Every organization is in need of a qualified, trustworthy accounting team to manage the everyday finances and taxes that allow the business to operate. Accounting is a popular career choice because of the healthy salary and job security – but how much can a CPA (Certified Public Accountant) expect to make per year?
In general, a CPA can expect to make between $65,000-150,000 per year. Obviously, this is a wide range that features a lot of determining factors. Location, experience, and the type of accounting work will make a difference in CPA compensation. Keep reading to learn more about the role of a CPA, the difference between CPA and accountant, CPA salary, and the CPA exam.
What is a CPA?
A CPA is a Certified Public Accountant. These accountants have additional training and certifications in areas of taxes, audits, ethics, and government regulations. A CPA may manage the accounts payable and receivable, payroll, financial records, filing taxes, and some client communications. Certain companies may require a CPA instead of a standard accountant depending on the nature of their finances.
What does a CPA do?
A CPA enjoys a wide variety of applications, which also contributes to the wide salary range that can be expected. A certified public accountant can perform many tasks that a bookkeeper and traditional accountant cannot. A CPA may work in-house for a particular company, or provide accounting independently for a number of clients. A CPA can also be brought in for consulting work or for audit assistance, reports Better Team.
CPA job description
- Assess & perform business transactions
- Manage financial records
- Perform internal audits
- Create and consult on budgets
- Prepare taxes
- Report financial success & make recommendations for improvement
- Stay up-to-date on changing regulations
CPA vs. accountant
All CPAs are accountants, but not all accountants are CPAs. Earning the designation of CPA requires extra training, education, assessment, and proper certification, and it allows you access to jobs and responsibilities that are not available to traditional accountants, according to Capella. The differences may seem subtle, but can spell entirely different futures.
Accountant:
- 4 year accounting degree
- Can prepare taxes
- Basic financial recording & accounting
- Ongoing education not required
CPA
- 4 year accounting degree
- One year of work experience with a CPA
- Pass CPA exam
- Fiduciaries – meaning they are required to operate with clients’ best interest in mind
- Can represent clients before IRS
- Stricter code of ethics
- Opportunity for advancement to financial analyst, VP of Finance, CFO, etc.
The biggest reason to acquire a CPA designation is that, according to Investopedia, you can expect to make at least 15% more than an accountant without certification.
CPA salary
A beginning salary for a CPA is usually around $65,000, depending on the type of accounting work. As stated above, there are lots of interesting ways to apply accounting degrees and CPA certification, and the CPA salary varies a lot from state to state (check here to see what average CPA salary might be in your area). Big business states such as New York, California, Texas, and Washington may find significantly higher salaries to remain competitive.
- Entry level accountant: $40-50,000
- Entry level CPA: $65,000
- CPA credit analyst: $75,000
- Big four firm CPA: $90,000
- Average CPA salary: $119,000
- Senior CPA salary: $152,000
Another factor to consider is that the Journal of Accountancy reports over half of CPAs work for employers who award their accountants with bonuses each year, which can be up to 10% of their salary. Additionally, accountants should be happy to learn that they can expect salary increases of 4-5% annually, which is higher than many professions.
TRY THIS: Use the salary comparison tool from the Association of International Certified Professional Accountants to see how various levels of experience, certifications, or locations can impact CPA salary
CPA exam
Is becoming a CPA right for you? Many accountants find that, while demanding, earning the designation of CPA is well worth the time and effort it takes simply for the increase in salary. Add in the increased job opportunities and career growth and you’re in excellent shape.
The CPA Exam has the following requirements:
- A four section test, each four hours long
- AUD – auditing & attestation
- BEC – business environment & concepts
- FAR – financial accounting & reporting
- REG – regulation
- Minimum of 75 score on each test
- All four tests passed within 18 months (pass rates are between 40-59% for each section)
- Your local state board will set the requirements for fees and exam eligibility
- 150 credit hours of education including 30 credit hours of accounting and 24 credit hours of business administration
- One year of experience working with a licensed CPA
- Once licensed, CPAs are expected to pursue ongoing education to remain sharp and well-informed
You can find more information in the American Institute of CPAs Frequently Asked Questions here.
It’s fairly common for a business to sponsor CPA licensing for their accountant employees. As an employer, you may consider a mentorship program that includes exam practice and tutelage under an experienced CPA. If you’re an accountant considering your CPA designation, you may want to ask the senior or managing accountant about being sponsored for further certification.
Other financial career salaries and resources
- How much does an accountant make?
- How much does a CFO make?
- How much does a CMA make?
- How much does a controller make?
- How much does a financial analyst make?
- How much does a treasury analyst make?
- How much does a Vice President of Finance make?
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