CFO vs. CPA: Which is best for your startup?

If you’re considering hiring a finance expert to support your startup, are you sure which type of finance expert you need? There are many different roles in the world of finance, each with distinct duties and expertise. Hiring for a role that doesn’t meet your startup’s needs can leave your team struggling to handle everyday accounting tasks or lacking the right skills to support the business as it grows. 

To help you decide between hiring a CFO or a CPA, this article covers the responsibilities of these finance experts, differences between the roles, and how to choose between CFO vs. CPA to suit your startup’s unique situation.

What are CFOs and CPAs?

A Chief Financial Officer (CFO) is a senior executive who leads the financial management of a business. CFOs analyze the company’s financial statements and sales performance to inform business decisions, and they work closely with the CEO and any investors.

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Read more: CFO vs. Controller: What’s The Difference?

A Certified Public Accountant (CPA) is an accountant who is licensed by a state board of accountancy. CPAs oversee a business’s bookkeeping, carry out complex accounting procedures, and analyze finance data. CPAs work closely with company finance teams, including bookkeepers and tax accountants.

Read more: Who Are The Best CPAs For Startups?

CFO vs. CPA: How these roles compare

While both CFOs and CPAs have expertise in overseeing business finances, there are far more differences than similarities between these roles. Below are how CPAs and CFOs compare in three key areas.

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CPA vs. CFO: Which does your startup need?

Because CPAs and CFOs have different skill sets, they can benefit businesses in different situations. An important distinction is that CPAs are required to have in-depth knowledge of accounting regulations and tax—but the CPA license doesn’t include finance strategy. In contrast, although CFOs must have an understanding of accounting processes and documents, they likely won’t possess in-depth and up-to-date knowledge of accounting intricacies. Instead, they bring experience in business strategy and development.

A CPA is the right choice if your business requires:

• Support setting up GAAP-compliant processes
• Help setting up your accounting system
• Assistance filing tax returns or tax planning
• Advice on tax deductions you’re entitled to claim
• Preparation for an audit
• Monthly financial reporting in accordance with GAAP
• Help identifying and addressing accounting issues
• Assistance choosing and setting up accounting software

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A CFO is the right choice if your business requires:

• Planning for your financial forecast
• Advice on growing the business
• Guidance with big-picture tax strategy
• Financial leadership
• Strategic planning based on financial data
• Help reducing expenses, maximizing assets or resolving cash flow issues
• Assistance with fundraising or mergers and acquisitions
• Oversight of capital structure and investments
• Help negotiating contracts

This isn’t an exhaustive list, and some situations require the skills of both a CFO and a CPA. For instance, if you’re trying to secure funding, a CPA can ensure you have accurate accounts and produce financial statements, while a CFO can use this data to build financial models and present them to investors.

There is no set time when a startup should hire a CFO or CPA. However, most startups begin working with a CPA to get their books in order before they bring on a CFO to build strategy from this data. 

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Gain CFO And CPA expertise without the expense of hiring

Many startups would benefit from the expertise of a CFO or CPA but don’t yet have enough work (or funds) to justify a full-time CFO or CPA. In this situation, a cost-effective way to bring on CPA or CFO-level help is to hire them a fractional CFO or outsource their duties to a financial services firm—so you only pay for the work you need.

With Zeni, you don’t need to decide between CPA vs. CFO—we provide all the benefits of both a CFO and a CPA with our outsourced service designed for startups. Zeni is a full-service, AI-powered finance firm that manages the bookkeeping, accounting, tax, and CFO service needs of more than 100 startups remotely. Our team of finance experts—including tax accountants, CPAs, financial controllers, and CFOs—have over 100 years of combined experience and can help with all levels of tasks from day-to-day bookkeeping to financial planning to advising on financial strategy.