Are you pursuing an accounting career? You’ll want to know the difference between public and private accounting to get on the right track. The type of work you want to do, your personality traits and your career goals can help you decide which path is right for you.
What is Public Accounting?
Public accountants work for organizations that offer accounting services to other individuals and businesses, which means public accountants work for an array of companies. As an independent third party, public accountants review financial statements and systems to determine if their client’s financial statements accurately represent results, financial positioning and cash flow. They provide support with auditing, tax and consulting. Tax season tends to be the busiest time of the year for public accountants.
Careers in Public Accounting
Public accountants typically launch their careers as staff accountants, advancing into senior accountant roles, then management roles, and finally, a select few earn a partner spot at their firm. The Big Four, Deloitte, Ernst and Young, KPMG and PWC, are the largest accounting firms in the world.
Public accountants often select an area to specialize in, for example, tax accounting, auditing, forensic accounting or consulting.
What is Private Accounting?
Private, or corporate, accountants work for one individual business. Private accountants help establish systems and record business transactions that ultimately become financial statements. Private accounting can support a business, government organization or agency to plan the overall cost of doing business and evaluate the organization’s fiscal performance. The end of a fiscal quarter is typically the busiest time for private accountants.
Careers in Private Accounting
Private accountants generally start as staff accountants before moving into management roles, with the capstone management role being that of the CFO. Private accountants develop in-depth industry knowledge as their careers advance.
The focus on managerial reports makes the role more predictable, as private accountants’ work may also include account reconciliations and manual journal entries.
The Difference Between Public vs. Private Accounting
The difference between public vs. private accounting can be best explained by examining five critical areas: necessary background, schedule, education and certification, personality and career goals.
Background
First, you should consider what experience you already have. Public accountants must have strong analytical skills and possess an understanding of business systems. Private accountants should understand business processes and industry standards.
Schedule
The typical schedule can vary widely between the two career choices. Because public accountants are working for a wide variety of clients, they generally work long hours, have inconsistent schedules and travel frequently. On the other hand, private accountants generally have consistent schedules and travel much less (if at all) since they work for just one company.
Education and Certification
While an accounting degree is a must in either public or private accounting, public accountants are required to have a CPA license to practice public accounting; in private accounting, a CPA is often a valued addition but isn’t mandatory.
Personality
Perhaps one of the biggest differentiators in public vs. private accounting is the personality type that works well for each one. Public accountants should be strong communicators, adapt quickly and be outgoing to work with external clients. Private accountants must also be strong communicators, and their internal focus makes organization and dependability essential traits.
Career Goals
Finally, your ultimate career goals should be considered. The peak of a public accountant’s career is to earn a coveted partner role at your firm. The top job for private accountants is to step into the role of Chief Financial Officer (CFO).
But despite how different the two roles are, there isn’t much difference in a public vs. private accounting salary. According to Robert Half, the midpoint salary for a general accountant in private accounting with 1-3 years of experience is $62,000; for a public accountant with the same amount of experience, the midpoint is $52,000. Even at the senior levels, salaries remain quite comparable at the midpoint: a private accounting financial analyst director earns about $130,000 compared to the $134,000 a senior manager in tax services earns in public accounting.
Public vs. Private Accounting: Which One is Right For You?
If you like to have a broad range of expertise, public accounting may be a better fit for you, as you’ll develop a breadth of skills and understand multiple industries supporting clients in many different types of businesses. If you prefer a deep specialization, working as a private/corporate accountant, allows you to develop expertise in your organization and its industry. You should also consider whether you would prefer to focus internally on a single company, or externally with clients.
Another consideration is that many accountants choose to launch their accounting careers in the public accounting space to gain experience before moving into private accounting. You may find each different type of accounting is right for you at different stages in your career.
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