What is a CPA salary package like? You may have pursued a CPA career because of your passion for the profession, but at the same time we all need to make a decent living from what we do in our day to day lives.
There are some stringent CPA requirements to be able to practice in this field. So if you are going to go through the effort of preparing for the CPA license requirements and taking an expensive CPA course, it just makes sense to look into the kind of money you are looking at after passing one of the most challenging professional exams out there, the Prometric CPA exam.
Not only are the CPA exam requirements stringent and expensive, but you are not done there. You also have to pass the CPA ethics exam subsequently, which means more time, more effort and more money out of your pocket. Let’s see how all this effort can pay off.
In this section I will shed some light on what CPA salaries are like, as well as the best resources that provide some of the most accurate market research data showing what CPA salaries are like in various sub disciplines and geographies, both in public accounting and the private sector (private and public companies).
Usually, starting salaries for CPAs are comparable in public accounting and the private sector. For someone with a few years experience, the salaries are a little bit higher in the public sector. However, for someone that sticks it out long term in public accounting, they are often offered a handsome premium to move to the private sector. If one sticks around long enough to become a partner, especially in a big four firm, salaries can reach a healthy mid six figure level with a very healthy bonus package. Many CPAs make well above a million dollars every year.
The Bureau of Labor Statistics (BLS) is the official entity that tracks jobs and salaries and according to them there were approximately 1.5 million CPAs in the USA in 2008. This number is supposed to surpass 2 million by 2020. Of this total, roughly 25% work in public accounting, either in audit or tax specialties. Less than 10% of these CPAs are self employed as either part time freelancers or full time consultants.
This is all just United States information. Prospects for those wanting overseas exposure is even hotter as the global demand for accountants is projected to skyrocket beyond belief, especially in emerging markets. As more economies progress and standardize their financial systems and processes, the need for qualified CPAs will only grow overtime.
Many overseas job positions also provide lucrative tax benefits, often shielding a large chunk of one’s income from income taxes. For example, working in the United Arab Emirates exempts you from all income taxes.
An average CPA salary package is only expected to increase over the next few years. Not only is demand expected to increase, but the nature of the profession has become dynamic and vast, much more than the traditional role of bookkeeping, auditing and taxation. An accountant’s role is much more complex than what it was, spreading over the legal and regulatory compliance landscape that is ever changing in nature.
Let me give you an example. If you are in an internal audit role, not only are you expected to understand and execute financial accounting and reporting audits, but also operational audits which require knowledge of how various components and processes of a business works, legal and regulatory compliance audits, which require understanding and application of relevant laws and regulations such as Sarbanes Oxley (SOX), policy, procedure and governance audits as well as information technology audits.
CPAs who specialize in various sub disciplines and specialties will likely command a salary commensurate with the demand for their experience and expertise. Other factors include geographical differences. A CPA working in New York will make more than a CPA working in Ohio given the increased cost of living. This difference is called a cost of living adjustment. But all other factors equal, a CPA’s salary package will be primarily dictated by experience in terms of capabilities as well as tenure. Let’s look at some statistics:
Bureau of Labor Statistics
As of 2012, the median CPA salary was approximately $65,000, with the middle in the $50,000 to $82,000 range and the top 10% in the $105,000 to $110,000 range. This data is from across the United States, not taking into account geographical differences (cost of living adjustments).
Starting salaries for CPAs these days are typically in the $50,000 to $55,000 range (those with a Master’s degree typically earn $5,000 more). CPAs with 4 to 6 years of experience typically earn $55,000 to $75,000 in smaller companies, and $70,000 to $155,000 in larger companies. Controllers and Chief Financial Officers typically make anywhere from $165,000 all the way up to $400,000 annually (large corporations), not including bonuses and other incentives. Now there is something to aspire to
Robert Half’s Accounting Salary Guide
A more precise and comprehensive study of CPA salaries is conducted by Robert Half International (RHI), the world’s leading accounting and finance recruiting firm. Each year, Robert Half produces a comprehensive study of salaries in Accounting and Finance. Their studies are broken down by region, specialization and even position or specialty within each field.
Salary.com is a popular and arguably the most used website to research market salaries for various positions and career fields. You input the variables such as years of experience, responsibilities, direct reports, location, company type, industry and several others. The system scours its database and coupled with external market research provides a fairly accurate estimate of what a particular position’s salary package can be.
Other Factors Impacting a CPA Salary Package
The quality of a CPA salary package is going to be predicated on the various factors I discussed above. Some of the most lucrative packages will be offered to those who not only have the desired experience, but also the CPA certification, other relevant certifications, advanced degrees, education from highly credible and regarded institutions as well as specialties within the accounting and finance fields.
I also want to clarify that a CPA salary can be quite different from an accountant’s salary who is not a CPA. Getting that CPA certification usually results in a higher salary given the additional expertise gained from obtaining the certification. This difference can be approximately 10% in one’s early career, and up to 100% years later at the senior level. So as you can imagine, getting your CPA license is well worth the effort.
Finally, I want to conclude this section by saying that although salary is very important, keep in mind the total compensation package when evaluating alternative job offers. A CPA salary will likely not vary too much from one company to another in a comparable position or role, but in addition to the salary you should consider the benefits package such as time off, health benefits and 401k contribution match. There are also other intangible factors such as the Company’s values, your commute to work, flexible work-life balance arrangements and others. But in order to benefit from all this, one must successfully complete the exam requirements.