Can You Use a CPA Licensed in Another State?

A Certified Public Accountant (CPA) is a licensed financial professional providing accounting and tax services to individuals and businesses. These services include preparing financial statements, conducting audits, and offering tax advice. CPAs are licensed at the state level, with each state board setting specific requirements. A common question is whether a CPA licensed in one state can serve clients in another. This article explores interstate practice for CPAs and their clients.

Understanding CPA Licensing and Practice Mobility

CPAs receive their licenses from individual state boards of accountancy, which establish the specific criteria for becoming and remaining licensed. These criteria include completing a certain number of college credit hours, passing the Uniform CPA Examination, and gaining a set amount of relevant work experience. Once licensed, a CPA is authorized to practice public accounting within the boundaries of their licensing state.

The landscape of CPA practice has evolved with the concept of “practice mobility,” which allows CPAs to serve clients across state lines without obtaining a separate license in every state. This framework is based on the Uniform Accountancy Act (UAA), a model law developed jointly by the American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA). Most states have adopted provisions similar to the UAA, simplifying interstate practice.

A key principle of practice mobility is “substantial equivalency,” meaning a CPA’s home state licensing requirements are comparable to those of the state where they wish to practice. If a CPA is licensed in a state deemed substantially equivalent, they are permitted to practice in other substantially equivalent states without needing a new license or prior notification. This applies to CPAs who hold a valid license and meet the 150-semester hour education requirement.

This mobility rule allows a CPA to provide services to clients in another state as if they held a license there, provided they do not establish a physical office or principal place of business in that state. For instance, a CPA based in one state can prepare tax returns for a client in another state remotely. Even with practice mobility, an out-of-state CPA remains subject to the jurisdiction and disciplinary authority of the state board where they are providing services.

The UAA and its adoption by numerous states have created a more streamlined environment for CPAs to offer their expertise nationwide. This framework aims to reduce administrative burdens while maintaining public protection through regulatory oversight. While the intent is broad mobility, specific conditions and service types can still influence the application of these rules.

Specific Services and State-Specific Requirements

Practice mobility extends to many common accounting services, including tax preparation, financial planning, and general consulting. A CPA licensed in one state can prepare federal and state tax returns for clients in other states under the mobility provisions. This applies to both individual income tax returns and business tax filings. Financial planning and advisory services, which involve guiding clients on investments, retirement, or estate matters, also fall under these mobility rules.

General consulting services, where a CPA provides expert advice on business operations, internal controls, or financial strategy, are also covered by practice mobility. For example, a CPA might advise a business in another state on optimizing its accounting systems or improving its cash flow. These services do not require specific state-by-state notification or additional registration.

However, “attest services,” such as audits, reviews, and compilations of financial statements, have more stringent requirements. These services involve expressing an opinion on the fairness of financial information and carry a higher degree of public reliance. While practice mobility applies, some states may require out-of-state CPAs or their firms to provide a specific notification to the state board before performing attest services. This notification ensures the state board is aware of the CPA’s activities.

If a CPA firm establishes a physical presence in another state, such as opening an office or regularly holding client meetings, they may be subject to that state’s firm registration requirements. This means the firm, not just the individual CPA, might need to register with the state board. These rules ensure that firms operating within a state’s borders comply with local regulations and oversight.

Despite the mobility framework, an out-of-state CPA must understand the specific state’s tax laws and regulations relevant to their client’s situation. For instance, state income tax rates, sales tax regulations, or specific business registration requirements can vary significantly. Adherence to these state-level nuances is important for providing accurate and compliant services.

What to Consider When Engaging an Out-of-State CPA

When hiring a CPA licensed in a different state, individuals and businesses should undertake several verification steps. First, confirm the CPA’s licensure status directly with their home state’s board of accountancy. Most state boards offer online verification tools to ensure their license is valid.

Beyond verifying the CPA’s home state license, check with your own state’s board of accountancy to understand any rules for out-of-state practitioners. While practice mobility is widespread, some states may have unique requirements, such as a brief notification process for attest engagements. This ensures the CPA is authorized to serve you.

Confirm the out-of-state CPA possesses expertise in your state’s tax laws, industry nuances, or unique financial regulations. For example, if you operate a business, ensure they understand your state’s corporate income tax structure or sales tax rules. An experienced CPA can navigate multi-state tax implications.

Discuss communication methods with an out-of-state CPA, including secure client portals, virtual meeting platforms, and preferred response times. Acknowledge time zone differences for convenient scheduling. While most work is remote, understand the potential for in-person meetings if desired.

Before commencing work, always request a clear engagement letter from the CPA. This document outlines the scope of services, responsibilities of both parties, fee structure, and payment terms. Understanding these details upfront helps prevent misunderstandings and establishes a clear professional relationship.