A certified public accountant (CPA) is an accounting professional who passed a standard CPA exam and met their state’s requirements for experience and education to become licensed. A CPA can hold down any number of jobs, such as tax accountant, financial analyst, internal auditor, chief financial officer and accounting professor.
As the American Institute of CPAs explains, all CPAs are accountants, but not all accountants are CPAs. However, CPAs and non-CPA accountants typically hold bachelor’s degrees in accounting or finance.
As of August 2021, nearly 670,000 people in the U.S. held active CPA licenses, according to the National Association of State Boards of Accountancy. That figure excludes data from Hawaii. There are more than 1.3 million accountants (CPAs and non-CPAs) and auditors across the nation, the U.S. Bureau of Labor Statistics says.
“The CPA credential is a symbol of trust and professionalism in the world of business. It’s a highly challenging professional track, but the reward is that CPAs are considered the most trusted advisers in business,” the American Institute of CPAs says.
What Does a Certified Public Accountant do?
So, a certified public accountant handles accounting duties. But beyond that, what does a CPA do? Generally speaking, a CPA helps their employer or clients deal with complex financial matters and achieve financial goals. For instance, a CPA might:
- Prepare a family’s tax returns
- Comb through a government agency’s financial records to search for evidence of fraud or other criminal misbehavior
- Consult with a business on its financial strategies
- Compile a company’s yearly financial reports
“Increasingly, people rely on CPAs for assistance in building college funds, planning for retirement, and creating estate plans,” the Society of Louisiana Certified Public Accountants says.
Daniel Sleep, a CPA who owns an accounting firm that services small businesses, says being a CPA “can be rewarding, or it can be the worst. You really need to find within the accounting profession what you enjoy most. Otherwise, it will be draining.”
How to Become a CPA
Requirements for becoming a certified public accountant vary from state to state. However, all states require at least 120 hours of college credit and a college degree, says CPA Tim Yoder, the tax and accounting analyst for the Fit Small Business website. A majority of states require 150 hours of college credit.
“Your degree does not necessarily have to be in accounting, but you’ll need a certain number of hours in accounting courses,” Yoder says.
Once you meet the education requirements, you must pass four CPA exams lasting four hours each, Yoder explains. These exams, which can be taken separately, cover topics like accounting, auditing, regulation and taxation. Once you’ve completed the first exam, you must complete the remaining exams within 18 months.
Furthermore, most states require a CPA candidate to pass an ethics exam.
Most states also demand a certain amount of experience before you can be licensed as a CPA, such as one to two years working with a licensed CPA.
Once someone receives a CPA license, they must take continuing education courses to maintain the license.
CPA Jenna Carson, a partner at personal finance website MoneyLucid.com, notes that many CPAs spend at least eight years studying and working before obtaining a license.
“The length of time is tough, but if you make it through, you know you’re on the right path,” Carson says.
How Much Does a CPA Make?
As of May 2021, the median annual pay for an accountant or auditor stood at $77,250, according to the U.S. Bureau of Labor Statistics. One estimate suggests that a certified public accountant can earn about 10% to 15% more than an accountant who’s not a CPA. Put another way: A CPA holds the potential to make at least $1 million more than a non-CPA counterpart during their career.
Career prospects for accountants and auditors look good. The labor bureau predicts the employment of accountants and auditors will rise 7% from 2020 to 2030, with an average of about 135,000 openings in those fields projected each year.
Despite that demand, Sleep cautions that being a CPA won’t guarantee you’ll rake in the money.
“You can start making as little as $50,000, but if you are a good people person and have good management skills, you can usually make upwards of $150,000 to $250,000,” he says. “For those wanting to be their own boss or be a partner at a good firm, you can make much more than that.”
Beyond the pay, Yoder believes becoming a CPA is “the absolute best way” to launch a career in business.
“Many new CPAs start their careers at public accounting firms, but within a few years move on to something else in the business world,” he says. “Those first few years at a CPA firm expose young business professionals to the inner workings of many different businesses. They learn so much more working with multiple clients than they would if they worked for a single company.”
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