While an accounting career path may seem pretty straightforward, you’ll need to make a decision early on about the specific type of path you’ll follow: public or private accounting? While the skills required in each sector are similar, the one that’s right for you will depend on your salary expectations, long-term career goals, desired work environment, and other factors.
Here, we’ll compare public vs. private accounting and lay out some of the pros and cons to consider for each field.
Public vs. Private Accounting
First, what’s the difference between public and private accounting?
Public accountants can be thought of as external accountants. They don’t provide accounting services for any one company; rather, they work for a firm that provides services to an array of different companies. Public accounting typically deals in services that satisfy regulatory requirements, like auditing, tax and forensic accounting. You may have heard of the ‘Big Four’—these are four major public accounting firms that play a dominant role in the industry: Deloitte, Ernst and Young, KPMG, and PWC.
Private accountants, on the other hand, are internal accountants. They’re an employee of the company for which they’re doing accounting. This is why private accountants are sometimes referred to as corporate accountants. The work of private accountants is done for the company’s benefit and may include financial planning, reconciling accounts, and preparing financial reports.
Both fields of accounting typically require a minimum of a bachelor’s degree in accounting or finance. Accountants in both sectors may choose to pursue a CPA license, which enables them to file reports with the Securities and Exchange Commission. Becoming a CPA requires passing a rigorous exam and maintaining ongoing education requirements. For those in the public accounting sector, a CPA license is usually a requirement to advance into managerial positions.
One upside is that no matter which accounting career path you choose, you’ll enjoy ample employment prospects over the next decade. The Bureau of Labor Statistics predicts consistent job growth for accountants in all fields through 2028. The average accountant salary in 2018 was $70,500.
Examples of public accounting jobs
Certified Public Accountant
This versatile accounting professional is in charge of a wide range of accounting, auditing, tax, and consulting tasks. They act as an advisor to an organization, helping the business plan for and reach its financial goals. For publicly traded companies, a CPA prepares and files necessary reports with the Securities and Exchange Commission and can also represent clients in front of the IRS.
Any business that deals in the production of goods or services needs to account for the cost of their supply chain. A cost estimator specializes in determining the cost of labor and raw materials necessary to do business. Especially in public sector projects like critical infrastructure and construction, a cost estimator is necessary to ensure taxpayer dollars are being spent wisely.
A public auditor analyzes the financial documents that are required by law on behalf of an organization. This includes the forms and statements corporations are required to provide to shareholders as well as tax returns.
A forensic accountant uses a financial paper trail to investigate crimes. This might include looking into embezzlement, fraud, bankruptcy, contract disputes and even murder that involves a financial component.
This professional ensures their clients are in compliance with all federal and state income tax laws.
Public Accounting Pros and Cons
Variety of work
Because public accountants perform work for many different companies, you’ll have the opportunity to get your feet wet in a variety of industries. Public accountants should be comfortable learning quickly and juggling diverse responsibilities. Public accounting also lends itself to specialization; for example, an accountant working for a public firm might specialize in tax or mergers and acquisitions.
Depending on your area of expertise, you may travel frequently as a public accountant. Auditors in particular spend a good deal of their time on the road, traveling to work with clients onsite. For people who don’t want to be tied to a desk in an office, this could be viewed as a plus.
Ample advancement opportunities
Ambitious public accountants have their pick of advancement opportunities. You can obtain your CPA license and move into management, become self-employed as a consultant, or even work your way up the ranks to become a partner at a firm. Senior-level CPAs at large public firms can easily clear six figures annually, while salaries for partners are even more lucrative.
The public accounting field is known for long hours and stressful busy seasons. It can be quite competitive, especially at larger firms. Many accountants begin their careers at a public firm to build experience, then transition to a private accounting role for greater work-life balance.
A CPA license is required to advance
If you want to move up the public accounting food chain, you’ll need your CPA license. The CPA exam is one of the most rigorous professional certifications of any industry, with more than 300 multiple-choice questions, 20 task-based simulations, three writing portions and a pass rate of just 50%. It’s not uncommon for employers to cover the cost of preparation and CPA licensing for their employees.
Examples of Private Accounting Jobs
A bookkeeper is responsible for maintaining an organization’s general ledger. They record all profit and loss transactions and produce financial statements and reports. A four-year accounting degree is not a requirement to become a bookkeeper.
A staff accountant’s job duties often overlap with those of a bookkeeper, but the staff accountant takes things one step further. Whereas a bookkeeper mainly keeps records, an accountant analyzes the data and uses it to make meaningful interpretations to be used in decision-making by the company.
A payroll accountant does more than just make sure the paychecks go out on time. This person oversees the company’s compliance with all state and federal laws pertaining to wages and manages the related reporting activities. They also make sure the appropriate amount of money is withheld for the purpose of taxes and prepare annual compensation reports.
Controllers are largely concerned with ensuring the accuracy of a company’s financial record keeping. They oversee the regulatory compliance of the organization and design controls to mitigate risk, enhance accuracy and maintain adherence to generally accepted accounting principles.
A CFO takes a big-picture approach to the company’s financial position. They assess financial opportunities, weigh them against potential risks, make recommendations to the company’s leadership and oversee lower level financial staff. They’re also heavily involved in goal setting and performance tracking.
Private Accounting Pros and Cons
Better work-life balance
Though many professionals in the accounting field experience a heavier workload around tax time, generally speaking, private accountants have more flexibility than their public accounting peers. Because of low unemployment and high competition for top accountants among employers, it’s become more common for employers to approve alternate work arrangements like nontraditional hours or telecommuting to boost retainment.
If you’re the type that likes to stick to a routine, private accounting will provide more consistency from day to day. You’ll mostly be doing the same type of work every day, because as an in-house employee you won’t have to switch between industries. If you’re looking for longevity (sticking with one company for a long time), private accounting can afford this opportunity.
Private accountants typically travel less than their public counterparts, if at all. Travel in this sector is mostly limited to traveling between branches if the company has multiple locations.
More limited career progression
Because you’re internal to a single company, your advancement opportunities are limited to the positions that the company has to offer. The Chief Financial Officer is the top of the food chain, and there’s only one of those. The same usually goes for upper management positions in private accounting like controller.
A CPA license is not required
Unlike public accounting, a CPA is not necessarily required to climb the corporate ladder, though many in private accounting still opt to pursue it. Alternately, some private accountants choose to pursue an MBA, which can be beneficial if you’re looking to expand your role to cover more of the operational side of the business.