Accountants are financial specialists who help companies record and analyze their financial activities. Certified Public Accountants(CPAs) are also accountants but work at a higher level. Regular accountants only need a bachelor’s degree and mostly work for private corporations. They help companies file their taxes, provide reports on financial activities, and offer financial advice. CPAs perform more advanced functions, like preparing government audits and offering the world’s largest corporations detailed financial advice. Becoming a certified public accountant means receiving the best financial education and having the most advanced financial skills. Not all accountants become CPAs, but all CPAs are accountants.
What do accountants do?
Accountants analyze and interpret financial data and prepare financial documents. They may also perform other activities like providing business advice, recommending financial policies, or filing tax returns.
A company’s accountant has access to its financial documents. So, they’re expected to recognize financial irregularities and advise a company against financially irresponsible behavior.
For those reasons, accountants are highly valued. Experienced accountants are also highly sought after. The best-paid 25% of American accountants earn $97,530 on average annually.
What does a Certified Public Accountant do?
Certified public accountants(CPAs) are licensed professional accountants who protect public interest. All CPAs are accountants, but not all accountants are CPAs. An accountant has to gain additional qualifications to become one.
As for what they do, CPAs mostly work like other accountants. But, their role involves providing financial advice and consultation more than regular accountants. For example, CPAs oversee internal audit reports for government audits. They also issue financial statements to a company’s Board of Directors or management.
CPAs are extensively hired by the world’s top businesses, and they’re considered extremely valuable. A Certified Public Accountant with 20 years of work experience could earn upwards of $150,000 annually.
Should you become a regular accountant or a CPA?
That depends. Do you want the highest salaries and are willing to invest the effort to get a higher qualification? If yes, then a CPA is a good choice. If not, there’s nothing wrong with being a regular accountant.
Being a CPA has many advantages over being a regular accountant. For example, CPAs charge higher fees and earn more. You can also do things that regular accountants can’t, like representing clients to the IRS during tax audits.
But those perks come with costs. CPAs are held to higher performance standards. They also have to receive a license. Meanwhile, regular accountants need a bachelor’s degree at most.
So, it’s a question of whether you’re willing to commit to the extra effort to become a CPA. Or if you’re comfortable with being a regular accountant. The right choice depends on you.
How much do CPAs make compared to Accountants?
American accountants have a median annual income of $77,250. American CPAs earn between 10-15% more, at around $84,975. CPAs naturally have a higher income than regular accountants at all experience levels.
The best-paid accountants in the US earn approximately $97,530. In comparison, the partners of a CPA firm earn $166,572 annually.
Becoming a CPA is the right choice for you if you want to earn the highest salary.
Can you become a CPA without getting an Accounting degree?
Every state has different educational requirements for CPAs. Virtually all of them require a bachelor’s degree with a specific number of study hours dedicated to accounting and business. So, you can become a CPA without an accounting degree if you’ve studied enough accounting and business in college.
That being said, candidates with accounting backgrounds in college have the best chances of becoming CPAs. So, if you’re still in school, it’d be advisable to tailor your education around this future.
What are the examination requirements?
CPA candidates complete a Uniform Examination, which has the following four sections:
- Auditing & Attestation
- Financial Accounting & Reporting
- Regulation
- Business Environment & Concepts
CPA candidates have an 18-month window to attempt each section. They’re also required to score at least 75% in each section to pass. Most candidates attempt the exams multiple times before passing each section. Fewer than 20% of CPA candidates pass all 4 sections during their first attempt.
How to maintain a license?
A Certified Public Accountant maintain their license by fulfilling yearly educational requirements. All states requires to complete the equivalent of 40 hours of continuing professional education (CPE). Some states may also have flexible educational requirements.
For instance, Alaska requires to complete 80 hours of CPE every two years, with at least 20 hours of CPE per year. So, an Alaskan CPA could complete 20 hours of CPE in the first year and 60 hours in the second to complete the 80 required.
How many years does it take to become one?
On average, it takes seven years to become a CPA. The exact time largely depends on the candidate’s professional experience, education, and their state’s regulations. As an example, some states only require one year of professional experience, while others require two.
Putting it all together, certified public accountants are accountants who’ve received additional education and training to serve the public interest. They work for the public interest by providing financial advice and other services for the government and private businesses. Modern accountants also provide financial advice and similar services, but on a smaller level.
Becoming a Certified Public Accountant involves receiving the highest accounting education, passing difficult academic examinations, and receiving continual education.