A CPA stands for Certified Public Accountant. While all CPAs are accountants, not all accountants are CPAs! Becoming a CPA or certified public accountant is a top career goal for many accounting students. Becoming a CPA shows the public, government, and businesses that you have the needed education and experience to perform specialized accounting tasks. The CPA certification additionally demonstrates the ability to effectively address regulations, rules, professional ethics, and the challenges of accounting.
There are some accounting services that only licensed CPAs are eligible to perform legally. For example, the authority to file reports with the SEC (Securities and Exchange Commission) is one of the most important roles of the CPA. Auditors and those who perform attestation must also be CPAs. Because of these rules, many public accounting firms and law offices will only hire CPAs, or will only hire those who are eligible to become CPAs in the near future.
Becoming a certified public accountant is a highly regarded status for those in the accounting profession. As of May 2019 there were 654,375 licensed CPAs in the U.S. spanning across all 50 states. Accountants may also become CPAs in hundreds of countries around the world, though their certification is different from the U.S. as financial rules and regulations are different in each country. Accountants who are CPAs in one country will likely need to relicense in the United States.
If you’re interested in business and finance, a career as a CPA could be an ideal fit for you. While there are many requirements, including education and CPA exams, many CPAs agree that the requirements are well worth the effort. Learn more about what career options a CPA has, how much money they make, and how you can become one.
There are many career paths a CPA can take, but the most common are working in public or industry accounting. A CPA will likely choose between working at a large or small public accounting firm, or working in industry accounting as an internal accountant for an organization. Because there are certain tasks that only CPAs can legally perform, accounting firms are more likely to want to hire CPAs. In a public or industry accounting position an accountant can pursue many careers or specialties, including:
Auditing. CPAs play an important role in the auditing process. Public accountancy firms are responsible for auditing client financial statements, and issuing an opinion for shareholders and the public. Basically, they are an unbiased, neutral third-party who ensures that the company is following correct accounting principles. Every public company is required by the SEC to have a CPA public accounting firm audit their financial statements and issue an opinion. Auditors can also work in industry accounting—doing internal audits for their organization before a public accounting firm performs their audit. They work with the public accountancy firm to answer questions about the financial statements and behavior of the company.
Taxation. Taxes are probably what CPAs are most well-known for. CPAs can work for themselves doing taxes for individuals, for a company helping prepare their tax documents and financial records, or for a public accounting firm doing tax research and helping clients save on taxes. Tax CPAs work to help clients file their taxes, with a focus on helping clients legally lower their tax burden every year. They must regularly keep up with the latest tax rules and regulations, as laws often change.
Consulting. CPAs often work as consultants on accounting matters for companies. They can help companies set up their financial systems and processes so everything is accurate and efficient. They can help an organization prepare for tax filings and audits, and work to manage the entire financial process while creating a high-functioning, effective financial team.
Management accounting. Management accountants work for companies in the public and private sector to help run the finances of the organization. They help create and analyze budgets, help access financial performance, choose investments, analyze risks, and more. They use their knowledge of accounting best practices to help make the best calls for how to make the organization profitable. A CPA can help a management accountant stand out among the competition and demonstrates their aptitude for best practices.
CPAs earn an average annual salary of around $70,000 per year. But there is a large disparity in how much they can earn, with the lowest 10% of CPAs earning around $40,000, and the top earning more than $150,000 per year. There are many factors that influence the salary of a CPA including:
Location. Certain states are more likely to have higher paying opportunities for CPAs than others. States with large cities and accounting firms are more likely to have higher salary levels for CPAs than smaller states with smaller firms.
Experience. CPAs who work in firms tend to see specific professional growth every year. Pay typically increases every year as CPAs gain more experience and get promoted. In industry accounting, experience lends to promotion and higher salaries.
Job type. Entry-level positions are obviously going to pay less than senior level positions, so CPAs can expect to see considerable salary growth as they advance to better job opportunities in their career.
CPAs can expect a better salary than regular accountants. While they may start at a similar salary level, CPAs can expect much better job opportunities and thereby a better salary the longer they work. In the long run, it pays to be a CPA!
The path to becoming a CPA takes a bit of time and lots of learning. Each state has its own unique requirements, so it’s valuable to research the requirements in your state. For the most part however, there is a fairly straightforward path to follow if you want to become a CPA. Certified public accountants are similar to lawyers in that they are usually only licensed in one state. That means if a CPA needs to move, they should contact the state board of their new state and discuss the best way to transfer their CPA license.
Obtain a bachelor’s degree. The first step to becoming a CPA is to meet all the education requirements. The first education requirement is to get a bachelor’s degree in accounting. A bachelor’s degree in accounting will give you knowledge about GAAP (Generally Accepted Accounting Principles), journal entries, financial statements, debits and credits, managerial accounting, finances, auditing practices, tax practices, and more. In many states in order to sit the CPA exam, you must have at least 120 credit hours of education, which is a bachelor’s degree. You may still be able to become a CPA if you have a bachelor’s degree in another field, but you’ll likely need substantial coursework in accounting. A master’s degree in accounting can also help and assure that you are prepared to succeed in the profession.
Earn a master’s degree in accounting. A master’s degree in accounting is an education requirement in many states. While many states require just 120 credit hours (or a bachelor’s degree) to sit for the CPA exams, most require 150 hours (or a master’s degree) in order to actually get your CPA license. So you can begin taking some of the exams with just a bachelor’s degree, but you’ll need a master’s degree in accounting in order to become licensed. Some students may opt to reach the 150 credit hour requirement by doing a double major in their bachelor’s degree, but many experts agree that the higher education of a master’s degree is often the best option for accounting students. A master’s degree in accounting will provide you with advanced knowledge in auditing, taxation, accounting research, governmental and not-for-profit accounting, professional ethics, and more. All of which will help prepare you for the CPA exam.
Prepare to take the CPA exam. There are important steps to take to prepare for the CPA exam. You’ll need to get your educational requirements verified by your state, then you’ll formally apply to take the exam. After this application, you’ll get a Notice To Schedule (NTS) that allows you to schedule and take a section of the CPA exam. There are 4 sections of the CPA exam total, and you’ll need an NTS for each one. The four sections of the CPA exam are Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG). There are many CPA review courses that students can utilize to help them prepare for each of the CPA exams. Some of the most popular CPA review courses include Becker, Wiley, Surgent, and Rogers.
Take the CPA exam. The CPA exam is administered by the American Institute of Certified Public Accountants (AICPA). The AICPA works with NASBA (National Association of State Boards of Accountancy) to administer the exams. NASBA is in charge of regulating the state boards and ensuring that every state is following the proper rules. They issue the NTS and work with states on their requirements. The AICPA is responsible for the creation of the exams and its administration, while NASBA is responsible for distribution of information. You need to take all four parts of the CPA exam in an 18-month time period, and you have to get at least a 75 on each part. You can retake any exams you don’t pass, as long as all sections of the exam are passed within 18 months.
Become licensed. To become licensed, most states require more than the CPA exam, and have additional experience requirements. Many experience requirements are that a candidate have two years of public accounting work experience to become licensed. But this may vary from state to state, so it is recommended to research your state’s work experience requirements. Many states also require an ethics course or exam to ensure their CPAs understand the ethical requirements of accounting. After you’ve all of the state's requirements for CPA licensure you may apply for licensure through your state's Board of Accountancy.
Continue education. In order to keep up your licensure, most states require that CPAs take continuing education courses to ensure they are up-to-date on regulations and laws. Every state has mandatory annual continuing professional education requirements. These requirements can be met by taking a variety of courses that can be chosen by you according to your needs and interests.
While becoming a CPA may seem like a long and daunting process, those who have done it say it is extremely rewarding and well worth the effort. If you’re interested in becoming a CPA, take the first step and get a bachelor’s or master’s degree in accounting from WGU today.