Are you considering a career as a Certified Public Accountant (CPA)? If so, you’re likely wondering how much you can expect to earn in this field. The answer, however, is not a simple one. CPA salaries can vary widely depending on factors such as location, industry, level of experience, and specific job duties. In this article, we’ll delve into the world of CPA compensation and explore the various factors that can impact your earning potential.
What is a CPA?
Before we dive into the world of CPA salaries, let’s take a brief look at what a CPA is and what they do. A Certified Public Accountant is a professional who has earned a certification in accounting from the American Institute of Certified Public Accountants (AICPA). To become a CPA, one must meet certain educational and experiential requirements, pass the Uniform CPA Examination, and complete continuing professional education (CPE) courses to stay certified.
CPAs work in a variety of industries, including public accounting firms, corporate accounting, government, and non-profit organizations. Their duties may include:
- Preparing and reviewing financial statements
- Conducting audits and financial analyses
- Providing tax planning and preparation services
- Consulting on financial matters
- Developing and implementing financial systems and processes
Factors Affecting CPA Salaries
As mentioned earlier, CPA salaries can vary widely depending on several factors. Here are some of the key factors that can impact your earning potential as a CPA:
Location
Location is one of the most significant factors affecting CPA salaries. Cities with a high cost of living, such as New York or San Francisco, tend to offer higher salaries to compensate for the increased cost of living. On the other hand, smaller cities or rural areas may offer lower salaries.
According to the Bureau of Labor Statistics (BLS), the top five states with the highest average salaries for accountants and auditors (which includes CPAs) are:
- New York: $94,610
- New Jersey: $88,490
- California: $86,930
- Connecticut: $85,610
- Massachusetts: $84,490
Industry
The industry in which you work can also impact your salary as a CPA. For example, CPAs working in the finance and insurance industry tend to earn higher salaries than those working in non-profit or government sectors.
According to the BLS, the top five industries with the highest average salaries for accountants and auditors are:
- Finance and insurance: $83,610
- Management of companies and enterprises: $78,490
- Information: $76,490
- Professional, scientific, and technical services: $75,490
- Manufacturing: $73,490
Level of Experience
As with most professions, level of experience plays a significant role in determining CPA salaries. More experienced CPAs tend to earn higher salaries than those just starting out in their careers.
According to the AICPA, the average salary for CPAs with 0-2 years of experience is around $45,000-$60,000 per year. Those with 2-5 years of experience can expect to earn around $60,000-$80,000 per year, while those with 5-10 years of experience can earn around $80,000-$110,000 per year.
Specific Job Duties
The specific job duties you perform as a CPA can also impact your salary. For example, CPAs who work in auditing or forensic accounting tend to earn higher salaries than those who work in tax preparation or bookkeeping.
According to the AICPA, the average salary for CPAs working in auditing is around $70,000-$90,000 per year, while those working in forensic accounting can earn around $80,000-$110,000 per year.
CPA Salary Ranges
So, how much can you expect to earn as a CPA? Here are some general salary ranges for CPAs in different industries and with varying levels of experience:
| Industry | Entry-Level (0-2 years) | Mid-Level (2-5 years) | Senior-Level (5-10 years) |
|---|---|---|---|
| Public Accounting | $45,000-$60,000 | $60,000-$80,000 | $80,000-$110,000 |
| Corporate Accounting | $40,000-$55,000 | $55,000-$75,000 | $75,000-$100,000 |
| Government | $35,000-$50,000 | $50,000-$70,000 | $70,000-$95,000 |
| Non-Profit | $30,000-$45,000 | $45,000-$65,000 | $65,000-$90,000 |
Conclusion
As you can see, the salary range for CPAs can vary widely depending on factors such as location, industry, level of experience, and specific job duties. While these figures can provide a general idea of what to expect, it’s essential to research salaries in your specific area and industry to get a more accurate picture.
Additionally, it’s worth noting that while salary is an important consideration, it’s not the only factor to consider when choosing a career as a CPA. Other benefits, such as job security, opportunities for advancement, and personal fulfillment, should also be taken into account.
By understanding the various factors that impact CPA salaries and researching salaries in your specific area and industry, you can make an informed decision about your career path and set yourself up for success as a Certified Public Accountant.
Additional Tips for CPAs
If you’re already working as a CPA or are considering a career in this field, here are some additional tips to keep in mind:
- Stay up-to-date with industry developments: The accounting industry is constantly evolving, so it’s essential to stay current with the latest developments and trends.
- Consider specializing in a particular area: Specializing in a particular area, such as auditing or forensic accounting, can help you stand out in a competitive job market and increase your earning potential.
- Develop strong communication skills: As a CPA, you’ll be working with clients and colleagues, so it’s essential to develop strong communication skills to effectively convey complex financial information.
- Join professional organizations: Joining professional organizations, such as the AICPA, can provide you with access to networking opportunities, continuing education courses, and other resources to help you advance your career.
By following these tips and staying focused on your career goals, you can set yourself up for success as a Certified Public Accountant and enjoy a rewarding and challenging career in the accounting industry.
What is the average salary of a CPA in the United States?
The average salary of a Certified Public Accountant (CPA) in the United States varies based on factors such as location, industry, level of experience, and specific job duties. According to the Bureau of Labor Statistics (BLS), the median annual salary for accountants and auditors, which includes CPAs, was $77,250 in May 2020.
However, salaries can range from around $45,000 for entry-level positions to over $150,000 for senior-level positions or those in high-demand industries such as finance or consulting. Additionally, salaries can vary significantly depending on the specific location, with cities such as New York or San Francisco tend to offer higher salaries than smaller cities or rural areas.
How does experience impact a CPA’s salary?
Experience plays a significant role in determining a CPA’s salary. Generally, the more experience a CPA has, the higher their salary will be. Entry-level CPAs with little to no experience can expect to earn around $45,000 to $60,000 per year, while those with 2-5 years of experience can earn between $60,000 to $90,000 per year.
Senior-level CPAs with 10-20 years of experience can earn significantly higher salaries, ranging from $100,000 to over $150,000 per year. Additionally, CPAs with specialized skills or certifications, such as forensic accounting or taxation, may also command higher salaries. Experience is a key factor in determining a CPA’s salary, and those with more experience tend to earn higher salaries.
What industries pay CPAs the highest salaries?
CPAs working in certain industries tend to earn higher salaries than those in other industries. The finance and banking industries tend to pay CPAs the highest salaries, with median salaries ranging from $80,000 to over $150,000 per year. Consulting firms, such as the Big Four (Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers), also tend to pay CPAs high salaries, with median salaries ranging from $70,000 to over $120,000 per year.
Other industries, such as healthcare and non-profit, tend to pay CPAs lower salaries, with median salaries ranging from $50,000 to $80,000 per year. However, salaries can vary widely depending on the specific company, location, and job duties. CPAs working in high-demand industries or with specialized skills tend to earn higher salaries.
How does location impact a CPA’s salary?
Location plays a significant role in determining a CPA’s salary. Cities with a high cost of living, such as New York or San Francisco, tend to offer higher salaries to compensate for the increased cost of living. CPAs working in these cities can earn significantly higher salaries, with median salaries ranging from $80,000 to over $150,000 per year.
In contrast, cities with a lower cost of living, such as smaller cities or rural areas, tend to offer lower salaries. CPAs working in these areas can earn median salaries ranging from $40,000 to $70,000 per year. Additionally, salaries can vary widely depending on the specific location within a state or region. CPAs working in urban areas tend to earn higher salaries than those working in rural areas.
Do CPAs with specialized certifications earn higher salaries?
CPAs with specialized certifications, such as the Certified Information Technology Professional (CITP) or the Certified Financial Planning (CFP) certification, tend to earn higher salaries than those without these certifications. These certifications demonstrate a level of expertise and knowledge in a specific area, which can be attractive to employers.
According to the American Institute of Certified Public Accountants (AICPA), CPAs with specialized certifications can earn up to 10% to 20% more than those without these certifications. Additionally, CPAs with multiple certifications tend to earn higher salaries than those with a single certification. Specialized certifications can demonstrate a level of expertise and knowledge, which can lead to higher salaries.
How does a CPA’s salary compare to other accounting professionals?
CPAs tend to earn higher salaries than other accounting professionals, such as bookkeepers or accounting clerks. According to the BLS, the median annual salary for bookkeeping, accounting, and auditing clerks was $40,240 in May 2020. In contrast, the median annual salary for accountants and auditors, which includes CPAs, was $77,250 in May 2020.
However, salaries can vary widely depending on the specific job duties, industry, and location. Other accounting professionals, such as Certified Management Accountants (CMAs) or Certified Internal Auditors (CIAs), may earn similar salaries to CPAs. Additionally, salaries can vary depending on the specific company and industry. CPAs tend to earn higher salaries than other accounting professionals due to their advanced education and certification requirements.
What are the benefits of becoming a CPA?
Becoming a CPA can have numerous benefits, including increased earning potential, job security, and career advancement opportunities. CPAs tend to earn higher salaries than other accounting professionals, and they are in high demand across various industries. Additionally, CPAs have access to a wide range of job opportunities, from public accounting firms to private industry and government.
Becoming a CPA also demonstrates a level of expertise and knowledge in accounting and finance, which can be attractive to employers. CPAs are also required to complete continuing professional education (CPE) courses to maintain their certification, which can help them stay up-to-date with the latest developments in the field. Overall, becoming a CPA can be a valuable investment in one’s career and can lead to numerous benefits and opportunities.