CFO?
The complete assessment guide
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