If you choose a career as an accountant, you have to decide whether it's a good career move to take the CPA exam to become a certified public accountant. While this exam is not required to work for many accounting firms, it can significantly impact your average salary and lifetime earning potential. The average salary of accountants is not only influenced by credentials such as the CPA license; several other factors directly influence starting salary and the annual salary for accounting professionals. Of course, other elements play into an accountant's salary, including years of experience.
Education and How to Take the CPA Exam
Now that you understand how crucial the CPA credential can be, it's time to think about taking the exam. You must complete your bachelor's degree first. Once you've earned your bachelor's, you may want to continue to graduate school for your master's degree. It isn't required, but first-time test-takers with graduate degrees have better passing rates than those without them.
Next, you may want to consider enrolling in a CPA review course or another preparation program to better your chances of passing the first time. Then, it's time to take the exam, which the American Institute of Certified Public Accountants gives in three parts; you have 18 months to complete all three. If you have to take the exam a second or third time (or even more), it's not a big deal. There's a reason a public accountant's salary is typically higher. Passing means you have demonstrated a superior level of skill and knowledge and are deserving of better compensation.
Once you have passed all three parts of the CPA exam, you can apply for licensure. Some states have other requirements. One of the most common is at least one year of professional experience. Sometimes, internships can count toward this time. Finally, you'll need to complete continuing education programs to qualify for licensure renewal every one or two years.
Average CPA vs. Non-CPA Salary Ranges
The United States Bureau of Labor Statistics reports that accountants and people who do auditing earned a median annual salary of $77,250 in 2021. The lowest-paid, entry-level junior accountants earned less than $48,000, and the highest-paid senior accountants earned more than $128,970.
The Bureau of Labor Statistics does not differentiate between CPAs and non-CPAs, and because many major firms (like KPMG) are private, it isn't easy to ascertain exact salary figures. That being said, based on job postings and the available salary information, a certified public accountant's salary can be considerably higher than a non-CPA accountant who works in tax preparation or another field. On average, a CPA may earn $40,000 more annually than non-CPAs.
To earn the highest salary possible in accounting, you should take the CPA exam and meet the other requirements. While you might not have the years of experience to make this amount initially, you'll eventually accrue the tenure you need for these higher numbers.
Other Factors Impacting Accountant Pay
Other factors impact pay for an accountant. If you're shaping your career path, you'll want to keep these elements in mind.
- Location. One of these factors is geographic location. The cost of living in states like New York and California is higher than in more rural states, such as Texas.
- Company size. The size of the company for which an accountant works also matters significantly; larger companies often pay higher salaries to attract the most qualified candidates.
- Credentials. Even though the CPA is the most critical, accountants can earn other credentials that add to their pay. Some examples of these other credentials include a CFE (certified fraud examiner) and a CFA (certified financial analyst).
- Experience. Work experience also plays a role; the longer your tenure and greater your competency, the more you make.
- Specialization. Finally, there are many types of accountants, including tax accountants, corporate accounting, forensic accounting, general accounting and more. Sometimes, becoming an expert in a field of specialization can help increase your salary.