Public vs Private Accounting: Which One Is Best for You?

Most accounting stereotypes display the world of accounting as a bland number-crunching field, which can’t be further from the truth. There are various types of accountants who help organizations make informed financial decisions and achieve goals, with most falling into the two branches of public and private accounting.

Public accountants work for public accounting firms and work with multiple clients from a wide range of industries. In contrast, private accountants work for a specific company and focus on its internal financial operations.

If you’re interested in going on an accounting career path, it’s important to note that while they share similar duties, public and private accounting have significant distinctions in the work environment, salary, and job outlook. Therefore, let us provide you with insights into public vs private accounting so you know how to choose which one is best for you. 

What Is Public Accounting?

Public accounting is a type of accounting that offers various financial services to external clients, such as auditing, tax preparation, and consulting. They act as a third party to review the financial documents of various clients for public disclosure and determine if their financial statements accurately represent cash flow and financial position.

They can work with individuals, businesses, non-profit organizations, and government agencies. Public accountants aim to help clients comply with regulations, manage their finances, and make informed decisions.

The regulatory framework for public accountants is strict, especially for those who have to follow GAAP (Generally Accepted Accounting Principles) when making financial reports. Moreover, aspiring public accountants must pass the Certified Public Accountant (CPA) certificate exam to practice. 

What does a public accountant do?

Public accountants play a crucial role in managing financial documents that their clients must disclose to the public, such as tax documents. They also prepare and analyze financial statements to meet regulatory requirements for financial reporting. Another huge role they play is in conducting external audits of financial statements and ensuring they’re accurate. 

Public accountants can work in specialized areas such as forensic and tax accounting. Forensic accountants deal with financial crimes like embezzlement, fraud, and criminal transactions. On the other hand, tax accountants calculate tax returns, ensure clients make on-time payments, and file the appropriate forms to claim deductions. 

In general, the responsibilities of a public accountant include: 

• Examining financial records to prepare for tax returns and conduct audits for their clients;
• Preparing financial documents, like budget reports, financial statements, quarterly earnings reports, and accounting records;
• Advising clients on financial decisions and making recommendations for improving operations and lowering tax liabilities;
• Managing financial information for clients, including reviewing accounts to identify discrepancies. 

What Is Private Accounting?

Private accounting or corporate accounting is a type of accounting where the accountant exclusively works for a single company and works on the financial information of the said company. Private accountants can work in various industries, such as businesses of different sizes, nonprofit organizations, government agencies, or any establishment that requires in-house financial services.

Their work plays a pivotal role in helping management make informed decisions by focusing on performing audits of financial documents, advising on financial and budgetary matters, and filing tax returns for their organization. Moreover, they set up internal systems to record business transactions, which helps inform a company’s financial statements.

What does a private accountant do?

Private accountants play an integral role in managing internal financial processes within a company. Their primary goal is to set up internal systems to record all business transactions and prepare financial reports to inform of a company’s financial health. Within the private accounting realm, they can specialize in managerial accounting and cost accounting. Managerial accounting focuses on creating financial statements, documents, and reports to help management make informed operational decisions and achieve company goals. Meanwhile, cost accounting focuses on organizing and monitoring all direct and indirect expenses for effective resource allocation. 

The typical duties of a private accountant include:

• Preparing records and data for external auditors, which can be public accountants;
• Creating financial reports and extracting insights for upper management;
• Planning department and company budgets to contribute to long-term financial planning and forecasting;
• Handling monthly, quarterly, and annual closings;
• Staying up-to-date with national, state, and local tax codes;
• Ensuring financial reports are accurate and compliant with accounting standards. 

The Difference Between Public Accounting vs Private Accounting

Both public and private accountants do audits and work with financial statements and need similar accounting skills and interpersonal skills like organizational skills, self-motivation, and attention to detail to succeed in the field.

However, they have many substantial differences, which you should consider when choosing between them. The key differences between public and private accountants are: 

Education

Both public and private accounting require similar education requirements, as the minimum requirement is a bachelor’s degree in accounting or business. While a bachelor’s degree is an excellent start in the sector, you’ll need additional credentials to become either a public or private accountant.

However, to rise through the ranks, a Master of Science in Accounting or a Master of Business Administration degree can be helpful if you want to further your knowledge in accounting and finance or take on leadership roles. 

To advance in the public accounting sector, you’ll have to obtain the CPA certification from a state board by passing the CPA exam. 

Work environments

While one of the most significant differences between public and private accounting is the work environment, both have a period in the year that is their busiest. Public accountants are usually busiest during tax season, whereas private accountants are at the end of a fiscal quarter.

While both work in an office setting, public accountants might have to travel to visit clients at their offices, whereas private accountants typically work from a single location. This is because public accountants work with various clients, such as individuals, corporations, or government bodies. Contrarily, private accountants work for a single company and focus on internal clients within the company.

Another difference is that private accountants work typical business hours, unlike public accountants, who have unpredictable timetables. Lastly, team collaboration is another factor in the work environment for public and private accountants. Public accountants work with colleagues on various projects, especially during tax season, to meet deadlines for many clients. On the other hand, private accountants can oversee employees like accounting clerks or bookkeepers. 

Salaries

While both receive promising compensation, public accountants are prone to make more. Payscale reports that, on average, public accountants make $76,165, with salaries ranging from $54,000 to $123,000 depending on experience, location, and industry influences. On the other hand, private accountants, on average, make $63,384, with salaries ranging from $49,000 to $81,000. 

The location also impacts the earning potential for public and private accountants. The Bureau of Labor Statistics (BLS) reports that the top three paying states for accountants and auditors are the District of Columbia, with a mean wage of $110,750, New York, with $110,320 and  New Jersey, $102,040.

Moreover, industry influences salaries, with the top-paying industries being:

• Media Streaming Distribution Services, Social Networks, and Other Media Networks and Content Providers with $144,780;
• Drinking Places (Alcoholic Beverages) with $134,270;
• Computer and Peripheral Equipment Manufacturing with $124,180.

Job outlooks

The accounting job landscape is in demand for public and private accountants due to complex financial regulations, data analytics, globalization, taxation, and auditing. The BLS estimates that employment of accountants and auditors is projected to grow 4% from 2022 to 2023, with about 126,500 openings projected each year. 

Globalization and economic growth affect the demand for public accountants, as with their increase, so does the need for audit and tax services. On the other hand, the demand for private accountants is relatively stable.

Public or Private Accountant: Which Role Is Right for You?

As both public and private accounting have their share of benefits and distinct roles in the industry, choosing between the two can be overwhelming. So, how do you determine which path is right for you?

Here are a few points to keep in mind as you make your decision:

• Schedule: Private accounting might be better for you if you want to have a manageable routine with regular working hours. If you prefer more traveling opportunities, a career in public accounting might suit you better.
• Career goals: A vital determinator between the two is your career goals. Becoming a public accountant allows you to have a promotion track and advance to a partner role in your firm. Meanwhile, becoming a private accountant will enable you to step into the role of CFO. 
• Personality: While both require being a strong communicator, as a public accountant, you also need to be outgoing to work with clients and be able to adapt quickly. On the other hand, as a private accountant, you focus more on being organized and reliable and having leadership skills.

Final Thoughts

Exploring the distinctions between public and private accounting, such as education requirements, work environments, salaries, and job outlooks, underscores the importance of aligning career choices with individual preferences and aspirations. When choosing between the two, it’s important to consider key factors such as working schedule, career advancement opportunities, and personality traits.

Pursuing either a public or private accounting career can be fulfilling and rewarding; therefore, take charge of your professional journey today!

Frequently Asked Questions

Does public or private accounting pay more?

Although both public and private accounting are well-paid, public accountants usually tend to get paid more than private accountants. Public accountants make around $76,165, whereas private accountants make $63,384.

What are the benefits of working for a public company instead of a private company?

Working as an accountant in the private industry has its advantages, as you can work fewer hours and have more flexibility. However, it has limitations that aren’t present in the public industry. In the public sector, as a public accountant, you can benefit from the scheduled promotion track from an associate to senior in three years or a manager in eight years. You can also benefit from raises and bonuses each year.