CPA vs. Accountant: Differences You Need to Know

Bryce Welker
·10 min read

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Choosing between becoming an accountant or taking the steps toward a Certified Public Accountant (CPA) certification is pivotal for those in the finance and accounting industries. Both career paths can lead to rewarding professional experiences, yet they differ significantly in certification requirements, the scope of work, and career opportunities.

But how do you decide which one is right for you?

According to the U.S. Bureau of Labor Statistics, there were over 1.5 million accountants in 2022, with expected job growth of 4% by 2032, which shows the increasing complexity of financial regulations and the expanding need for in-depth financial analysis.

Let’s explore the advantages and considerations of each path, aiming to equip you with the knowledge needed to make an informed choice about your future in the field of finance.

Key Takeaways

  • Certification and Education: CPAs must complete 150 semester hours of education and pass the Uniform CPA Examination, while accountants need a bachelor’s degree in accounting or a related field, with the option to pursue certifications like CMA or CIA.

  • Scope of Work: CPAs are authorized to perform audits, represent clients before the IRS, and engage in financial planning and consulting. Accountants handle financial transactions, data management, and prepare tax returns but cannot conduct audits or represent clients before the IRS without the CPA designation.

  • Career Opportunities: The CPA designation opens doors to higher-level positions such as CFO or tax advisor and is recognized internationally, offering a broader range of opportunities and higher earning potential than non-CPA accountants.

  • Salary Potential: CPAs generally command higher salaries, reflecting their specialized skills and legal authority to perform certain tasks. CPAs can expect to earn, on average, $76,000 annually, with potential earnings exceeding $200,000 for senior positions. Non-CPA accountants start with lower salaries but can also achieve significant earnings with experience and additional certifications.

  • Investment in Certification: Pursuing CPA certification requires a significant investment of time and resources, including meeting education requirements, passing the CPA exam, and fulfilling experience requirements. Accountants can start their careers with fewer financial resources and time commitment but may find their earnings ceiling lower without the CPA designation.

Understanding the Roles

Certified Public Accountant

A CPA is a finance professional who has passed the Uniform CPA Examination and met all other state certification requirements. CPAs can perform tasks that non-certified accountants cannot, such as preparing audited or reviewed financial statements and representing clients before the Internal Revenue Service (IRS).

Their expertise covers various accounting activities, including tax preparation, financial auditing, and financial planning. CPAs are held to a code of ethics and must complete continuing education credits to maintain their certification.

Accountant

An accountant without a CPA license is proficient in overseeing financial records and conducting financial analysis. These professionals can execute a wide array of accounting duties, including the meticulous recording of financial transactions and the effective management of financial data.

Although they can prepare tax returns, they are not permitted to conduct audits or represent clients in front of the IRS unless they also have the CPA designation. Accountants often hold a bachelor’s degree in accounting or finance and may pursue other certifications, such as Certified Management Accountant (CMA) or Certified Internal Auditor (CIA).

CPA vs. Accountant Certification Requirements

To find work as an accountant, most finance professionals meet the following requirements:

  • Education: A bachelor’s degree in accounting or a related field is generally required.

  • Certifications: While not required, accountants can pursue certifications such as CMA or CIA to enhance their qualifications.

  • Experience: Requirements vary depending on the employer, but practical experience in accounting is often preferred.

Only a CPA must meet the requirements below:

  • Education: CPA candidates must complete 150 semester hours of education, typically requiring a master’s degree or equivalent.

  • Examination: Candidates must pass the Uniform CPA Examination, which tests knowledge in auditing and attestation, business environment and concepts, financial accounting and reporting, and regulation.

  • Experience: Most states require CPA candidates to have 1-2 years of accounting experience under a CPA.

Scope of Work and Career Opportunities

CPAs have a broad scope of work, including preparing audited financial statements, tax planning and preparation, financial consulting, and assurance services. They often hold positions in public accounting firms, government agencies, and private companies. The CPA designation opens doors to higher-level positions such as Chief Financial Officer (CFO) or tax advisor, and it is recognized internationally.

Non-CPA accountants work in various industries, including public accounting, private corporations, and non-profit organizations. Their work primarily involves recording financial transactions, preparing financial statements, and managing budgets and forecasts. While accountants can advance in their careers, the CPA designation typically offers a wider range of opportunities and higher earning potential.

CPA vs. Accountant Salaries

One of the most significant considerations for individuals choosing between a career CPA and an accountant without the CPA designation is the potential difference in salary. Understanding these differences can help make an informed decision about pursuing the CPA certification.

Here is a breakdown of average salaries from entry-level starting salaries to more experienced higher salaries.

CPA Salaries

  • Starting Salary: Entry-level CPAs earn an average total compensation of around $59,000

  • Average Salary: $76,000 annually, with an average range from $54,000 to $123,000, up to over $200,000 for experienced executives

CPAs with significant experience and those in executive positions, such as Chief Financial Officers (CFOs) or partners in accounting firms, can see salaries that exceed $200,000 annually, not including bonuses and other forms of compensation.

Accountant Salaries

  • Starting Salary: New accountants can expect to make about $50,000

  • Average Salary: $57,000 annually, with a range from $44,000 to $76,000, up to over $100,000 for accountants with several years of experience

Accountants without a CPA license may find their earnings ceiling lower than CPAs, particularly in roles that value or require the CPA designation for advancement or specialized tasks.

Testimonials for the Importance of a CPA License and Higher Salaries

CPAs generally command higher salaries than their non-certified counterparts, reflecting their specialized skills, expertise in financial regulations, and the ability to perform tasks requiring a CPA license, such as auditing financial statements and representing clients before the IRS.

This is something discussed by accountants in a Reddit thread regarding whether a CPA designation is needed.

Here’s an enhanced summary incorporating insights from the discussion:

  • A Reddit user in public accounting pondered the benefits of pursuing a CPA for career advancement, highlighting a common dilemma accountants face. With a salary of about $72k at a midsize firm in a low-cost living area (LCOLA) in the Midwest, the user questioned the financial and professional worth of obtaining a CPA designation.

  • Another user emphasized the necessity of a CPA for progression in public accounting, pointing out that it’s crucial for those aiming to stay in the field. The CPA directly impacts salary and opens doors to managerial positions, which often require the designation of a “good look” for the firm.

  • The consensus in the thread suggested that the CPA designation is king, surpassing other certifications in prestige and perceived value. It’s seen as a testament to one’s discipline and dedication to the accounting profession, with the potential to specialize in a niche within the accounting and finance industries.

Exam Content and Investment

Not all accountants pursue certifications post-degree, but many do. For accountants pursuing certifications like CMA or CIA, exams also test a wide range of knowledge but are more focused on specific areas of accounting or auditing. Those wanting to specialize as a tax accountant may choose to become an enrolled agent (EA.)The investment for these certifications includes exam fees and study materials, with the requirement of continuing education to maintain certification.

Those who become a CPA must endure rigorous testing of accounting and business concepts, taxes and regulations, and financial reporting standards. The exam consists of four parts, and candidates must pass all four within an 18 to 30-month period, depending on their state. The investment in time and resources for CPA exam preparation is significant, including exam fees, review courses, and the potential need for additional coursework to meet the 150-hour requirement.

Deciding Between CPA Certification and a Regular Accounting Degree

Navigating the decision between pursuing a Certified Public Accountant certification or sticking with a regular accounting degree can be complex. Consider these If/Then scenarios when making a decision:

  • If you aspire to specialize in auditing financial statements or wish to represent clients before the Internal Revenue Service (IRS), then you might want to get CPA certification, as only CPAs are legally authorized to perform these tasks.

  • If you are interested in high-level career opportunities such as becoming a Chief Financial Officer (CFO) or a partner in an accounting firm, then a CPA certification can provide the credentials and respect necessary to advance to these positions.

  • If you seek a career with a broad scope of responsibilities in financial planning, internal auditing, and management accounting within corporate settings, then a regular accounting degree, possibly supplemented with certifications like Certified Management Accountant (CMA) or Certified Internal Auditor (CIA), might be good enough.

  • If you are drawn to the complexity of tax codes and regulations and want to offer tax planning and preparation services, then CPA certification is highly beneficial, given CPAs’ extensive knowledge of taxes and regulations, enhancing their ability to navigate complex tax situations.

  • If you wish to work in environments that require a deep understanding of generally accepted accounting principles (GAAP) and financial reporting without the need for CPA-specific tasks, then pursuing a bachelor’s degree in accounting and gaining practical experience in private accounting or business management could be sufficient.

  • If you aim to work in public accounting, especially in firms that audit publicly traded companies regulated by the Securities and Exchange Commission (SEC), then obtaining a CPA license is essential, as it is a requirement for firms performing these audits.

  • If you are concerned about the financial and time investment required to pursue CPA certification, including meeting the 150 semester hours of education, passing the rigorous CPA exam, and fulfilling the experience requirements, then a regular accounting degree, which requires fewer financial resources and time commitment, might be a more practical option for starting your career in accounting.

Conclusion

Deciding between pursuing a CPA certification or remaining an accountant without the designation depends on individual career goals, interests, and the level of investment one is willing to make in one’s professional development. CPAs enjoy a wide range of career opportunities, higher earning potential, and the ability to perform tasks that non-CPAs cannot.

However, becoming a CPA requires a significant commitment to education and passing a challenging examination. Accountants, on the other hand, can still build successful careers in finance, with opportunities for advancement and specialization. Ultimately, the choice should align with one’s career aspirations, professional interests, and the impact one wishes to have in the finance and accounting industry.

FAQs

Can an accountant without a CPA designation perform audits or represent clients before the IRS?

No, only CPAs are authorized to perform audits of financial statements and represent clients before the IRS.

What educational requirements are necessary to become a CPA?

To become a CPA, candidates must complete 150 semester hours of education, typically requiring a master’s degree or its equivalent, and pass the Uniform CPA Examination.

Are there any certifications that an accountant can pursue other than the CPA?

Yes, accountants can enhance their qualifications with certifications such as Certified Management Accountant (CMA) or Certified Internal Auditor (CIA).

How does the salary potential compare between CPAs and non-CPA accountants?

CPAs generally command higher salaries due to their specialized skills and legal authority to perform certain tasks, with entry-level CPAs earning between $50,000 and $70,000 annually, which can exceed $200,000 for those in senior positions. Non-CPA accountants typically start with lower salaries but can also achieve significant earnings, especially with additional certifications and experience.

What career opportunities are uniquely available to CPAs that non-CPA accountants might not have access to?

CPAs have exclusive access to higher-level positions such as Chief Financial Officer (CFO), partner in accounting firms, and roles requiring the preparation of audited financial statements or representation before the IRS, which are not typically available to non-CPA accountants.