A comprehensive guide on becoming a certified public accountant
Are you thinking about becoming a CPA? This article breaks down the steps to becoming a CPA, from the rigorous steps needed to earn the certification to the diverse career opportunities and benefits that come with it. Here’s why it’s an excellent choice for anyone in accounting!
What is a CPA?
A Certified Public Accountant (CPA) is an expert accountant who has passed a challenging exam and met specific education and experience requirements. Licensed by the state, they follow strict ethical rules. CPAs take on crucial tasks like auditing, tax prep, and financial advising, making sure everything is accurate and legally sound.
Unlike regular accountants, CPAs have a certification that sets them apart. This certification shows a higher level of expertise and authority, highlighting their commitment to excellence and integrity.
How to become a CPA?
Candidates must meet specific educational, experiential, and exam requirements to become a CPA.
Step 1: Meet education requirements
To become a CPA, you’ll need a bachelor’s degree in accounting or a related field. But here’s the catch: many states require 150 semester hours of college coursework. That’s more than your typical bachelor’s degree, so you might need extra classes or even a master’s degree to hit the mark.
Step 2: Gain relevant experience
Next, you need to get 1-2 years of relevant work experience, usually under the guidance of a licensed CPA. This hands-on experience is vital because it gives you practical skills and real-world knowledge you can’t get from textbooks.
Step 3: Pass the CPA exam
Then comes the big hurdle: the CPA exam. This challenging, multi-part test covers various areas of accounting, and passing it is a key step in becoming a CPA.
Step 4: Apply for licensure
After passing the exam, you’ll apply for your license from your state’s Board of Accountancy. Each state might have a few extra requirements, so you’ll need to check those out.
Step 5: Complete continuing education
Finally, to keep your CPA license active, you’ll need to keep learning. This means taking ongoing education courses to stay updated with the latest in accounting practices and standards.
CPA exam overview
The CPA exam is divided into four parts: Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG). Each section tests different skills and knowledge areas.
Content areas:
AUD:
Covers auditing processes, standards, and ethics.
BEC:
Includes business concepts, financial management, and IT.
FAR:
Focuses on financial accounting and reporting.
REG:
Deals with taxes, business law, and professional ethics.
You must pass all four sections within 18 months to earn your CPA certification. The exam is designed to ensure that CPAs have a high level of competence in their field.
How to get a CPA license?
In order to get your CPA license, you need the following credentials:
State-specific requirements
Every country has its own set of rules for getting a CPA license. These can include extra education and experience requirements beyond just passing the CPA exam. It’s important to check with your state’s Board of Accountancy to make sure you meet all the local criteria.
Continuing education
To keep your CPA license active, you’ll need to take continuing education courses regularly. This helps you stay updated with new laws, regulations, and best practices in accounting. Most states require CPAs to complete around 40 hours of continuing education each year.
Career opportunities for CPAs
Certified public accountants enjoy some of the most diverse career opportunities, such as:
Public accounting
In public accounting, CPAs work for firms that offer accounting services to various clients. This can include tasks like auditing, tax preparation, and consulting. You’ll often work with a wide range of clients and industries, which gives you a lot of diverse experience.
Corporate accounting
If you go into corporate accounting, you’ll manage a company’s financial records. This includes handling budgeting, financial reporting, and internal audits. Your job is to ensure the company’s financial health and compliance with regulations.
Government and non-profit roles
CPAs in government and non-profits play a crucial role in ensuring financial integrity and transparency. You might work in areas like auditing, budget analysis, and financial management, helping to ensure public accountability and efficient use of resources.
The differences between CPAs and non-CPA accountants
A CPA is a certified public accountant who has met rigorous education, examination, and experience requirements. On the other hand, a non-CPA accountant may have yet to pass the CPA exam or meet the additional requirements needed to become certified.
Legal and professional distinctions
CPAs have legal recognition and can perform certain tasks that non-CPAs cannot, like auditing public companies and representing clients before the IRS. This credential signifies a higher level of expertise and commitment to professional standards.
Key responsibilities of a certified public accountant
If you become a CPA, expect to fulfill these responsibilities in any given role:
Auditing
CPAs are the go-to professionals for both external and internal audits. Their job is to make sure financial statements are accurate and comply with regulations. They dig into financial records and give their expert opinion on their validity.
Tax preparation and planning
When it comes to taxes, CPAs are the experts. They prepare and file tax returns for both individuals and businesses. Plus, they offer strategic tax planning to help minimize liabilities and ensure everything is in line with tax laws.
Financial consulting
CPAs also wear the hat of a financial advisor. They guide clients on financial strategies, covering investments, estate planning, and risk management. Their expertise helps clients make smart, informed financial decisions.
Forensic accounting
In forensic accounting, CPAs play detective. They investigate financial discrepancies and fraud, analyze data to spot illegal activities, and often provide expert testimony in legal cases.
Management accounting
CPAs in management accounting focus on a business’s inner workings. They analyze financial data to improve efficiency, reduce costs, and boost profitability.
The skills required for CPAs
Here are the key skills required to become a successful certified public accountant:
Analytical skills
CPAs need to be top-notch at analyzing complex financial data and drawing accurate conclusions. This means having a keen eye for detail and strong critical thinking abilities.
Communication skills
Effective communication is crucial for CPAs. They must clearly explain financial information to clients and stakeholders, both in writing and verbally.
Ethics and integrity
CPAs follow strict ethical standards, ensuring honesty and transparency in all their work. This builds trust with clients and regulatory bodies.
Technical proficiency
CPAs must be well-versed in accounting software, tax laws, and financial regulations. Keeping up-to-date with industry changes is vital for their success.
How much does a CPA earn?
The salary of a CPA can vary widely depending on experience, location, and industry. Entry-level CPAs typically earn between €45,000 and €65,000 annually. With more experience, salaries can range from €70,000 to €100,000 a year.
Those in senior or specialized roles, such as forensic accounting or executive positions, can make over €120,000 annually. Plus, bonuses and other compensation can boost their earnings even further.
Benefits of becoming a CPA
There are numerous advantages of becoming a certified public accountant, including but not limited to:
Job security
Becoming a CPA offers significant job security. There’s always a high demand for qualified CPAs across various industries, ensuring that professionals with this credential are always in demand. Economic ups and downs don’t affect the need for skilled accountants as much, making this a stable career choice.
Career opportunities
CPAs have a broad range of career paths to choose from. Whether it’s public accounting, corporate finance, government, or non-profit sectors, the CPA designation opens many doors.
You could find yourself in roles like auditor, tax advisor, financial analyst, or management consultant. The CPA credential’s versatility allows for easy movement across different sectors and industries.
Job satisfaction
Many CPAs find their work fulfilling due to the variety of tasks and the positive impact they have on their client’s financial health.
The role often involves problem-solving and strategic planning, which can be intellectually stimulating. Helping businesses and individuals manage their finances effectively brings a real sense of accomplishment.
Increased earning potential
CPAs generally earn higher salaries than non-certified accountants. Entry-level CPAs can expect competitive starting salaries, which grow significantly with experience and added responsibilities.
Specialized roles and senior positions can command salaries well above the average for the accounting profession. Plus, CPAs often receive bonuses, profit-sharing, and other financial perks, boosting their earnings even more.
Which is better: an MBA or a CPA?
An MBA is an academic degree focused on management and business operations, providing a broad understanding of business principles. It’s ideal for those looking to start or run a business.
On the other hand, the Certified Public Accountant (CPA) is a professional license for accountants, indicating a high level of expertise and specialization in accounting. It’s perfect for those pursuing a career in accounting, enhancing career advancement and earning potential.
Each path has its strengths, so the best choice depends on your career goals. If you’re aiming for a management role or want to understand business operations broadly, an MBA might be the way to go. But if you’re passionate about accounting and want to specialize in this field, becoming a CPA is an excellent choice.
Is becoming a CPA worth it?
Becoming a CPA takes a lot of time and effort, including passing a tough exam. But here’s the upside: CPAs usually earn about 25% more than non-CPA accountants. Plus, they often move up to higher-responsibility positions within a year or two and can reach senior-level roles only a short time after that.
The bottom line
Getting your CPA license can significantly boost your resume and career opportunities. Sure, you can work as an accountant without it, but having a CPA shows a higher level of expertise. This credential opens the door to advanced job opportunities, higher earning potential, and greater career growth.
FAQs
Is a CPA or CFA better?
It depends on your career goals. A CPA is ideal for accounting and auditing roles, while a CFA is better suited for careers in investment management and financial analysis.
Is CPA useful for finance?
Yes, a CPA is very useful for finance roles, especially in areas like financial reporting, tax planning, and auditing, where deep accounting knowledge is crucial.
Is CA or CPA better?
Both are prestigious accounting credentials. A CA (Chartered Accountant) is typically more recognized internationally, while a CPA (Certified Public Accountant) is highly valued all over the world.
Where do CPAs make the most money?
CPAs make the most money in industries like finance, consulting, and corporate accounting. Specialized fields such as forensic accounting, executive roles, and positions within large public accounting firms also offer higher salaries.
