Certified public accountants or CPAs are licensed accounting professionals who provide financial management services. They help you solve potential financial queries, manage finances, and file your business’s taxes. Their primary duties are bookkeeping, preparing taxes and financial statements, representing clients in front of the IRS, financial planning and conducting audits.
The rapidly evolving financial industry has boosted the demand for exceptional accounting professionals. Both government and businesses need a licensed accountant who ensures the highest fiscal and ethical standards. A CPA certificate is the industry standard that sets you apart. It shows you have the education, training, and experience to excel.
If you are wondering how to become a CPA, read on to know the entire journey in detail.
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1. State’s Requirements
You should check with the requirements of your state’s licensing/accounting board while you’re in college. Ensure you take the appropriate specialization and coursework.
Earn a bachelor’s degree
Most states require CPAs to hold a bachelor’s degree with a minimum of 150 credits hours. In contrast, some states require 120 credit hours to be eligible for the CPA exam. In addition, some states also allow you to substitute work experience in the relevant field for a bachelor’s degree.
Consider a master’s degree.
Although it is not mandatory, a master’s degree in either accounting or finance can elevate your chances to ace the CPA exam. It also increases your job prospects. If you have a major in another subject, you must meet the minimum number of accounting-related credits specified by your state’s accounting board.
The exam is indeed demanding; hence the candidates need to prepare intensively. In addition to individual study, exam prep courses like Wiley CFA prep allow you to prepare well and ensure your confidence before taking the exam. They offer several benefits such as studying and retaining more in a shorter time, one-to-one mentoring from dedicated instructors, diverse practice questions, and many more.
Preparing for challenging exams like CPA can be stressful; therefore, enrolling in an exam prep course with university professors and subject matter experts will be beneficial.
3. Pass the CPA Exam
To work as a public accountant, you need to pass the Uniform Certified Public Accountant Examination, which consists of four parts.
- Audit and Attestation (AUD)
- Financial Accounting & Reporting (FAR)
- Regulations (REG)
- Business Environment & Concepts (BEC)
Each section is a four-hour test. You get 18 months to pass all four sections of the CPA exam that you can attempt in any order. The test contains question blocks which are called testlets. Each testlet consists of either task-based simulations or multiple-choice questions. Moreover, the test also evaluates your written and communication skills by asking you to write a client letter with word processing software.
The test score depends on a weighted scoring system which means you gain more points for difficult questions or tasks. The candidates need a minimum score of 75 points on a scale of 0-99 in each section.
Some states also require you to pass Ethics Examination with at least 90% within 1-2 years of the CPA exam. Both ethics and CPA examinations are developed and graded by the American Institute of CPAs.
4. Gain Relevant Experience
After you have passed the test, the next step is to acquire a minimum amount of professional work experience to qualify for full licensure. The experience requirements vary among states. Your state’s accounting board determines how much work experience is needed, what positions or what types of practice are acceptable such as auditing. Most states also accept the general accounting experience with roles open to all accounting professionals.
Some states require only one year of full-time relevant work experience. However, as per AICPA, most US jurisdictions offer licenses to candidates with two years of relevant professional experience under the supervision of an authorized CPA.
5. Choose Specialization
In addition to a CPA license, you can also opt for a CPA specialization. Specializing in something you have always been interested in will only help you climb the ladder of success to reach a higher level.
Your area of expertise will add some additional letters after CPA, which can help you gain some extra value in the eyes of an employer. Moreover, it opens the door for a higher position and a handsome salary package. Following are some of the common areas of specialization
Tax CPA specialists assist businesses in completing complicated tax forms and advise on how they can save money.
Personal Financial Planning
As CPAs don’t necessarily work for businesses, this area acts as a bread and butter for many CPA practices such as estates and risk management, tax and retirement planning, and investment advice.
Forensic and Valuations
CPAs with forensic and valuations specialty are in demand since they understand the complexity of valuing assets and financial documents. They promote fair business dealings and look for criminal activities.
Information Management and Technology Assurance
CPAs with this specialty are concerned with the technological advances in accounting and their impact on financial data. These specialists possess exceptional knowledge of information relationships and technologies and specialized information management tools.
It is a bottom-line-oriented business where firm management CPA specialists build a client base, service clients, and manage employees.
6. Get Your License
The post-examination process to receive your licensure varies among states. Your state’s board of accountancy issues the license with the requirement of additional actions such as professional development hours.
After you meet all the requirements, including passing each section of the uniform CPA exam, ethics exam and maintaining professional work hours, you can apply for your license. The professional developmental hours can vary from 1800 to 4000 hours specified by your state.
The application process typically requires proving the completion of requirements and paying a licensing fee. After the authorized CPA affirms your professional work hours, you will receive your CPA license.
Though it is not easy to receive a CPA license, the journey is worth it. Once you have earned the license with your never-ending focus and dedication, you will enjoy a promising future. You will work in the accounting industry, which expects to grow by 10% by 2026, much faster than average.
7. Renew and Maintain Your Licensure
There is one final step of periodic license renewal to keep them current. Once you have received your license, you must complete continuing education requirements to renew it. The credit requirements vary by state. Most states require CPAs to complete credits annually to maintain their certificate. CPAs devote 40 hours each year to continuing education.
Public and private CPA holders must comply with CPE requirements. The subject area of continuing education depends on your area of professional practice. CPAs can complete their credit hours through professional institutes and colleges.
Accounting firms where you might be working understand the standards of continuing education for CPAs; hence they provide you with the time and resources to renew the license.
After learning the rigorous CPA journey, you must be wondering, is it worth your time and hard work? The answer is yes; it is worth each second and penny you invest. It comes with numerous benefits such as greater prestige, higher career growth, job security, satisfaction, and better earning potential.
CPAs’ expertise and proficiency set them apart from standard accountants. Besides years of academic and technical training, several years of massive on-the-job training further test their ethics. Therefore, they are considered elite professionals. Their peers, clients, and the general population respect and admire their professionalism.
Furthermore, CPA holders can specialize in any area they are interested in, e.g., Forensic CPA. They develop a higher level of satisfaction by learning technical skills, gaining experience, and making a difference in their area of expertise.
The strong demand allows CPAs to earn above-average salaries in the job market. CPA license holders make 10-15% more. Moreover, they have the flexibility to either work for third-party accounting firms or start their own business. They can also travel around the world to gain international business exposure.