Accounting is one of the most popular careers in the business field. It’s an ideal career choice for those with a keen interest in mathematics and a strong eye for detail. According to the Bureau of Labor Statistics, accountants earn an average of $73,560 per year. Additionally, the demand for accountants is expected to increase by 4% over the next ten years, which is on par with the national average.
If you’re considering a career as an accountant, this guide can provide invaluable information. It explains the difference between a general accountant and a CPA as well as the steps to becoming an accountant.
Differences between an accountant and a certified public accountant
As you begin the path to becoming an accountant, one of the first things you’ll need to decide is if you want to be a Certified Public Accountant (CPA) or a general accountant. While the terms CPA and accountant are often used interchangeably, there are some distinct differences between the two professions. For example, all CPAs are actual accountants, but not general accountants are certified CPAs.
Here’s a closer look at some of the major differences between a CPA and an accountant.
Both CPAs and standard accountants typically begin their educational path by earning a bachelor’s degree in accounting. However, there are no set educational requirements for private accountants. In fact, you may be able to find an entry-level position without any type of degree.
You do need to have at least a basic understanding of accounting practices, so some type of college training is often necessary. Most employers today, however, prefer candidates with at least a bachelor-level degree in accounting or a related field.
On the other hand, a certified public accountant must complete a bachelor’s degree program from an accredited college or university as well as a minimum of 30 credit hours of graduate-level studies. This accreditation ensures that you take all the college-level courses necessary to sit for the CPA exam.
Some accountants and CPAs choose to enhance their career opportunities by obtaining an advanced graduate degree, such as a Master’s of Business Administration (MBA), Master of Accountancy (MAcc), Ph.D. in Accounting, or a Doctor of Business Administration (DBA). While a graduate-level degree is not required, it can help you to advance your career and to move into executive positions, such as a corporate president, CEO, or CFO.
CPAs are also required to seek licensure from the state where they work. CPA license requirements vary from state to state, but most states require that you hold a master’s degree, pass all four sections of the uniform CPA exam, and complete a set number of on-the-job training hours.
In addition to passing the CPA exam, a licensed public accountant must also commit to completing a set number of continuing education hours each year to ensure they stay up to date on the latest accounting practices. Along with this licensure, a certified public accountant must adhere to strict accounting principles and ethical guidelines.
Private accountants, on the other hand, are not required to seek any type of CPA license with the state. Therefore, the hiring potential for these professionals is based on other qualifications, such as education and experience. Accountants can also seek specialized certifications, such as Certified Fraud Examiner (CFE), Certified Chartered Accountant, and Certified Management Accountant (CMA), to further their career.
Due to the higher credentialing requirements, accountants with a CPA license are oftentimes seen as more desirable candidates by many employers. General accountants not considering CPA certification should consider selecting a specialty in accounting to enhance their job opportunities after graduation.
Representation with IRS
Another major difference between CPAs and general accountants is that CPAs can represent clients in matters involving the Internal Revenue Service (IRS), such as tax audits. Both accountants and CPAs can prepare and file tax returns, however, standard accountants have no authority to speak to the IRS on behalf of their employer or clients. Accountants who specialize in taxes or auditing can take steps to become an enrolled agent with the federal government in order to represent clients with IRS matters. Due to these restrictions, most companies and individuals hire a public accountant to prepare and file their federal tax returns rather than a general accountant.
CPAs are also under both ethical and legal responsibilities to always act in the best interest of their clients or employer. Unlike general accountants who can only handle informal audits, CPAs are capable of conducting professional audits and delivering official audited financial statements. Since many major companies and nonprofit organizations are required to submit audited financial statements every year, they often hire or contract with a CPA certified accountant to handle these services.
While specific job duties vary from job-to-job, public accounting and private accounting professionals handle many of the same on-the-job responsibilities, such as:
- Document and record financial transactions
- Set up and management chart of accounts
- Reconcile bank statements and financial accounts
- Prepare and analyze financial statement
- Conduct internal audits
- Handle the employee payroll process
- Prepare and file tax returns
- Provide tax planning and advice services
- Set, oversee, and manage budget
- Assist with financial planning
- Manage accounts receivables and accounts payable
- Follow GAAP (Generally Accepted Accounting Principles) guidelines
There are, however, a few tasks that a private accountant can handle that general account cannot, including:
- Conduct official financial audits
- Publish audited financial statements
- Represent clients in IRS matters
Specialties for accountants
Both general and public accounting students are also encouraged, or in some cases required, to choose a specialty at both the undergraduate and graduate levels. Fortunately, there’s a wide range of different specializations to choose from, but this can also make the decision more difficult.
Here’s a look at some of the most common accounting specialties to consider.
A forensic accountant is specifically trained to search financial records for any type of discrepancies or irregularities as well as unexplained or unauthorized transactions. These professionals are in high demand and often work for major corporations, financial institutions, large investment firms, police departments, and governmental agencies. Forensic accounting also involves valuating losses due to criminal activities. Forensic accountants may be required to testify in court on behalf of their client or employer.
The primary duty of a financial accountant is to oversee the day-to-day financial records for their employer or clients. They are responsible for a range of financial duties, including tracking and recording all financial transactions, managing A/P and A/R, preparing and analyzing financial statements, and reconciling bank statements. A certified public accountant or private accountant can hold the job of a financial accountant, but you must have an in-depth understanding of all GAAP principles.
As the name suggests, management accounting involves the overall management of the company. These senior accountants are involved in the financial planning and budgeting of the company. They provide valuable insights, such as financial statement analysis, financial forecasting, and risk management analysis to help key players in the company make sound financial decisions. This accounting concentration is ideal for students wishing to pursue a career in the executive level of a company, such as the CFO position.
Cost accounting is a form of managerial accounting that solely focuses on calculating product costs at every stage of the manufacturing process. Cost accountants are responsible for calculating fixed, variable, operating, direct, and indirect costs associated with the cost of producing a specific product or providing a specific service. Rather than earning a CPA certification, these professionals should take steps to become a Certified Cost Accountant (CCA).
Tax accountants specialize in planning, preparing, and filing tax returns on behalf of their employer or clients. They should have an understanding of corporate, business, and individual tax codes. While not required, most tax accountants take steps to earn their accounting certification as a CPA. Tax accountants also provide professional tax advice and can represent clients in IRS matters after earning their CPA or Enrolled Agent (EA) credentialing.
Government accountants can work at the federal, state, or local levels. They handle financial services, including auditing, tax filing, payroll preparation, budgeting, and financial analysis services for a variety of governmental agencies, including the Internal Revenue System, state treasury offices, and local municipalities. These accountants must have a thorough understanding of financial guidelines set forth by the Federal Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB).
Investment accountants typically provide personal financial planning services for an investment firm. They work with individuals, small business owners, and entrepreneurs by helping them create an investment portfolio that may include everything from stocks and bonds to real estate. Personal financial planners provide tax advice, assist with estate planning, and help clients save for retirement.
Auditing accounting includes both internal and external auditing services. Internal auditors typically work for the company and regularly check financial accounts and transactions looking for inaccuracies, fraud, and authorized spending. External auditors, on the other hand, are contracted by a company to conduct a third-party review of their financial records. Most companies hire external auditors that are CPA certified to obtain official audited financial reports.
International accountants work for or provide services for international companies. They must not only have a comprehensive understanding of GAAP accounting principles, but they must also understand all financial guidelines of the International Financial Reporting Standards, as well as the specific accounting guidelines for any country where the company is located. These accountants are highly trained and experienced, but also have some of the highest salaries in the accounting field.
Accounting information management
Formally referred to as Information Management and Technology Assurance (IMTA), accountants who specialize in accounting information management specialize in software management and security of financial records. They are responsible for managing, updating, and replacing the company-used accounting software, as necessary as well as maintaining the security of the company’s financial records. Accountants interested in an accounting career in this field should become a Certified Information Technology Professional (CITP).
Educational requirements for accountants
Those wishing to become an accountant must start by earning an undergraduate degree. While some entry-level positions may be available for those without any type of degree, most employers today prefer candidates that have completed an undergraduate degree program.
There are two basic types of undergraduate programs in accounting available, including:
The lowest level undergraduate program available is an associate degree in accounting. This type of program takes an average of two years to complete and is typically offered at community colleges. Students can expect to take a mixture of general education and business-related courses, such as economics, accounting principles, and business law.
Graduates of an associate degree program can often find entry-level positions available within a company’s accounting departments. Students with an associate degree can also take steps to become certified bookkeepers if they choose.
An associate-level program can be a great place to start for some students. You may also consider enrolling in a transfer program that allows you to complete two years at the community college before transferring to a four-year college or university to finish your studies. Since community college is significantly cheaper than most colleges and universities, students can save a significant amount of money on overall tuition by enrolling in a transfer program.
Most accounting students begin their career by earning either a Bachelor of Arts (BA) in Accounting or a Bachelor of Science (BS) in Accounting degree. Bachelor’s degree programs take an average of 4 years to complete but could take longer depending on your specific concentration and if you’re seeking a dual major. Most bachelor programs require the completion of 120 credit hours, which includes a combination of general education courses, such as English composition and philosophy, and business-related classes, including foundations of accounting, information technology, marketing, macroeconomics, and investments.
Most colleges and universities give students the opportunity to complete an internship program. The real-world experience obtained through an internship can prove invaluable when it comes time to find an accounting job after graduation. If at all possible, it’s recommended to complete some type of internship program to gain this level of experience. Always look for internship opportunities that are closely related to your specific concentration.
Students graduating with a bachelor’s degree will find numerous job opportunities available to them. Those seeking a CPA certification, however, will have to complete some graduate-level coursework to qualify for the Uniform CPA examination.
While obtaining a graduate degree is not required to start a career as an accountant, many students decide to advance their job opportunities by obtaining a graduate degree. Many colleges and universities offer both online and traditional classroom-style graduate-level programs. The convenience of an online program may make it possible for you to continue working while earning your degree.
There are two types of master degree program available, including:
A master’s degree program can take anywhere from 2 to 3 years to complete or even longer depending on your specific program. Students can enroll in a Master’s in Accounting (MAcc) degree program or a Master’s in Business Administration (MBA) program. While an MBA is not strictly an accounting program, most employers recognize it as such.
Students enrolled in a master’s degree program take a wide range of business-related courses, such as business ethics, international finances, financial management, and marketing management. Students are also encouraged to select a specific concentration in accounting and to take accounting courses pertaining to that specialty. You may also be required to complete an internship program with a local agency or company.
If you are planning to take the CPA exam, you don’t necessarily need to complete a graduate-level program, but you must take at least 30 credit hours at the graduate level. Since most master’s programs only require the completion of 36 to 60 credit hours, most students choose to finish the program to earn their graduate degree.
If you are looking for a way to jumpstart your career, you should consider taking an accelerated accounting program. These programs are very intense and require full-time studies, but you can earn both your bachelor’s degree and master’s degree in accounting in about 5 years.
Some students choose to advance their careers even further by seeking a doctorate degree in accounting (Ph.D. in Accounting) or a doctorate degree in business administration (DBA). These programs can take anywhere from 3 to 5 years to complete and are ideal for those who wish to teach accounting at a college or university or those seeking to move into executive-level positions, such as president or CEO of a company.
Components of a successful accounting career
Accounting is not the right career choice for everyone. However, for those who possess the right skillset and aptitude, accounting can be both a lucrative and stable career option. According to the Bureau of Labor Statistics, the average accountant earns an annual salary of $73,560. However, annual salaries for accountants can range anywhere from $45,220 at the low end to $128,680 or more at the high end.
Several factors contribute to this large discrepancy in salaries. Understanding these factors and how they can affect pay will allow you to position yourself in a way that leads to a successful career as an accountant.
There are several must-have skills that all accountants should possess. Below is a brief look at just some of these soft and hard skills
- Strong attention to detail
- Excellent communication skills (both written and verbal)
- Good time management skills
- Keen eye for detail
- Analytical thinking capabilities
- Problem-solving skills
- Strong work ethics
- Comprehensive knowledge of GAAP rules and guidelines
- Understanding of financial transactions and reports
- Proficiency in accounting software usage
- In-depth knowledge of federal tax codes
- Knowledge in economics and investments
- Data analysis training
- Mathematical comprehension
As you might expect, the level of education you have is likely to impact salaries. Most employers are looking for candidates with at least a bachelor’s degree in accounting or business administration with a concentration in accounting. Naturally, these employers are often willing to pay a higher salary to ensure those working in the accounting department fully understand all standard accounting practices and guidelines.
While a bachelor’s degree may be the basic minimum requirement for accountants, taking steps to earn a master’s degree can give you a competitive advantage. Not only can a master’s degree make you eligible for more job opportunities, but it can help you secure better, higher-paying jobs. If you’re already working as an accountant, check to see if your employer offers a tuition reimbursement program. This type of program may make it more affordable for you to earn your graduate degree.
Employers often link experience with salaries. In most cases, an employer is willing to pay a higher salary to employees with the most experienced in the field. This factor means that as your career progresses, your salary should increase, even if you’re still working for the same employer.
While you can’t gain this valuable experience overnight, you can carefully track all the experience you gain over the years. For example, keep track of any financial project you work on and any volunteer work you do, such as serving on the board of a local nonprofit. Tracking this experience along with way will make it easier to include everything on your resume when you apply to new positions.
As discussed earlier, certified public accountants (CPAs) are seen by many employers as having a higher level of training and qualifications. Even if an employer is not necessarily looking for a CPA, they are still more likely to hire a candidate with these credentials. Additionally, some employers are willing to pay a higher salary to those employees who possess a CPA licensure.
In order to obtain a CPA license, you must complete at least 120 credit hours in an undergraduate program and an additional 30 hours of graduate-level studies. Once you complete these educational requirements, you can sit for the Uniform CPA exam. You have 18 months to pass all four sections of the CPA exam, including:
- Audit and attestation
- Business environments and concepts
- Financial accounting and reporting
Finally, you must complete a set number of on-the-job training hours and fulfill and additional state requirements.
If you are not planning to become a licensed CPA, you may want to consider other professional certifications, such as:
- Certified Government Financial Manager
- Chartered Global Management Accountant
- Certified Internal Auditor
- Certified Government Auditing Professional
- Certified Financial Services Auditor
- Certified Management Accountant
- Certified Information System Auditor
- Certified Information Technology Professional
- Internal Employee Benefit Plans Audit certification
Obtaining a certification in your accounting specialty can help to showcase the level of skills and training you have in a particular field. While not all employers require these types of credentials, being certified can help you stand out from the competition and to secure higher-paying jobs.
Your position and accounting specialty will also play a role in annual salaries. Here’s a look at the average annual salaries for some of the most popular positions in the accounting field.
- Bookkeeper/accountant assistant: $42,410
- Tax examiner: $55,640
- Cost estimator: $66,610
- Budget analyst: $78,970
- Financial analyst: $83,660
- Management analyst: $87,660
- Personal financial advisor: $89,330
- Fiscal manager: $134,180
Keep in mind that these are average salary statistics and that actual salaries fluctuate greatly based on other factors, such as location and experience.
Location plays a very important role in salaries for accountants. Employers take factors, such as cost of living, competitor salaries, and demand, into account when calculating salaries for their employees.
For example, here’s a look at the states that offer the highest average salaries for accountants.
· Washington, D.C.: $110,140
- New York: $101,440
- New Jersey: $96,260
- Massachusetts: $88,830
- California: $88,130
- Colorado: $85,120
- Connecticut: $84,860
- Maryland: $83,950
- Washington: $83,720
- Georgia: $83,370
You can compare these rates with the state that have the lowest average salaries for accountants.
- West Virginia: $69,480
- South Dakota: $69,170
- Utah: $68,590
- Montana: $68,560
- Wyoming: $68,520
- South Carolina: $68,520
- Nevada: $68,360
- Louisiana: $67,350
- New Mexico: $67,330
- Mississippi: $66,450
When comparing salaries, however, it’s important to factor in the cost of living, which represents the amount of money needed to sustain an average standard of living. States with higher salaries, such as New York and California also have a higher-than-average cost of living, which means that personal costs, such as housing, food, and transportation may costs more in these areas.
Furthermore, if you’re looking for areas with the most job opportunities for accountants, you should consider applying for jobs in states with the highest concentration of accountants, such as:
- California: 150,050
- New York: 112,360
- Texas: 109,470
- Florida: 73,690
- Pennsylvania: 50,240
- Illinois: 49,590
- Virginia: 43,550
- Colorado: 36,470
- North Carolina: 35,890
- Georgia: 34,800