If you’re considering a career in accounting, it’s important to understand the many different options that are available to you. An accounting degree can lead you to many different types of accounting careers, and unique specializations like tax and auditing.
Within the accounting profession, two of the most popular branches of accounting are known as public accounting and private accounting (also known as industry accounting). At the most basic level public and private accountants are external or internal accountants, respectively. There are other career paths for accountants, but public and private accounting are two of the most popular branches of accounting.
If you’re considering a career in accounting or currently earning your accounting bachelor’s degree it’s extremely important to understand your options, how to get involved in either public or private accounting, and why a degree is vital to either path.
Public accounting can also be viewed as external accounting. Public accountants work at a third-party firm and work with clients to review and prepare financial documents that are required to be disclosed to the public. At the simplest level, public accountants work to verify financial documents, reports, and disclosures from an outside perspective. They may help prepare tax returns for individuals and organizations, perform audits for companies, consult, and advise on tax and financial matters. They may be tax or audit specialists within their accounting firm. Public accountants work for a third-party firm that is hired out by businesses and organizations to evaluate their finances.
Private accounting is commonly called industry accounting. Private accountants are considered internal accountants. They work for a single company and help deal with the financial information of that company. They prepare and analyze reports for an internal manager. Often their work is then analyzed and reviewed by a public accounting firm. The public accounting firm will provide an independent stamp of approval, confirming that the private internal accounting practices meet accounting standards. Private accountants may file tax returns for their organization, perform audits of financial documents, advise on financial and budgetary matters, and more all for their specific company.
Education and CPA licensing. Both private and public accountants have a requirement for a bachelor’s degree in accounting. A bachelor’s degree gives you a firm understanding of GAAP (generally accepted accounting principles), financial statements, journal entries, and more. Public and private accountants alike will need at least a bachelor’s degree to help them prepare for this career. Additionally, there may be more education and CPA certification required for many accounting firms. Being a certified public accountant (CPA) is usually a requirement for public accountants. Accountants won't need to become certified public accountants to start in public accounting, but they usually need to be a CPA to move into management positions at their firm. Different states have different requirements for becoming a CPA, and many states require you have a certain amount of school hours to be eligible to become a certified public accountant. Usually the requirement is over 150 credit hours, or equivalent experience in order to sit for CPA tests. So public accountants may also need a master’s degree to become a CPA. Certified public accountants demonstrate that they have specific knowledge and are qualified accountants. There are tax, audit, financial, and managerial tests involved in becoming a CPA. Private and public accountants alike can benefit from being a CPA, as it usually helps you stand out from other candidates for jobs. Being a CPA may also help increase your average salary level, give you opportunities for other positions, and more. A bachelor’s degree is a critical first step to a future in either one of these branches of accounting.
Skills. Both private and public accountants need to have similar skills in order to be successful in their position. They need knowledge in accounting practices and standards, regulations, finance, and more. They also need good communication skills, as public accountants interview individuals in a company as they review financial statements, and private accountants will need to interview members of their own company. Strong organizational skills, an ability to meet deadlines, and self-motivation are all important for accountants.
Salary. Salaries for public and private accountants are fairly similar. The average annual salary for accountants in both the private and public realms is over $71,000 per year. Both private and public accountants can climb the ladder and expect a lucrative salary as part of their career. The top 10% of accountants earn a salary of more than $124,000 per year. Public accounting firms typically keep their salary levels similar so they stay competitive. Private accountants may see a difference in salary levels based on where they are located, the industry they are in, and more. Being a CPA can greatly impact your average salary level, as well as your experience and education.
Job duties. The main difference between private and public accountants is their job duties. Public accountants spend their days reviewing financial documents for accuracy and completeness before they are disclosed to the public. They test and analyze the financial records their clients submit for errors. This is why a great education and CPA license is critical—it helps ensure that accountants are prepared for any situation and client. Private accountants are the ones preparing documents for public accountants to review. They work with financial managers to plan budgets, evaluate fiscal performance, and ensure that correct financial practices are being followed. Auditors and tax accountants alike have specific roles in public and private accounting firms.
Career path. In public accounting, the career path is fairly straightforward. You enter the career at an entry-level position as an auditor, consultant, or tax professional and can work your way up through different management and director ranks, eventually becoming a partner. In private accounting, you can start in an entry-level position and move through different positions like as an auditor, accounting manager, financial director, and up to a Chief Financial Officer position.
Industry experience. Public accountants often are responsible for working with companies in many different industries. They get to experience financial and accounting work in many organizations as they have many different clients. Private accountants work within one industry and organization, so are less versatile when it comes to financial understanding of various industries. However, they may be more specialized in one specific field which can help them thrive in that area. They also develop deep financial knowledge of their employer and their industry, which makes them an invaluable part of the team.
Work environment. Private and public accountants will both face a busy season during the year. That can be around the tax deadline for tax accountants, or around the end of the fiscal year for auditors. However, public accountants may experience more travel than private accountants because they need to be on-site to review documents for clients. Public accountants often do their work in their client’s office, and spend much less time in their firm’s actual offices. While busy seasons for accountants are all fairly similar, they may happen at different times of the year based on the branch of accounting you choose. Public accounting firms may be small and cover a certain region, or extremely large. The largest global public accounting firms, commonly known as “The Big 4,” are Deloitte, PriceWaterhouse Cooper (PwC), Ernst & Young (EY), and KPMG.
If you’re currently studying to become an accountant, it’s extremely valuable to learn about the different branches of accounting you can enter. A degree can help you prepare for an exciting career that you will love.