You’re standing at a crossroads, but you’ve decided which path to take: You want to become a Certified Public Accountant. Kudos are in order. Before you start the journey, however, it’s important to understand what will be expected of you at every point along the way. Here’s a breakdown of the 5-step process for becoming a CPA.
1. Decide You Want to Earn the CPA Designation
This sounds a little pat, but honestly, it isn’t. For one thing, you may want to work in the financial realm without becoming an accountant. In that case, you might be better suited to financial analysis or becoming a CMA, which is a Certified Management Accountant. In this role, you still provide accounting services, but with a much stronger emphasis on the financial decision-making side, and reduced stress on bookkeeping and taxes.
On the other hand, perhaps you just really like preparing taxes, and have thought until now that you would have to become a CPA to do so. Not so. If you really enjoy the tax side of accounting – preparing returns, helping with audits, estimating quarterly taxes – you can do that without getting a CPA license. Instead, you can become a Licensed Tax Preparer, Licensed Tax Consultant or IRS Enrolled Agent.
If you do opt to become a CPA, it’s important you do so with full knowledge of your other options. Look into the career options and benefits of each potential program before selecting the one that feels right for you.
2. Apply to a Program
Next, it’s time to apply to a program. It’s possible to work as a CPA without earning a master’s degree, since technically the certifying exam only requires that you hold a bachelor’s (in addition to the work experience component, which we will discuss below). However, the tasks you will complete as a CPA are incredibly complex, and without a firmer understanding of accounting principles, it’s easy to get lost in the weeds.
The best idea is to get a Master of Science in Accounting before you continue on your journey. Not only does this give you a strong academic foundation, it prepares you for the rigors of running your own business in a way that a bachelor’s degree simply cannot.
A word to the wise: Don’t discount the master’s degree simply because you don’t want to work for yourself, either. Even if you would be perfectly happy working under another CPA, you will have access to greater responsibilities with a higher degree. Plus, you may one day decide you want to go into business for yourself, but not wish to attend school once you’re established in your career.
In any case, you’ll want to be sure you pick your program carefully and apply well before the deadline to avoid missing your opportunity for this year.
3. Complete Your Schoolwork and Graduate
It goes without saying that your best bet is to graduate on time, with good grades. Most companies will not hire accountants who have taken classes but not earned degrees. You’ll be happy to hear, though, that this is an excellent time to graduate with a degree in accounting. According to the Bureau of Labor Statistics, the median salary is $68,150 and jobs are growing at a rate of 10 percent, which is faster than average.
4. Earn Work Experience
Like many professional certifications, you must prove competency in the field before you can sit the exam to become a CPA. In this case, the requirements are two years of work experience under a licensed CPA. Your state or jurisdiction may have more exact specifications about the number of hours required or other parameters. In many cases, you can earn your experience working in another accounting environment, such as for the government, rather than working under a CPA – but it’s best to check before you accept a job.
Note that while some states offer reciprocity – they recognize the legitimacy of each other’s CPA licenses – not all do. Therefore, your license may not transfer should you wish to move, meaning you would have to take the test over again. If you want to avoid this, decide where you want to settle before sitting the exam.
5. Study for and Take the Exam
The CPA exam is a four-part series of smaller tests. Each is four-hours long, and covers a different aspect of the accounting field. The tests are made up of task-based questions and multiple-choice, with one essay component on only one of the sections. Most people study at least 300 hours to prepare for the 16-hour test, which will be completed over a period of several weeks or even months, depending on your schedule.
It’s critical you take the exam seriously and begin studying well ahead of time. The test is not curved, so you will not benefit from other students’ failure to prepare. Instead, it is based on a point scale that does not translate to percentages. While 75 out of 99 is a passing score, that does not mean you can get away with answering only 75 percent of questions correct. While exact figures aren’t available, you can assume a very high level of proficiency will be needed to pass.