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Accountant vs. CPA: What’s the difference?
Besides their skills and the services they offer, their educational requirements are also different.
If you’re planning to pursue a career in accounting, it’s important to start thinking about your educational path well in advance. One of the major career choices that you’ll face is whether to become an accountant or a Certified Public Accountant (CPA). Each career option has different educational and licensing requirements, and also bring about different job opportunities.
Considering your overall career goals can help you decide which path is right.
Comparing accountants and CPAs
Accountants are professionals who manage financial records of a business or firm. They perform a variety of services, including account analysis and auditing, and are responsible for managing bookkeeping and financial documents.
CPAs are a type of accountant who has pursued additional specialized education and earned a license. All CPAs are a type of accountant, but not all accountants are CPAs. Accountants are expected to follow best practices in their work, but CPAs are held to a higher ethical standard and must adhere to the Association of International Certified Professional Accountants (AICPA) Professional Code of Conduct.
While accountants manage day-to-day finances for a business, CPAs may be responsible for tasks that accountants can’t perform, such as preparing audited financial statements and conducting company audits.
Education and licensure
There are several educational paths to become an accountant. Most accountants earn a bachelor’s degree in accounting or a related field. Some students who graduate with an associate degree might be able to secure a junior accounting position, when develop their skills on the job to advance their careers.
Some employers may also only consider applicants who have gone on to earn their master’s degree in accounting. Graduates with at least a bachelor’s degree program may also choose to pursue certifications in areas like government accounting or management accounting.
According to the AICPA, to become a CPA, an accountant will need to not only pass the CPA exam, but will need to complete at least 150 credit hours, though undergraduate degrees only require students to complete 120 credit hours. To become a CPA, students need to complete an additional 30 credit hours, and there are several ways to do that:
- Double major and earn two bachelor’s degrees
- Pursue a graduate-level program like a Master’s of Accounting, Master’s of Science in Taxation or Master’s of Business Administration
- Take classes as a non-degree student
- Complete a CPA review or preparation program at a community college
Additionally, individual states have different requirements, including requiring CPA candidates to be a United States citizen and to have a social security number. States also have individual education requirements and may specify that applicants must earn their total credit hours within a certain timeframe. Additionally, states often require CPA candidates to have a certain amount of experience, such as two years’ experience working with a supervising CPA.
Caitlynn Eldridge, founder and CEO at Eldridge CPA, explains that CPAs have completed specific requirements to earn the designation. “CPAs have a designation that came from taking a four-part exam and scoring at least a 75 on all parts, and then working one to two years under the supervision of a CPA,” she says. States also have varying continuing education requirements that CPAs must complete to keep their designation.
“Accountants do not need to have any designations,” says Eldridge. “Some states might require a CPA to hold themselves out as an accountant, but others don’t. Accountants usually have studied some type of accounting, either through apprenticeship or at an associate or bachelor’s level.”
Duties and responsibilities
Accountants manage the daily financial activity of businesses. Their duties may include organizing and recording financial transactions, reconciling accounts each month or annually, analyzing financial statements and preparing budgets. Accountants are often responsible for ensuring that bank payments are made on time, preparing tax returns and managing balance sheets. Accountants are often responsible for evaluating a business’ overall financial operations and providing guidance to help the business make well-informed financial decisions.
CPAs may have all of those same duties and responsibilities of an accountant, but their extra qualifications mean they are eligible to have additional duties. CPAs are capable of preparing audited financial statements filed with the Securities and Exchange Commission. They can perform external audits or audit public companies, and a CPA is also qualified to represent taxpayers and companies during an audit, defending a return for the client.
Eldridge worked for both Big 4 accounting firms and Fortune 200 companies before she opened her own practice. “Today I work in advising small businesses on tax planning and saving, growth of their business, how to meet goals and build businesses in alignment with their values and then accounting and bookkeeping,” she explains. “I absolutely love breaking down complex finance items for clients and helping them understand the best ways to grow their businesses. I also love that our work can be done in the office and remotely. It allows for a beautiful balance in work and life.”
Which states have the highest ethical standards for CPAs?
CPAs are held to the AICPA Code of Professional Conduct, but individual states also have their own ethics standards for CPAs. According to The CPA Journal, Texas requires CPA candidates to take a three-credit ethics class before being qualified to site for the CPA exam. That class is part of the state’s 150-hour coursework requirement.
Texas isn’t the only state with a stringent ethics requirement; seven other states also require CPA candidate to complete an ethics coursework requirement. Here’s the complete list:
- New York
- Rhode Island
- West Virginia
Salary and career prospects
According to the U.S. Bureau of Labor Statistics (BLS), as of 2022, accountants and auditors earned a median annual salary of $78,000. The BLS doesn’t differentiate between salaries for accountants and CPAs.
The BLS reports a promising career outlook for accountants and auditors, with employment predicted to grow by 4.4% through 2032, which is slightly faster than all occupations. According to the BLS, about 126,500 openings are projected to become available each year, and the employment of CPAs and accountants is closely linked to overall economic growth. As a result, the increasing globalization of business may create additional demand for finance professionals. Another factor in salary is location and the BLS provides median salaries for accountants and auditors by metro area. Here are the top-paying metro areas:
AICPA reports that the average starting salary for public accountants ranges from $40,000 to $57,500 and partially depends on the firm size and location. According to AICPA, accountants who have a graduate degree and hold a CPA certification can earn 10 to 15% more than the average starting salary.
Accountants may explore many different career prospects, including employment in business offices, nonprofits, healthcare, insurance operations and even forensics. Because CPAs have additional qualifications, they have more career prospects. AICPA notes that CPAs might work in public accounting in audit, tax and management consulting areas. CPAs can also explore business and industry employment, working in areas like financial accounting and reporting, management accounting, financial analysis and treasury management. CPAs also have the option of providing specialized services like financial forensics, business valuation, personal financial planning and IT consulting.
Which is the right career path for you?
Whether you pursue a career as an accountant or decide to earn a CPA designation will depend on your career goals and the type of work that you ultimately want to do. A CPA designation can help to qualify you for more opportunities, and it may give you a competitive advantage when applying for a position. However, the CPA designation requires additional schooling and time, and you will also need to budget the time and money to complete your state’s continuing education requirements.
If you’re planning on a career in the accounting field, you’ll have several paths to consider:
- Earn your bachelor’s degree and become an accountant. Consider earning a certification in a certain field, like government accounting, to help prepare you for your specific career goals and to make you a more competitive job candidate.
- Plan your education path to pursue a CPA designation. Complete a bachelor’s degree in a field like accounting, then earn your master’s degree or even complete dual bachelor’s degrees to meet the 150 credit hour requirement. Plan on working for at least a year before you can take the CPA exam, based on your state’s requirements.
- Start by earning your bachelor’s degree in accounting and then decide which career path is right for you. Completing an internship during your undergraduate degree might help you decide. If you opt to become an accountant, you can move right into the workforce after graduating or pursue a master’s degree for more specialized and advanced education. If you decide that the CPA route is best for your goals, you can go on to earn a master’s degree or take additional classes, then prepare to sit for the CPA exam.
Careers in accounting can be rewarding, and there is increasing demand for accounting professionals. Think carefully about your goals and don’t hesitate to talk to your professors or mentors as you decide whether an accountant or CPA is the best path for you. If you’re ready to research accounting programs all you need to do is click the Find Schools button to get started.
Published: September 21, 2023
Written and reported by:
With professional insights from::
Founder and CEO, Eldridge CPA