Career Path and Compensation

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#1
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Hi everyone,

I am very new to the tax accounting profession. I've completed my BA, CPA exams, and now starting my first full time position. I’m starting at 51K (with payed overtime). The firms revenue is 190 million to give you an idea of the company’s size. I am writing because I need guidance on how to build my career.

I've read that i should expect:
1 year experience 50K to 60K
5 years experience 70K to 80K

My question is, should i expect to get raises of at least 4K a year for five years to reach the minimum 70K mark? I'm trying to gain understanding on how to make the most of my time and career. The geographic location is in Southern California.

Thank you all in advance and if you need clarification on my question, please ask :)
 

#2
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I don't think it's going to be positive to examine your career progression through the prism of your compensation.

Sometimes we're underpaid, sometimes we're overpaid. Sometimes both in the same week, without even switching employers!

My advice...go to work with a "go-getter" attitude and sponge up everything you can the first 2-3 years. Continually show people you work with that you're ready for more. You already have one major milestone behind you (your CPA exams), so you can focus 100% on the job.

When you're offered a promotion, you can do research to see what's competitive in your market for the position and negotiate the promotion compensation by illustrating what you've been bringing to the table, and what you hope to do in the future for the firm.

If you find the first firm isn't for you, you can interview around and usually get a raise by changing firms.

Best of luck.
 

#3
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I fully agree with what ManVsTax stated. When you are first starting out, do not focus on the compensation (though certainly it is important, but it will rise with time and as you change firms). It is not going to be great in the beginning and it is not realistic to expect annual $4k raises unless you are bringing A LOT to the table. Do not be afraid to understand and admit your limitations, but do everything possible to soak up knowledge, how to apply everything you do learn, etc. That is what will ultimately drive your career path and increased compensation. Also, which firm you work for can change your total compensation--some of the smaller firms pay more than the large ones with far more resources.

You will be worked to death. It is the nature of this field and you can only control it if you are able to successfully transfer into self-employment. It will be tiring, but just do it to gain the experience and ability to work efficiently and delegate/work with a team. I routinely worked 70+ hour weeks as an employee and now rarely even have a 40 hour week. I think it is wise to have compensation targets, but do not let them control your career because it'll harm you in the end.

We also each take a different path based on our experience levels and so it is difficult for us to provide insight from a strictly compensation perspective. My starting salary at my first CPA firm was a joke, I moved into private accounting and immediately started making six figures because of my experience at just 27 (much of it spent dealing with international logistics and operations, inventory, wholesale/retail, etc.). I had a niche. I am now on my own and have certainly expanded outside of my niche, make more money than in private accounting and nearly entirely because of how I conduct myself and, again, my particular set of experience.
 

#4
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I would say raises of 4k each year starting out is generally too high with one employer, but can be obtained by taking a new role at a different CPA firm. For reference I started out in 2013 with base of 38k + tax season bonus at a small CPA firm. 7 years later I'm making a base of 84k + tax season bonus at a different small CPA firm. When I switched CPA firms a 30% raise came with it. Cost of living here is about average here so CA may be different.

It's been my experience that small firms do indeed pay more than larger ones (briefly worked for a top 25 firm). I think this is in part because smaller firms are more flexible and you can prove directly to the owner your value.
 

#5
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ManVsTax wrote:I don't think it's going to be positive to examine your career progression through the prism of your compensation.

Sometimes we're underpaid, sometimes we're overpaid. Sometimes both in the same week, without even switching employers!

My advice...go to work with a "go-getter" attitude and sponge up everything you can the first 2-3 years. Continually show people you work with that you're ready for more. You already have one major milestone behind you (your CPA exams), so you can focus 100% on the job.

When you're offered a promotion, you can do research to see what's competitive in your market for the position and negotiate the promotion compensation by illustrating what you've been bringing to the table, and what you hope to do in the future for the firm.

If you find the first firm isn't for you, you can interview around and usually get a raise by changing firms.

Best of luck.



Understood. I recently read that to become a tax manager you need a masters, i was under the impression a BA, CPA, and a good amount of experience was enough. Is it uncommon to reach tax manager without a masters?
 

#6
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CornerstoneCPA wrote:You will be worked to death. It is the nature of this field and you can only control it if you are able to successfully transfer into self-employment.


Hi CornstoneCPA, thank you for your response. So its more typical for someone to gain a few years experience then either work for the private sector, or go out on their own as a CPA? What about the managers? I'd imagine they stay at firms for years working their way up and eventually becoming partner.

I'm just trying to road map a path so i see the big picture.
 

#7
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TheAnswerMan wrote:For reference I started out in 2013 with base of 38k + tax season bonus at a small CPA firm. 7 years later I'm making a base of 84k + tax season bonus at a different small CPA firm.



Hi TheAnswerMan,

thank you for your time. I see you started in 2013. What has been your main goal for advancement and why?
 

#8
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Re Post 5 - I think it depends on the firm. I've got 3 tax managers here - 2 have Masters in Tax, 1 has MBA.
Didn't you get a Masters as part of the 5 year education requirement to be able to sit for the CPA exam?

EDIT-Miscounted. 4 Managers- 2 MST, 1 MBA, 1 no Masters.
 

#9
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sjrcpa wrote:Didn't you get a Masters as part of the 5 year education requirement to be able to sit for the CPA exam?


All you need for the CPA is a BA and a minimum of 150 units.

It sounds like someone with a masters would be considered before someone without, though experience will play a role.
 

#10
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TaxNewbie wrote:So its more typical for someone to gain a few years experience then either work for the private sector, or go out on their own as a CPA? What about the managers? I'd imagine they stay at firms for years working their way up and eventually becoming partner.


Depends on long-term goals. I never had ambitions of making partner at a firm (never actually wanted to become a CPA, but that is a long story) and entered private accounting figuring I would work myself up the corporate ladder. What a mistake that proved to be, though I gained a lot of valuable experience. At same time, I never figured I would have my own, successful practice at 34 (ok, basically 35--I'm holding onto the 34 as long as I can, which is only through tomorrow!). Life often takes you a very different direction.

Typically, if your intention is to make partner at a firm, you are going to need to start in public accounting and move into various positions. A lot of people start out with this ambition and realize in order for it to ever come to fruition, they need to change firms. Problem is unless firms have mandatory retirement ages for partners, there is little turnover as people love to cling onto the partner title. Others get tired of not having control and choose to go out on their own. Other than having routine access to coworkers to bounce ideas off of, I have ZERO desire to work as an employee--been there, done that, it was not worth the tolls.

A tax partner I know at a regional firm makes about $300k/year. During tax season and dealing with the THOUSANDS of returns they prepare just locally, he tends to hit the office at 3am and often does not leave until 10pm or later. That is asinine. I would rather make half that compensation and have an excellent work-life balance.

TaxNewbie wrote:
All you need for the CPA is a BA and a minimum of 150 units.

It sounds like someone with a masters would be considered before someone without, though experience will play a role.


The reason you see this is that to achieve the 150 credits, it really is not much more effort to obtain a masters and it has a better perception. Think about it..."this candidate only went for the 150 credit hours, rather than doing a bit more effort to obtain a masters. Are they going to be the go getter we need in this firm?" I believe it was six additional courses for me since my university waived some otherwise required courses based on my undergraduate. Realistically and on a resume, it is penny wise and dollar foolish to not just obtain a masters. It is effectively the new bachelors degree, anyway. Hell, admin level positions now want a 4 year degree! :roll:
 

#11
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CornerstoneCPA wrote:Life often takes you a very different direction.

Typically, if your intention is to make partner at a firm, you are going to need to start in public accounting and move into various positions. A lot of people start out with this ambition and realize in order for it to ever come to fruition, they need to change firms. Problem is unless firms have mandatory retirement ages for partners, there is little turnover as people love to cling onto the partner title. Others get tired of not having control and choose to go out on their own. Other than having routine access to coworkers to bounce ideas off of, I have ZERO desire to work as an employee--been there, done that, it was not worth the tolls.


100% this. In the larger firms there aren't going to be a lot of great opportunities because their partner pipelines have planned for the Boomer retirements. The smaller firms have some opportunities as sole owners or those facing poor health may retire, but that's less "making" partner as buying an entire firm.

---

TaxNewbie, it's too early to be too firm in your career plans. It's fine to have a rough idea in mind but stay flexible. A friend of mine that I graduated with in college started at big firms in big cities and had partner aspirations but it didn't work out, and he ended up buying a one-owner firm in a small city. I would have never thought that would be his career path but (after a lot of pain) he finally ended up in a really good place for himself.

My career also didn't go to my initial plan, but I remained flexible and have had a great career leading me into a good place. You never know what opportunities you will have so don't close yourself off to the possibilities.
 

#12
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CornerstoneCPA wrote:
TaxNewbie wrote:At same time, I never figured I would have my own, successful practice at 34 (ok, basically 35--I'm holding onto the 34 as long as I can, which is only through tomorrow!).


Happy Birthday (save that for tomorrow)!

I already had some credits to apply towards the 150. Agree that it would have been better to have a masters.


So TYPICALLY the story goes, work hard and absorb as much knowledge as possible, after 2-5 years tax accountants go into the private sector and work as an accounting manager or open their own firm. Some become partners if thats their "thing". And the people who stay at a CPA firm and work as managers for years and years are typically being overworked constantly.

It really seems like I should focus on senior tax account in 3 years, manager in 5. Then decide if i want to work for myself or look for a job as an accountant manager in a private company.

And in order to become a senior tax account, i need to work hard, soak up knowledge, and show my team that i am eager and ready for more.

And in order to become a manager, work in as many different positions as possible and work towards that 5 year mark.

Thats the plan.

However, i have one last question. Are there specific subjects that i should be aware of in regards to the knowledge to meet senior accountant? What will be my initial challenges and how to prepare for them? I guess i'm looking for a list of areas to prepare for, like corporate taxes etc.
 

#13
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missingdonut wrote:
CornerstoneCPA wrote:My career also didn't go to my initial plan, but I remained flexible and have had a great career leading me into a good place.


That's good to hear MissingDonut. I will stay open. I hear auditors are more desirable to private company's than tax accountants when it comes to filling positions for private sector accounting managers. Do you find that to be the case?
 

#14
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TaxNewbie wrote:Are there specific subjects that i should be aware of in regards to the knowledge to meet senior accountant? What will be my initial challenges and how to prepare for them? I guess i'm looking for a list of areas to prepare for, like corporate taxes etc.

For now that will be depend on what the firm needs/where it wants to go. But you can help steer the direction if you have/develop skills in certain area(s).
For example, I have interest and experience in estate/gift/trusts and that is one area we are targeting for growth.
Another growth area for our firm is government contractors.
When you work in public accounting you are generally expected to bring in clients, too.
EDIT: Just referred back to your OP and see you are working at large firm. Presumably they handle all types of tax work already. Express interest in and volunteer to assist those in your department as well as in the other tax departments.
 

#15
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TaxNewbie wrote:
I hear auditors are more desirable to private company's than tax accountants when it comes to filling positions for private sector accounting managers. Do you find that to be the case?


I've never done any audit work and it certainly has not hindered my career. I thrived (compensation wise) in private accounting because of my tech skills, ability to see larger picture, and the very dynamic aspects of international operations. At that time, I also outsourced tax because I wanted nothing to do with it.

Depending on the size of the company, they may prefer audit experience. Smaller companies will prefer tax experience whereas the larger companies are going to seek out both.
 

#16
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CornerstoneCPA wrote:
TaxNewbie wrote:
I hear auditors are more desirable to private company's than tax accountants when it comes to filling positions for private sector accounting managers. Do you find that to be the case?


I've never done any audit work and it certainly has not hindered my career. I thrived (compensation wise) in private accounting because of my tech skills, ability to see larger picture, and the very dynamic aspects of international operations......Smaller companies will prefer tax experience whereas the larger companies are going to seek out both.


Very nice insight, thank you.
 

#17
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TaxNewbie wrote:That's good to hear MissingDonut. I will stay open. I hear auditors are more desirable to private company's than tax accountants when it comes to filling positions for private sector accounting managers. Do you find that to be the case?


Tax, in my experience, is a double-edged sword. I'll agree that there are easier exit opportunities out of audit. That said, my initial exit from tax into industry was several years into my career, but because of the experience and skills I developed in tax, I believe it was easier for me to get into a position, but fewer opportunities were open to me than if I had been in audit. Harder to get an interview but easier to be a top choice.

The ongoing systematization and general devaluation of audit perception is (in my view) going to change this dynamic over the next several years, if it hasn't already. I actually think the difficulty of escape from audit will start to converge with the difficulty of escape from tax and only the consulting areas will have easy parachutes.
 

#18
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I think you’re asking the wrong question. The question you should ask yourself is, am I being compensated fairly for the job that I am doing? If the answer is no, you should strongly consider finding a different job. Everyone wants to make more money, but that isn’t a valid career basis. You will be extremely frustrated throughout your career if the only thing you ever ask is when and how do I get more money for my job. I personally went into public accounting never expecting to last more than two years, but I always answered the compensation question “yes”. As a result, I found the career to be rewarding, and ultimately found myself as a tax partner in a regional firm. Anyone can get there, but it takes hard work; accounting is a risk management business. And you have to be willing to take on serious responsibility. But all I can say is I’ve never felt underpaid (choose to be generous and live within your means), and that’s where I want to be. But playing the money game will never get you where you want to be. And that grand or two difference? Won’t be a blip in your career path.

Just my opinion...
 

#19
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Hey Missingdonut,

I forgot to mention, clever username.

So you believe that its difficult to go from tax to industry? I hadn't come across that opinion until now. Well its either going into industry or working for oneself. I dont believe there's any other option unless i stay at a firm for my whole career.
 

#20
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HenryDavid wrote:But all I can say is I’ve never felt underpaid (choose to be generous and live within your means), and that’s where I want to be. But playing the money game will never get you where you want to be. And that grand or two difference? Won’t be a blip in your career path.

Just my opinion...


Thank you HenryDavid,

Honestly, i'm just trying to get an idea from experienced professionals on how to shape my career. This thread has helped a lot and am looking forward to getting started.
 

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