Table of Contents
- Salary Ranges for CPAs
- Intro and Overview
- Typical Functions of an Accounting Career
- Possible Job Titles, Duties and Day in the Life
- Education and Degree Options
- Establishing Yourself in the Real World
- Learn from the Masters
- Starting Your Own Accounting Firm
- Independent vs. Employee
- Life as a CPA
- Fulfilling the Requirements to Work as a CPA
- Why Choose Accounting?
What Is Public Accounting?
Are you good with figures, formulas, or statistics? Do you like figuring out difficult money or accounting questions and keeping up with financial statements and ledgers? If you are thinking about going into accounting, or are already in the field of accounting, you might want to consider becoming a certified public accountant(CPA). CPAs serve an essential role in the business sector. Thousands of people all over the world trust CPAs to help them to keep track of their bookkeeping and get advice regarding their taxes and other accounting needs, including attestation services which they may not be able to get elsewhere. Many business owners report that their accounting professionals kept them out of trouble in both the tax and legal department, as well as having helped them to avoid the pitfalls that many corporate entities encounter as they build their business.
The more a business grows, the more money they have coming and going to their accounts. This creates an increased need to have someone to manage this process and provide guidance to ensure that they have good accounting policy in place are following the law regarding tax filings, internal auditing, bill payment, their financial statements, tax preparation, and other requirements. An public accountant knows the law on these issues and can help keep a business out of trouble in this regard. This is why people would rather pay a professional accountant for their services instead of trying to do it themselves.
Salary Ranges for CPAs
CPAs can make an annual salary that ranges from $74,000-$124,000 per year. Your income will depend on the role you play as a CPA and how much work you do on a monthly basis. Some accountants bill a per hour fee while others bill per project. This is up to you, and you will probably want to base this on how many clients you plan to have and how much you do for them.
If you aspire to have a career as a public accountant, you are on track for a potentially lucrative career in the field of accounting, especially as the demand for accounting continues to be high. In this article, we will outline the steps for CPA candidates to achieve certification from your local board of accountancy as well as some of the daily tasks and other issues you might encounter as a CPA.
Intro and Overview
Certified public accountants serve a wide variety of needs for both businesses and individuals. Business owners depend on their CPA to help them keep their books in order, balance their records on a monthly basis, and report their tax forms to the IRS. Individuals can also hire a CPA to help them do their taxes or to give them advice on their financial affairs and assist with financial planning. These accountants have extensive knowledge of accounting and can handle questions and issues of all kinds.
Organizational tasks are often difficult for the busy entrepreneur. CPAs can do the work of a regular accountant while also being able to file with the SEC and defend your tax filings to the IRS if necessary.
Typical Functions of an Accounting Career
The typical functions of an accounting career will vary according to the role you are filling with a particular business or individual. They may need you to show them the correct forms to fill out or to send in their official income tax return. Some people may need you to give them advice on how they should balance their ledger or keep more money in the bank by cutting certain expenses. Though they are not financial advisors, much of what public accountants do crosses over into this realm when they deal with clients. A good CPA will have a strong background in business and finance, as well since they are required to take some credit hours in business courses as students in order to complete the educational requirements before taking the Uniform CPA exam to earn their license.
Possible Job Titles, Duties and Day in the Life
The job title that you may have a CPA certification will depend on the institution that you work for, as well as the role that you are hired to play. For example, a business may want a regular CPA on staff to handle all of the books of business. This is an important job and will be a full-time position if the business has regular revenue that they must keep track of.
In addition to keeping the books, a CPA may also be responsible for paying bills that the business owes such as overhead, utilities, or even cutting checks for staff and employees. CPAs may work with a company's payroll department, and they may also be present in the event of an audit from the IRS or other financial entities. They may also do some forensic accounting if a business needs to decipher their books from previous years.
Another possible title that a CPA may hold is 'tax preparer'. Some firms, businesses, or individuals hire CPAs for the sole purpose of having them help with their taxes. While CPAs are not tax attorneys, they are often highly skilled in the area of IRS and state tax law. This is a requirement to receive their CPA certification. So CPAs are more than qualified to advise, prepare, and send a company or individual's tax forms to the IRS or state tax office for them.
Taxes are perhaps the number one reason that CPAs are called on to help. Business owners who have changed their status from a "Sole Proprietor" status to an "S-Corporation" status, for example, need tax advice on which forms to fill out since they are going from being an individual only to a corporation. The forms and processes that are involved in filing taxes as an S-Corp are significantly different than those involved with a Sole Proprietorship.
This is just one example of why a CPA might be needed by an individual who owns a company so that they will file their taxes on time and with the correct forms.
Why do people pay CPAs so well?
One reason people are willing to pay CPAs so much for their services is that CPAs save them a considerable amount of time and hassle. If an individual or business owner files their taxes using the incorrect forms, it can create a nuisance when they have to file amended returns or may even trigger an audit. When they use a CPA to file for them, they are confident that it will be done right the first time, saving them time later on. They are highly trained with years of study and real world experience under their belt by the time they complete their certification and pass the Uniform CPA Exam.
Education and Degree Options
CPAs must obtain a bachelor's or more advanced degree in accounting or business with a certain number of credit hours in accounting courses in order to even take the CPA examination. You can start in a community college or with a four year degree, but you'll need a college degree to succeed. If you aspire to become a CPA, we have outlined a step-by-step process that you can use to reach your goals.
Receive a bachelor's degree in accounting (master's preferred) - an accounting degree will provide you with the credit hours (150) to obtain approval from your local board of accountancy to take the CPA exam in most cases, though you will need to take at least some business courses as well. You can take this accounting program online or on site at your school of choice as long as it's accredited.
Take the CPA certification test and pass to receive your CPA license - The Uniform CPA exam is offered in every state in the nation by the American Institute of Certified Public Accountants (AICPA) and contains four sections that you take separately as well as a professional ethics exam. Passing this ensures that your learning was complete and you know your stuff including general accounting and terms, financial accounting, financial reporting, attestation, and more.
Master accounting software programs such as QuickBooks or other applications that business owners or individuals use to keep track of their finances - You should do this while you complete the education requirement and your accounting program, but it's best to stay on top of the changing technology surrounding the accounting field and business industry.
Do a one-year internship with a reputable accounting firm to learn the ropes - This is another requirement to earn your full CPA licensure. After passing the Uniform CPA exam, you must gain accounting experience under the supervision of a licensed CPA to prove that you really know what you're doing.
This is one career track you can follow to ensure that you have the knowledge and experience you need to obtain employment as a CPA. Keep in mind there may be other routes you could take, but the bachelor or master's degree is required to start. You also must pass the CPA exam that is required of all US certified public accountants to proceed. You can find more information about the CPA exam on the NASBA website.
Once you receive your notification that you have passed the NASBA exam, you will receive your accounting certificate, and you can start practicing your skills as a CPA.
Establishing Yourself in the Real World
What do you do after achieving these landmarks in your career? You can start by connecting to other accountants who have a good reputation for customer service and accounting skills. You can do this either by working with them as an apprentice for a year, if they agree, or observe what they do and "shadow" their work to see what you can learn and gain the necessary, relevant work experience. This will give you a chance to practice your organizational skills, communication skills, internal auditing, and more. These situations also often lead to solid job opportunities after you complete your shadowing.
Learn from the Masters
Most accounting firms understand that new accountants need guidance on "best practices" when dealing with real clients in the real world. If you talk to a well-established accountant in your hometown, they will likely be flattered that you want to learn from them. These seasoned accountants can serve as a mentor for you as you learn the ropes and establish yourself. It may also help you to be associated with a reputable accountant who already has the respect of the community.
Starting Your Own Accounting Firm
Once you get the experience you need, you may open your own accounting business or advertise yourself as an independent contractor. An independent contractor is not an employee. Instead, they work for themselves and book clients until they fill the amount of time they want to fill to make their income.
Keep in mind, however, you will have overhead if you start your own business, especially if you plan to hire people or move into a downtown office space. One alternative that many people are opting to do now is to work from their homes. The home-based business model is growing significantly this year, and this is expected to continue. If you start your business from your home office, you will avoid the overhead, and you will even be able to count up to 90% of your home as a deduction on your income taxes.
Independent vs. Employee
Independent contractor CPAs can make even more than staff CPAs if they charge a higher rate for their services. As an independent contractor, you may charge whatever you want for your time and expertise. You can also decide the hours you want to work and take on as much work as you want. You are in business for yourself as an independent contractor, but it is recommended that you seek an S-Corp tax status so that the IRS sees you as a separate entity from your business. This gives you legal protection from liability and avoids blending your finances with your business finances.
You should think about whether you want to work as an independent contractor or an employee of a company when building your resume and portfolio. Once your degree and licensure requirements are completed, you can decide what you want to do next.
Life as a CPA
Being a CPA is not for everyone. If you are a right-brain creative type, this is not for you. Not everyone loves to sit for hours poring over a business ledger full of facts and figures or helping advise business owners how to save more money for the future. But, for some, this is an ideal career. People who love working with numbers more than people or machines will find this to be the perfect career for them.
Fulfilling the Requirements to Work as a CPA
If you aspire to be a CPA, follow the steps we've outlined and then do your research on the types of schools you want to look into. Start with your bachelor's degree in Accounting from a reputable business school and then apply to take the CPA exam. Once you take the CPA exam, you will be licensed to practice all over the U.S. It is a national exam. However, you must apply for a mobility permit if you plan to move to another state to practice. You can check the requirements in our state guide to becoming a CPA.
Why Choose Accounting?
If you are considering a career in accounting, congratulations. Many CPAs make an excellent living working as either a staff accountant or an independent contractor. It's hard work, and you need to have a love of number crunching, but if that fits you, you'll make it. Use our information as a guide to get started and good luck in the world of accounting!