One of the most important choices you will make in an accounting career is working in public or private accounting. Aspects of the two can differ substantially, like specialized industry expertise, certifications needed, and work environment.
Comprehensive studies in the online Master of Business Administration (MBA) with an Accounting Concentration from Emporia State University (ESU) can prepare students to work in public and private accounting. Plus, it gives students the chance to explore different accounting environments and roles.
This can help students choose which facet of the profession best fits their interests and attributes. Through electives, students can further tailor studies to suit their individual career goals, whether in public or private accounting.
What Are the Basic Differences Between Public and Private Accounting?
Public accountants provide accounting services like financial auditing, tax preparation, and consultation to clients on an independent, third-party basis. Private accountants work for individual companies, providing internal accounting services like recording and analyzing business transactions and preparing financial statements.
However, a state-licensed public accountant must also be a certified public accountant (CPA). To sit for the CPA exam, accountants must meet extensive educational requirements. ESU’s online MBA coursework can help students meet these requirements.
Private accountants, on the other hand, do not need to hold CPA certification. But CPA certification and other accounting and financial management certifications can help secure a competitive advantage while pursuing promotions and commanding higher salaries in the job market.
A notable difference between public and private accounting is the work environment. Public accountants regularly travel to work with clients. They may be required to work long and irregular hours to meet deadlines and their clients’ needs.
Private accountants are more office-bound, given they work internally for a single company. Private accountants can also expect a more typical, stable workday schedule.
Private and public accountants also differ in terms of the industries they interact with. Private accountants work in their company’s industry, requiring industry-specific financial expertise. Public accountants work with clients from numerous industries, relying on more broadly applicable and transferable financial knowledge.
What Are the Benefits and Drawbacks of Both?
These differentiating factors mean choosing the right accounting career largely depends on an individual’s personality traits, preferred work environment, and goals.
Public accounting offers travel and adventure, the opportunity to work with clients of all kinds, and the chance to learn about a variety of industries. All these factors can benefit people who enjoy variety. Public accounting also requires intensive interaction and communication with clients, making it a good choice for someone with excellent interpersonal skills.
These aspects of public accounting can also be drawbacks for some professionals. Maintaining a healthy work-life balance as a public accountant can be difficult given extensive travel and long, irregular work hours. Additionally, the interpersonal demands of public accounting may also seem daunting for introverted people.
Private accountants focus interactions internally, forming long relationships and ease in regular communication. Private accounting offers more dependable, stable hours and (generally) less travel, meaning it can facilitate a healthier balance of work and life. Private accounting also offers the opportunity to specialize in a specific industry. While one potential drawback is that private accountants may find their careers are limited to an individual industry, a potential advantage is that individuals can refine industry-specific skills.
How Do Salaries and Job Opportunities Compare?
Basic staff accountant positions are relatively equitable in pay between public and private accounting. The Bureau of Labor Statistics reports that the median pay for accountants and auditors in 2020 was $73,560. That number includes both accountants without CPA certification and their higher-earning, CPA-holding counterparts.
Upward career trajectory following basic accountant positions diverges somewhat for public and private accountants. A public accountant could work their way up to a senior accountant position and eventually be promoted to senior accounting manager with an average base pay of $115,105, as reported by Glassdoor in April 2021.
The top-level position in public accounting is usually a partner in an accounting firm. April 2021 data from PayScale reports that accounting firm partners command an average salary of $171,042 plus substantial bonuses and profit sharing. Partners at the biggest firms with years under their belt can make much more.
Private accountants similarly work their way up through senior accounting and management positions, though many transition into finance-related roles. This is often the case for private accountants who aspire to become chief financial officers (CFO).
CFO earnings vary widely, as a great deal of their compensation comes from profit sharing and bonuses. April 2021 data from Salary.com reports that the average 2020 salary of CFOs is $395,882. Yet, like accounting firm partners, years on the job, bonuses, and profit sharing can boost this figure considerably.
All in all, job trajectories for public and private accounting are somewhat analogous. Considering the work environment, the style of work, and one’s personality traits may be most useful in deciding between private or public accounting as a life-long career.