Becoming a CPA

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#1
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I have a 2 year degree.

I've worked as a tax practitioner (EA) as an employee of my own firm (with a partner) for 10 years.

Perhaps each state is different, but if I went back to school for a higher degree and sit through the CPA exams, would I also have to actually work for another CPA?

Because I don't see how I can possibly do that unless I got rid of half of my clients.
 

#2
sjrcpa  
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Some states have a 1,000 or 2,000 hour work experience requirement before you can get the CPA license. That may have to be done under the supervision of a CPA.
Other than that I don't see why you would have to work for a CPA.
 

#3
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sjrcpa wrote: That may have to be done under the supervision of a CPA.


Does this mean I can potentially hire a CPA to supervise my own work and that I don't actually have to work for that CPA?

Thanks!
 

#4
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It all depends on your state, each state board has their own rules.
Typically a CPA needs to work within the same company and "supervise" your work, to then sign off on your hours.
Most states require a bachelors degree plus an additional 30 credit hours to meet the 150 hour requirement (you don't necessarily need a masters).

You can read more about your state's requirements here.
https://cca.hawaii.gov/pvl/files/2013/0 ... 10.14R.pdf

At this point in your career, there is going to be substantial opportunity cost to you obtaining the CPA certification, years of school, years of study for the exams, then the years of experience. You likely would not opt for the 1500 chargeable hours of audit work, as you are a tax guy, so it looks like 2 years experience would be required.

Not entirely sure if you can hire a CPA to work in your firm, who "supervises" you. Seems a bit paper thin to me unfortunately.
Some states do allow NASBA verification of experience, which is a chargeable service, but it depends on your state board whether that would be acceptable.

(I did the exams in 5.5 months, 550 hours, went 4 for 4, average score of 92 - but my results were not typical. Most people take 12-24 months to pass all 4 parts. It's an intense ride.)
 

#5
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In WA state, you don't have to work for (or even with) someone to have them 'sign off' on your CPA credential. A sole practitioner I know in my town had his college professor sign off. Similar situation, where he practiced in his own firm for several years, went back to school to get his degree and then his CPA credential.
You'd have to look up how Hawaii views that dynamic.
~Captcook
 

#6
CP Hay  
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Without being too invasive, what's the impetus for the certification? Seems like you've been doing well fo.r quite some time
 

#7
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Thanks for asking.

Yes, our book is currently full and our prices are well above what a retail non-CPA tax service would charge.

I would love to pat myself on the back and take credit for doing such a great job and being so personable, and while some of that is true, our success is more likely because of an undersaturated market. As we know running successful a tax firm is difficult and it is something that few individuals can handle.

So why a CPA? Because "what got me here won't get me there".

As a CPA, I could perhaps charge more, offer more complete services, and let's face it... the education and exam experience would make me a better tax person.

Also, I passed my series 65 and formed an RIA. So the next logical step for that would be to become a CFP, which might one day be required to provide investment advisor services. What if I built up a nice book of assets under management and then it was suddenly required? I would lose everything I worked for as a financial advisor.

For that I would need a 4 year degree (I only have a 2 year degree).

And if I'm getting a 4 year degree, why not take accounting and go for the CPA as well?

One reason why not, I'm reading, would be the grueling exam. The EA exam was not exactly easy, but we all know that the CPA exam is much more comprehensive, of course.

Another would be that it would be pretty much impossible for me to work for another CPA. I work WAY too hard as it is.
 

#8
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I think the CPA exam may have changed since I took it, but when I did the pass rate for each sitting was always around 50%, give or take. Most people failed because they didn't study enough. It's not difficult to pass if you put in the time. I took all four parts while working full-time as a tax associate and passed each section the first time by a comfortable margin. Granted, an associate doesn't have nearly as much responsibility as a manager or owner.

I'd start by calling your state board and asking what the employment experience means for you as an owner. Based on the plain language, it appears you would need to hire someone to supervise your work? If you can't get clarification on that or that's not feasible all the other requirements might be moot.

If the employment experience requirement is feasible, a Bachelors degree and the CPA exam while working full-time is going to be grueling. You'll have to decide if it's worth it to you. I'd look into whether you get credit for any of the hours you already have. Keeping in mind you need 150 hours total AND a Bachelor's.
 

#9
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Just to play devil's advocate here: The CPA credential is a valuable marketing tool in the tax industry and I understand the attraction from that end. But earning a CPA license requires studying and learning about a lot of non-tax related material. Would you get better mileage out of an MST?

The one thing a CPA can do that nobody else can is express an opinion on a set of audited financial statements. That's the one thing that sets CPAs apart. Do you ever see yourself getting the extra training and experience you would need to do that?

What I am asking is; with the effort spent on non-tax related subject matters is a CPA credential the best investment of your time at this point of your career?
Because on T.A. ten was the most you were allowed
 

#10
sjrcpa  
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I don't think you can get a Masters degree (MST) without having a Bachelors (4 year) degree first.
 

#11
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sjrcpa wrote:I don't think you can get a Masters degree (MST) without having a Bachelors (4 year) degree first.


That has nothing to do with my point. My question is: after completing the 4 year degree the OP has already decided to get, would an MST serve him better than a CPA license would?
Because on T.A. ten was the most you were allowed
 

#12
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You can get an MST from Taft University without a bachelor’s degree, as long as you are an EA. They are nationally accredited, rather than regionally, though.

Doesn’t it depend on the state as to whether a non-CPA can do an audit? Here in NC, much as the NC Board of CPA Examiners likes to think it is different, an EA can carry out an audit, although there may soon be limited exceptions in respect of HOAs.
 

#13
smtcpa  
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I'm a huge proponent of the CPA letters after one's name (it has helped me tremendously to build my tax practice) but I don't see how it will benefit you now with an established practice. I think you would be WAY better off getting the CFP. With the CFP you only need a bachelor's, with the CPA you effectively need a Master's AND then the 2-years experience under a CPA. To me the decision is pretty easy.
 

#14
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Since you already have an established tax practice, I would bypass CPA and go for CFP. It'll be interesting to see if you remain under your own RIA vs going under another one that handles all of the fun compliance matters. I know several CFPs that gave up their own RIAs in favor of working under a larger entity. If you can get $30 mil under management, that is $300k/year at 1%. I chose not to because I realized it just is not my cup of tea--I hate investment topics whereas business and entrepreneurship is my passion.

That said, the CPA exams are being modified (or already have been) to move away from forced study and passing of the four standard exams we are all familiar with. Instead, it'll be three exams and then a fourth that is more in line with your career intentions. For example, if you think you will never do audit, you could opt out of AUD and choose another direction (IIRC). I can't recall the details, it was last August that I heard about it but I liked the direction it was headed. Still, they're grueling exams and NASBA is flat out nasty with their 24 hour countdown clock for score releases.

I had already been working full time as an accountant for about 8 years, technically had the required experience under a CPA that died (so it never counted when I chose to become a CPA), and so I partnered with another CPA to achieve the supervision requirement. I ended up studying for and passing the exams in a four month period, first attempt, which also encompassed the island I live on taking a nearly direct hit by a hurricane. THAT was fun.
 

#15
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I have a CPA degree, it is largely useless and an anchor around my neck like an albatross. EAs pay a very small annual registration fee and the minimum required CPE per year is quite small compared to CPAs (WA has a 120 CPE per 3 year requirement where most states have 80 CPE per 2 years). Then you have CPA fees, practice to permit fees, firm fees, and then multiple state fees if you physically practice in multiple states. CPA fees can easily near $1,000 even before paying for CPE. Unless you want to do audits, don’t do it.

A CPF is very useful, so is a law degree.

A CPA degree is useless for those in tax practice with established firms.But that is just my opinion, I am very sure people will disagree. It opens doors for a beginning young student, it is useless for older established tax firms.
 

#16
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It's not so much that I will ever provide financial audits, but I sometimes have clients that need CPA signed-financials. This is mostly for handy-man or construction related clients that apply for a Hawaii contactor's license. The state wants a CPA signed balance sheet - just so they can check the box and so it can sit there in a file. In many cases, the situation is extremely simple, but I have to refer them away to a CPA that doesn't know or trust the client and it turns into a huge and expensive issue (not that I blame the CPA, of course).


It would be nice to have my own CPA rating so I can help those clients when that specific issue comes up.

Also, even though I have a full book and that I'm very happy with my bottom line, it would also be nice to have a CPA rating for marketing so I can continue to cull lower-yielding clients and provide more expensive/profitable services to my target market (small s corps).

But based on the answers in this thread, however, I think I'll just work on the CFP/4-year degree for now and just deal with those issues as best as I can.
 

#17
smtcpa  
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Yes, I could not disagree more. You sound like a CPA hater. The first question prospects ask me is "Are you a CPA?" (even though it can be meaningless in practice). Having a CPA is a GREAT marketing tool if you are building a practice. But the OP sounds like he has an established tax practice and wants to stay in tax (not go into industry). That's the only reason I can see for considering not getting the CPA.

And $1000 in fees? I paid CO $42 for my 2-year renewal last year. That's it. I moved to VA last year and VA does not require me to register in VA. Not sure where the 'thousands of dollars in fees' comes from.

As for education, most states require an average of 40 hours of CPE per year. EAs require an average of 24. If you're not getting at least 40+ hours anyway, then that's a problem. The CE requirement should not be a deterrent.

All I know is I remember my Dad encouraging me to pass the CPA exam when I was done with college. That was the best professional advice I ever got from anyone.

Treetopclimes wrote:I have a CPA degree, it is largely useless and an anchor around my neck like an albatross. EAs pay a very small annual registration fee and the minimum required CPE per year is quite small compared to CPAs (WA has a 120 CPE per 3 year requirement where most states have 80 CPE per 2 years). Then you have CPA fees, practice to permit fees, firm fees, and then multiple state fees if you physically practice in multiple states. CPA fees can easily near $1,000 even before paying for CPE. Unless you want to do audits, don’t do it.

A CPF is very useful, so is a law degree.

A CPA degree is useless for those in tax practice with established firms.But that is just my opinion, I am very sure people will disagree. It opens doors for a beginning young student, it is useless for older established tax firms.
 

#18
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A CPA license has TREMENDOUS appeal to a client base and prospective clients--even if a client or prospect will not utilize what only a CPA can do, those three letters and that license hold tremendous value to them. Plus, it also communicates to them that you have the mindset to achieve things and something significant to lose, therefore less likely to pull any shenanigans.

Yes, we deal with more requirements relative to other professionals to renew our licenses on a periodic basis but it is not THAT difficult. Whether 40 of CPE hours over 1 year, 80 over 2, or 120 over 3, it's the same damn requirement if you average it out. I do 60ish per year since I can carry over roughly 20 (some are excluded) but it gives me leeway if I happen to have a year where I cannot fit in the CPE I need, or I made a mistake somewhere with my CPE requirements and then the excess hours cover it. I earn 16 hours in a single ISCPA event I attend in Chicago and it has tremendous value to me, which is why I pay the costs of attending. I do Clemson's tax CPE and the cost is minimal relative to the CPE I obtain. I pay subscription fees to two other providers, though it is reaching a point that I may drop one. All in with travel, I am at around $1800/yr for CPE.

Backing out business licenses just to operate ANY business, I am licensed as a CPA in two states and I pay South Carolina around $150 to renew my license and my firm's. Michigan was a lot higher, do not recall the exact amount and it may have just been for initial registration under reciprocity but I recall $450--I'll deal with renewing that this summer and thus learn the renewal fee.
 

#19
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I agree with the general sentiment that the benefit of obtaining a CPA designation is tremendous. Those that are familiar with the amount of work that goes into obtaining that license really respect the designation, and may not work with anything less.

Regardless of whether the related fees are around $1,000 annually (and they may be once you add in AICPA and state society dues), you're more than going to make that back by charging a premium.

I also agree that for OP, the juice may not be worth the squeeze at this point in his career.

Maybe OP's pain point of

It's not so much that I will ever provide financial audits, but I sometimes have clients that need CPA signed-financials. This is mostly for handy-man or construction related clients that apply for a Hawaii contactor's license. The state wants a CPA signed balance sheet - just so they can check the box and so it can sit there in a file. In many cases, the situation is extremely simple, but I have to refer them away to a CPA that doesn't know or trust the client and it turns into a huge and expensive issue (not that I blame the CPA, of course).

could be remedied by hiring a young but experienced CPA with the intent of making him or her a partner in the long run. That solves the problem and also increases the probability of business continuity and favorable exit strategies for OP.
 

#20
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ManVsTax wrote:I also agree that for OP, the juice may not be worth the squeeze at this point in his career.

Maybe OP's pain point of

It's not so much that I will ever provide financial audits, but I sometimes have clients that need CPA signed-financials. This is mostly for handy-man or construction related clients that apply for a Hawaii contactor's license. The state wants a CPA signed balance sheet - just so they can check the box and so it can sit there in a file. In many cases, the situation is extremely simple, but I have to refer them away to a CPA that doesn't know or trust the client and it turns into a huge and expensive issue (not that I blame the CPA, of course).

could be remedied by hiring a young but experienced CPA with the intent of making him or her a partner in the long run. That solves the problem and also increases the probability of business continuity and favorable exit strategies for OP.


This is the only benefit I see in what's been shared and I think a strategic partnership with an outside firm would be far more advantageous. Performing A&A work is a meaningfully different pivot from tax work and may create some dynamics you'd prefer not to have to navigate (independence as the biggest). A&A work also, in my experience, requires a different approach to the relationship than being a tax advisor. If you're also entertaining the thought of investment advising, I think that is too many hats for one head. Again, I think a strategic partnership would be a much better solution for this issue. If you can plan ahead for these engagements and provide lead time to the CPA firm, I think you might have a different experience than it sound like you've had to date.
Does it have to be a HI CPA firm for this work?
~Captcook
 

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