CPAs are in high demand, and for good reason. After all, every business needs a qualified professional to take care of their finances. The high demand for CPAs means that you can expect to be well compensated for your work and are unlikely to ever be without a job.
Glassdoor reports that CPAs earn an average of $72,149 per annum, which is well above the average yearly income of workers in the US. In the latest Usual Weekly Earnings News for the fourth quarter of 2020, the BLS (Bureau of Labor Statistics) reported that the average weekly salary for US workers was $984. This amounts to a median annual salary of $51,168 (if we assume 52 weeks of work per year).
While you can still make a good salary as a non-CPA accountant, the qualification is likely to earn you a much higher income. In fact, the AICPA reports that CPAs can earn up to 15% more than accountants without CPAs. This is partly because of the prestige of the CPA qualification and partly because CPAs have a higher level of education than non-CPA accountants. Since the 150 credit hour rule was introduced, the higher salary of the CPA is an even bigger guarantee. Because CPAs are now expected to have a higher level of education, starting salaries have also increased.
While all CPA’s earn a good salary, not every CPA earns the same as the next. Generally, how much you will as a CPA accountant depends on a number of factors: experience, industry, size of firm, and location.
CPAs tend to earn higher salaries as they gather new skills and begin to pursue more advanced positions. If you are new to the working world, your experience is reflected in your grades and the relative prestige of your 1-2 years of internship. At the start of your career as a CPA, greater emphasis tends to be placed on the perceived quality of your education. For this reason, more advanced degrees (for example, a Master’s degree) tends to have a higher earning potential than a Bachelor’s degree. A CPA with less than one year of experience will earn about $52,000 per annum. Entry level salaries range from $43,000 to $65,000, depending on where and for whom you work.
Furthermore, having a CPA makes you a great candidate for promotions, landing you in the position of accounting supervisor or even CFO. This means that your salary as a CPA accountant could increase dramatically as your career advances. The average salary of a CFO, for example, is currently sitting at an impressive $133,919 per annum.
After you have been working for an accounting firm for 6+ years, the time spent in the position becomes less important, and more emphasis is placed on specific experience, accomplishments, and accolades. A CPA with seven years of experience will earn about $70,000 per annum. CPAs with over 20 years experience could earn up to $150,000 per year. Your specific role as a CPA is also going to impact your expected salary.
An important decision that you will make as a new CPA is whether to go into public or private accounting. A CPA can work in either sphere and, fortunately, the department of labour expects job growth in both fields. Public accountants, however, tend to earn a higher salary than CPAs working for private practices.
Don’t let this influence your decision too much, though. The private industry is a good option for new CPAs, as jobs are usually less demanding than positions in public accounting. Furthermore, the entry level salaries for CPAs are relatively similar, regardless of whether you start out working in a private or a public firm. Later on in your career, you can always decide to move to a public accounting firm. This may be because career advancement and salary increases take longer at private practices.
Obviously your level of seniority and area of specialization is going to directly affect your salary. An entry level position will not pay the same as a senior level position, and the salary at a Big 4 company will not be the same as for a firm. Likewise whether you work in tax, auditing, another specialization or general will also impact you salary. It is also important to bear in mind that many CPAs recommend that when you start out, you should switch firms every 2 or 3 years to ensure that your pay matches your skill level, otherwise your raise may not reflect that. But before making any rash decisions, it is always best to assess the market price for someone in your position beforehand, or you may wind up shooting yourself in the foot. Some examples of remuneration for CPA and accounting positions can be found on our pieces on accounting certification definitions.
Size of firm
If you are working in a larger, more complex firm, you are likely to earn more than someone working in a smaller firm. The influence of the size of a firm can even supersede that of experience. For example, an entry level CPA at a large firm may earn more than a CPA who has been working for a few years at a smaller firm. Larger firms also have other benefits, like gyms, cafeterias, and daycares. Smaller firms, on the other hand, are more flexible.
Working in a bigger city usually means a higher median salary for a CPA. This is because in metropolitan areas there is more competition, more opportunity, and more capital. But location isn’t everything. Especially considering that the cost of living in bigger cities is usually higher. According to the BLS, the highest average annual salary for CPAs is in Washington, D.C., at $96,000. The salaries for CPAs working in New York follow the earnings of Washington with a close second, averaging $95,000.
Remember, people with a CPA can work anywhere in the world, so don’t limit yourself! Do you like the cold? The average salary for CPAs in Switzerland is almost $20,000 more than in the USA.