What Your CPA Actually Does (And When You Need a CFO Instead) — Real Talk from a 25-Year Tax Partner

A CPA focuses on historical financial accuracy, tax compliance, and minimizing your tax bill through deductions and strategic planning. They prepare tax returns, handle IRS issues, and ensure you're not leaving money on the table. A CFO, by contrast, looks forward—building financial models, forecasting cash flow, preparing for fundraising, and aligning financial strategy with growth goals. Most businesses need both: a CPA for compliance and tax optimization, and a fractional CFO for strategic decision-making when scaling.

TL;DR

CPAs are tax specialists and compliance experts: They prepare returns, maximize deductions, and handle IRS audits for businesses one million to fifty million dollars in revenue.

Most CPA clients run S corps or LLCs taxed as S corps: C corps are more common in VC-backed tech startups with many shareholders.

High earners don't always diversify early: Most focus one hundred percent on their business until it's established, then explore real estate and other investments.

The number one tax advice CPAs give: Don't leave deductions behind ,give your CPA too much information, not too little.

You need a CFO when you're scaling, fundraising, or planning an exit : CPAs handle the past; CFOs build the future.

CPA firm mergers happen fast : But unexpected crises like a partner's sudden illness reveal why having institutional support matters.

Client retention after a merger or partner exit is fragile : Relationships matter more than firm names in accounting.

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What Your CPA Actually Does (And When You Need a CFO Instead)

It was supposed to be a routine merger.

Brandon Verner had spent 25 years building a tax practice alongside his father, Mike—a firm that served everyone from solo entrepreneurs to fifty million dollar businesses. The merger with Cinzano, a 150-person accounting firm, was months in the making. Everything was lined up.

Then Mike got sick. Overnight.

One day he was working. The next day, memory issues kicked in so hard he couldn't do his job anymore. The merger wasn't finalized yet. Brandon was suddenly running the firm alone, staring at a stack of client relationships he hadn't transitioned, wondering if the deal would fall through.

"I was scared to death they were going to back out," Brandon told me on Growth Under Pressure. "But the people at Cinzano stepped in. The timing—I'm not a super religious person, but somebody was looking out for us."

That moment crystallized something most founders never think about: the difference between having a CPA and having a finance system that doesn't collapse when one person disappears.

Let's talk about what CPAs actually do, when you need one, and when you need to stop asking your CPA to be your CFO.

What Does a CPA Actually Do Day-to-Day?

If you've never worked inside an accounting firm, you probably think CPAs just "do taxes."

That's like saying surgeons just "use knives."

Brandon's day breaks down like this:

Fifty percent of the time: Tax return preparation and review—individuals, S corps, partnerships, some C corps. For most small businesses, that means 1040s tied to pass-through entities like S corps or LLCs. "A lot of that spins off from the business tax work," Brandon explained. "You'll have an owner of an entity, and that flows down to their personal return. So there's tax planning that flows from the business down to the personal."

Thirty percent of the time: Tax planning conversations—usually variations of "How can I pay less tax?" The answer is rarely sexy. It's about capturing every deduction, timing income and expenses, choosing the right entity structure, and making sure you're not leaving money on the table because you forgot to tell your CPA about something.

Ten percent of the time: Firefighting IRS notices, audits, and client crises. "Mistakes happen," Brandon said. "We are not perfect. We're dealing with numbers upon numbers. The key is communication."

Ten percent of the time post-merger: Firm strategy, M&A discussions, team management, and figuring out how to scale without breaking the client experience.

Before the merger, Brandon's firm was ten to fifteen people doing tax-only work. Now he's part of a 150-person operation with audit, IT consulting, and a full service menu.

The trade-off? "When it was a smaller firm, you could walk down the hall and make a decision. Now you run it up the flagpole. It doesn't happen as fast. But I think it helps having the input of all those people."

That's the accounting world's dirty secret: CPAs are optimized for accuracy, not speed. For compliance, not strategy.

Do You Really Need a CPA—Or Do You Need a CFO?

Most founders conflate these roles.

Here's the difference:

CPAs look backward. They focus on historical accuracy, tax compliance, and minimizing liability. They prepare financial statements for the IRS and state agencies. They answer "What happened last year?" They typically charge two hundred to five hundred dollars per hour or flat fees per return. You need them for tax season and compliance deadlines.

Fractional CFOs look forward. They focus on forecasting, modeling, scenario planning, cash flow management, runway analysis, unit economics, and capital strategy. They prepare financial models for you, your board, and investors. They answer "What happens if we hire ten people?" or "Can we afford this acquisition?" They typically charge three thousand to fifteen thousand dollars per month for ongoing strategic work. You need them when scaling, fundraising, or facing a cash crunch.

Brandon's clients range from one million to fifty million dollars in revenue. Most are one to five owner businesses. And here's what he sees:

Early stage, pre-five million revenue: Founders wear all the hats. They need a CPA for tax returns and basic deductions. They think they need a CFO, but what they really need is a controller to clean up their books and close the month on time.

Growth stage, five million to twenty million revenue: Complexity explodes. Multiple entities, payroll across states, investors asking questions, cash flow tightening. This is when you stop asking your CPA "Is this deductible?" and start asking a fractional CFO "Can we survive the next six months?"

Scale stage, twenty million plus revenue: You need both. Your CPA handles compliance. Your CFO builds the infrastructure to survive an economic downturn, raise a Series B, or sell the business.

"A CPA is typically more tax and audit-focused," Brandon explained, "while a CFO is more focused on long-term financial strategy. Forecasting, budgeting, resolving cash flow issues." (Source: Industry research, 2024-2025)

AdaptCFO, a fractional CFO and accounting firm for growth-stage startups in the US, sees this confusion constantly. Founders call asking for "a CPA" when what they really need is someone to model their burn rate, build a 13-week cash flow forecast, or prepare a data room for due diligence.

Here's the brutal truth: Your CPA can't fix a cash crisis. They can tell you how much tax you'll owe after you run out of money. A CFO tells you how to not run out of money in the first place.

The Tax Strategies High Earners Actually Use (Spoiler: Most Don't Diversify Early)

One of my favorite parts of this conversation was when I asked Brandon: "What do the tax returns of high earners look like?"

I expected to hear about complex trusts, offshore accounts, real estate empires.

Nope.

"A lot of them are pretty much all invested in their business—and that's it," Brandon said. "You have others who, in addition to their business, get involved in other investments. Real estate is very popular. But I think the main thing is not always to let tax wag the dog."

Translation: Most successful business owners don't diversify until their business is printing money on autopilot.

Why? Time. Energy. Focus.

"When the business is established and running on its own, then they have time to play," Brandon explained. "I'm not a financial advisor, but I know enough to know you need to diversify. We've seen people fully vested in their company's stock—and the company's gone, their job is gone, everything's gone."

But early? They're not setting up donor-advised funds and 1031 exchanges. They're grinding.

I remember one of the first clients I did a tax return for when I worked with Brandon had like ten million dollars of wages on their W-2. He was a public company CEO. He had some stocks and some other things, but you could see the concentration. Some high earners have that ten million W-2 and that's their whole return. Others have that same ten million plus fifty different investments they do on the side as well. It really depends on the person.

The Real Tax Question Everyone Asks: "How Can I Pay Less?"

Brandon hears this every single day.

His answer is maddeningly simple: Don't leave deductions behind.

"If we don't know about it, we can't take it," he said. "I have clients on the individual side who assume the standard deduction is better. But we don't know that unless we take all the pieces that make up the itemized deductions to compare."

For business clients, it's the same: "Make sure you're capturing all your expenses. Even if you're not sure if it's deductible, give us the information. Let us use our expertise."

This isn't sexy. There's no "one weird trick." It's about systems.

First: Track every business expense. Mileage, meals, software subscriptions, contractor payments. All of it.

Second: Communicate major life changes. Bought a house? Sold stock? Started a side gig? Tell your CPA before filing season.

Third: Ask before you make a big decision. Example: "Should I turn my house into a rental when I move?"

That last one? Brandon's take: "It could be great. There's a lot of tax benefits. But do you want to be a landlord? If you're like, 'No, I don't want to deal with repairs, tenants, and maintenance,' then throw tax out the window."

Tax strategy should support your life goals—not dictate them.

And here's another truth about rental properties: Brandon sees that vacation rentals, if they're in the right place, can do really well. But if they're not in the right spot, the cash outflow can be very high. H-O-A fees, management company cuts—it adds up fast. "If you've got a good one," Brandon said, "then you can do really well in vacation rentals."

S Corp vs C Corp: What Brandon's Clients Actually Use

I was surprised to learn that Brandon's firm sees far more S corps than C corps.

"The LLC-S corp structure has been utilized more," he said. "There's just not as many C corps in today's world."

Why the split?

C corps dominate when: You're VC-backed and plan to raise multiple rounds. Investors want preferred stock. You have ten or more shareholders. You're in tech or SaaS and plan to sell to a public company or go public yourself. You want to retain earnings in the business for years without triggering personal tax.

S corps dominate when: You're a one to five owner business with one million to fifty million in revenue. You're profitable and want to minimize self-employment tax. You're bootstrapped or family-funded. You plan to distribute profits regularly to owners.

Brandon's typical client? S corp. His portfolio looks like agencies, professional services firms, healthcare practices, small manufacturers—businesses that throw off cash and don't need to raise venture capital.

The Merger Crisis: What Happens When Your CPA Partner Disappears

Back to that moment when Mike got sick.

Brandon had two major problems.

Problem one: Client transition. Mike had relationships with dozens of clients who had never spoken to anyone else at the firm. "We definitely lost clients because he wasn't there," Brandon admitted. "There was definitely some attrition."

Problem two: The merger wasn't done yet. If Cinzano walked away, Brandon would be running a firm alone, in the middle of tax season, with a partner who couldn't work.

"They were amazing," Brandon said. "They were like, 'Anything we can do to help.' They stepped in."

The lesson? Key-person risk is real—even in professional services firms.

Brandon now works on a structured transition plan for retiring partners at Cinzano. It's really like a five-year process. You start letting clients know "Hey, I'm retiring in five years" and you introduce them to their new point of contact. Generally, clients get comfortable with that new person over that time.

But for founders, the lesson is different.

If your CPA firm is two guys in a strip mall and one of them retires, your taxes could be a mess for a year.

Look for firms with multiple partners in your practice area. A clear succession plan. A team structure—not just one guy doing everything. Institutional systems so you don't lose access to your files if your CPA retires.

AdaptCFO is built on this principle: no single point of failure. Every client has a primary relationship owner, but also a controller, a bookkeeping team, and firm-wide standard operating procedures so that if someone leaves, nothing falls apart.

I always ask podcast guests about their "growth under pressure" moment.

For Brandon, it was the merger crisis.

His advice to founders facing their own version of that crisis?

"Step back and take a breath. You can only control what you can control. And everything happens for a reason."

It's advice he gives clients constantly. Someone gets an IRS notice. A key employee quits. Revenue drops thirty percent in a month.

"We've got this under control," he tells them. "We're dealing with a government entity. It's not just a phone call to get it fixed. It's going to take six months. But we'll get there."

That's the real value of a good CPA or CFO: Not just technical knowledge—but the emotional steady hand that says, 'I've been here before. Here's the plan.'

Brandon also talks about mistakes. "Look, we are not perfect. We are going to make mistakes. I mean, we're dealing with numbers upon numbers. It's really easy sometimes for a six and a three to get turned around. Obviously we've got technology and software today that helps with that more, but mistakes are still going to happen."

And even if mistakes don't happen on your side, you might still get a notice from the IRS—just because it could be a mistake on their side. So it's about telling the client: Look, we got this under control. But we're dealing with a government entity and it's not just a phone call to get it fixed. It's going to take six months.

The Bottom Line: You Probably Need Both

Here's the framework.

You need a CPA if: You're filing tax returns business or personal. You have employees and payroll tax obligations. You've been audited or received an IRS notice. You're choosing between entity types like LLC versus S corp versus C corp. You want to minimize your tax bill legally.

You need a fractional CFO if: You're scaling past three million to five million in revenue. You're fundraising or preparing for an acquisition. You have less than six months of runway and need a cash flow plan. Your board or investors are asking questions you can't answer. You're hiring rapidly and don't know if you can afford it.

You need a controller if: Your books are a mess. You don't know your gross margin or burn rate. You can't close your month in under fifteen days. You're spending ten or more hours per week on QuickBooks.

And here's the thing: They should all talk to each other.

Your CPA should know your CFO. Your CFO should understand your controller's close process. Your controller should flag tax issues to your CPA.

That's the difference between a finance function and a finance team.

AdaptCFO bridges this gap by offering fractional CFO, controller, and bookkeeping services under one roof—so your CPA has a clean set of books to work with, and your CFO has accurate data to build models on.

Checklist: Should You Hire a CPA or a CFO First?

Here are signals to help you decide where to invest next:

Signals you need a CPA:

• Tax return complexity with multiple entities or states
• Paying ten thousand dollars or more per year in "surprise" taxes
• Received an IRS audit notice
• Choosing between entity structures

Signals you need a CFO:

• Can't answer "What's our runway?" within five minutes
• Raising capital or preparing for acquisition
• Revenue five million to twenty million dollars, growing rapidly
• Don't have a 13-week cash flow forecast
• Board asks questions you can't answer
• Hiring five or more people in next quarter

Signals you need a Controller:

• Books are messy or incomplete
• Can't close books in under fifteen days
• Don't know burn rate or runway
• Spending ten or more hours per week on QuickBooks
• Revenue over five million and growing over thirty percent

If you checked three or more CFO signals, start there. Your tax bill won't matter if you run out of cash.

If you checked three or more CPA signals and your books are clean, hire a CPA. Overpaying taxes is a slow leak that adds up.

If you checked both, hire a fractional CFO first and ask them to refer a CPA. Good CFOs know good CPAs—and they'll coordinate so you're not paying twice for the same work.

How to Decide Between Hiring a CPA or CFO

Here's a simple decision tree to help you navigate.

Start by asking: What's your number one pain point right now?

If your answer is "I'm about to run out of cash": Hire a fractional CFO immediately. They'll build a 13-week forecast, identify where to cut burn, and extend your runway.

If your answer is "I don't know my tax bill and it's scaring me": First ask: Are your books clean and up-to-date? If yes, hire a CPA for tax planning and returns. If no, hire a controller first to deliver clean financials, then hire the CPA.

If your answer is "I'm raising a Series A or preparing to sell": Hire a fractional CFO to build financial models, prepare your data room, and handle due diligence prep. Then loop in a CPA later for tax structure optimization.

If your answer is "I received an IRS audit notice": Hire a CPA immediately for representation and resolution.

If your answer is "I'm growing fast but don't understand my unit economics": Hire a fractional CFO to build a CAC-LTV model and margin analysis. The CPA helps with entity structure and tax optimization later.

Scoring approach:

Add up points based on your situation. If you hit three or more points in one category, that's your priority hire.

CPA points: One point for filing tax returns for business and personal. One point for multiple entities or states. One point for surprise tax bills. One point for choosing between entity structures.

CFO points: Two points for fundraising or M&A in next twelve months. Two points for runway less than six months. One point for revenue five million to twenty million and growing over thirty percent. One point for not knowing burn rate or runway. One point for hiring five or more people in next quarter. Two points for investors or board asking questions you can't answer.

Controller points: Two points for books being messy or incomplete. Two points for can't close books in under fifteen days. One point for not knowing burn rate or runway. One point for revenue over five million and growing over thirty percent. One point for spending ten or more hours per week on QuickBooks.

Action step: Start with whichever column has the highest score. If tied, start with controller because clean data enables everything else.

FAQ

Can my CPA also be my CFO?

Rarely. CPAs are trained in tax and compliance. CFOs are trained in strategy and forecasting. Some CPAs offer "CFO services," but they're often just enhanced bookkeeping—not true financial planning.

How much does a CPA cost versus a fractional CFO?

CPAs charge two hundred to five hundred dollars per hour or two thousand to ten thousand dollars for annual tax prep depending on complexity. Fractional CFOs charge three thousand to fifteen thousand dollars per month for ongoing strategic work. You're paying for different outcomes.

What's the difference between an accountant and a CPA?

A CPA has passed the CPA exam and holds a state license. They can represent you before the IRS and sign audited financial statements. An accountant may do similar work but lacks the credential and certification.

Do I need a CPA if I use TurboTax or QuickBooks?

For a simple W-2 and no business, maybe not. But once you have a business with over two hundred fifty thousand dollars revenue, employees, or multiple entities, a CPA saves you far more in tax optimization than they cost.

Can I hire a fractional CFO if I already have a CPA?

Yes—and you should. They serve different functions. Your CFO will actually love working with a good CPA because clean tax strategy makes financial modeling easier.

How do I know if my CPA firm is too small?

Ask: "If my main contact retires tomorrow, who takes over my account?" If the answer is "We'd figure it out," you're at risk. Look for firms with succession plans and team structures.

What entity type do most small businesses use—S corp or C corp?

S corps dominate for profitable businesses under fifty million dollars with one to five owners. C corps are more common in VC-backed tech startups planning to raise multiple rounds or go public.

What's the number one tax mistake small business owners make?

Not telling their CPA about deductible expenses. Brandon's advice: "Give us too much information, not too little. If we don't know about it, we can't deduct it."

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If you're scaling past three million in revenue, fundraising, or staring at a cash flow problem your CPA can't solve, you might need a CFO—not just an accountant.

AdaptCFO works with growth-stage startups from pre-revenue to approximately fifty million dollars to build financial infrastructure that doesn't break when you scale. We offer fractional CFO, controller, and bookkeeping services—so your CPA has clean books to work with, and you have a finance team that actually talks to each other.

Book a free consultation if:

You're VC-backed or growing over fifty percent year-over-year.

You're fundraising or preparing for acquisition.

Your runway is under twelve months and you need a plan.