Sometimes in life, you need to take the road less traveled — and never look back.
If you’re already a CPA or attorney, you can tune out. This article won’t be of any interest to you.
Last year, I wrote a post about why all unenrolled preparers should become Enrolled Agents. If you don’t want to read that whole thing, it basically boils down to this: The simple ability to sign a Form 2848 can rapidly double or triple your income.
Today, I’d like to make the case for becoming a CPA, even if you’re a late-career professional.
Why You Should Consider Becoming A CPA
Let’s start with the most obvious reason: Despite the fact that the EA license is actually older than the CPA license (1884 vs 1896), the CPA community won the war for American “mindshare” when it comes to professional status and relevancy in relation to tax matters. It doesn’t matter that only 1/3 of American CPAs have a PTIN, typically only take one college class on federal taxation, and are never vetted by the federal government in regards to their actual tax knowledge and competency.
What matters is public perception. Whether us EAs like it or not, we will always be stuck explaining what we are and where our license comes from. If you ask any member of the public what profession/occupation a tax professional is, they’ll all automatically answer, “CPA”. That’s what I mean by them winning the war for “mindshare”. Simply put, the CPA community did a better job of branding and marketing themselves in the early 20th century, and EAs didn’t.
So, there is an automatic and very tangible marketing boost that you get from being a CPA that EAs, let alone unenrolled preparers, just don’t have.
I will say that this has not been a hindrance for me in marketing my tax resolution services. I can count on one hand the number of times I’ve had to provide the full, lengthy explanation about what an EA is. So, if you market yourself properly, and position yourself on the right side of the desk, it’s not a major issue. But if you’re not positioning yourself as an authority in a specific niche, the CPA designation can help provide a massive boost to your credibility and authority status.
Here’s reason number two: Career opportunities. If you don’t want to run your own business, and would rather work for somebody else, it’s going to be far easier with a CPA license. There are simply more jobs available for CPAs than EAs. This is partly due to the profession protecting and reinforcing itself, and partly due to state laws (in many states, you can’t use the word “accountant” at all unless you’re a CPA). Also, if you want or need to continue working part-time in retirement, it’s going to be easier to find work as a CPA than an EA.
And here’s the final, and probably least important reason to many of you, but the most important reason to me: Any national tax license is country-specific, whereas public accounting licenses are transferable internationally. In other words, because my EA license is obviously specific to US taxation, the Australian government won’t give me a TA (Tax Agent) license, and there is no bridge path – period. Contrast that with a public accounting license — be that a CPA or what many countries refer to as a Chartered Accountant (CA). Accounting, unlike tax law, is universal. GAAP and FASB are global standards, and thus there are license reciprocity pathways. As a US CPA, I can become an Australian/New Zealand CA with just a little bit of paperwork and a few months time, after which I can obtain a work visa and migrate. Again, not important to most of you reading this, but such things are important to the 3-4 million Americans that vagabond abroad (which I used to do, and intend to return to within a few years).
Now, I also have a fourth reason that’s probably not of interest to anybody else, but I’ll mention it anyway: NASBA requires all A&A CPE courses to be reviewed by a licensed CPA. In the wake of my bankruptcy and homelessness after the real estate crash, I have become one of those people that takes onerous steps to mitigate the risk of loss and creates multiple backup plans. Since I’ve put a lot of time, money, and opportunity cost into the CPE tech startup, I can’t afford for it to ever truly fail. I also feel a personal responsibility to return either capital or a dividend to our investors, no matter what. So, my “Plan C” for Prolaera would involve running it as an advanced CPE provider by myself, making possession of a CPA license almost mandatory.
So, with all that said, on to the next piece of this puzzle…
How To Become A CPA Late In Life
There used to be some states that had very minimal requirements for becoming a CPA. For example, New Hampshire used to only require an associate’s degree and 12 semester hours of accounting to sit for the exam.
Over the past 5 years, however, such loopholes to punching your CPA ticket have been dissolving. Now, all but two states require at least 150 semester hours of college just to sit for the Uniform CPA exam. There are also only two states left that offer two tiers of CPA licensure. Massachusetts still offers a non-reporting license, and Guam offers what they call an “inactive license”, but that still allows one to call themselves a CPA (except in Guam itself).
With that said, there are still some interesting loopholes in a few states that an individual can take advantage of to accelerate the process for non-traditional applicants. My new home state of Washington happens to be one of them.
So, here’s the gist of what it takes to become a CPA:
- Education: Again, most states now require a minimum of a bachelor’s degree (but it doesn’t need to be in accounting), 150 semester hours of total college credit, and minimum semester hours of accounting and general business subjects.
- Exam: The Uniform CPA exam is a four-part beast of a test that all CPAs must pass. Fortunately, it’s now offered more or less year-round at any Prometric testing center, and you don’t have to take them in order or in one sitting. We have it so much easier!
- Experience: All states require either 1 or 2 years of full time “public accounting” experience. In most states, the preparation of tax returns and representation of taxpayers in matters before the IRS is qualifying experience. However, most states require that this work be conducted under a licensed CPA within a few years prior to your application for a CPA license — but not all states.
Let’s first talk about the experience loopholes. Whether you’re an EA or an unenrolled preparer, chances are you already have the experience requirement met if you’re a mid or late career tax pro. The trick is to document that experience and obtain your CPA license in a state that either doesn’t require a direct supervisor to sign off on your experience, OR doesn’t require that supervisor to be a CPA.
The states of Arkansas, Indiana, Michigan, Montana, and Washington allow any CPA to verify your qualifying work experience, even if you never worked for them. Here in Washington, this is the path I will be taking to document my work experience. Literally any CPA that’s been licensed at least 5 years can review my life’s work, interview me, and sign off. This is another reason why you should get out and network!
The states of Illinois, Ohio, Virginia, and Wisconsin allow non-CPAs to verify your work experience, but they had to have been your supervisor. This should be easy to arrange if you co-own your practice with another practitioner, or only recently went into private practice for yourself.
You’ll notice that I’m suggesting states you may not live in. Bear in mind that you don’t have to be a resident of the state you obtain your CPA license. Only a few states require this.
So now that you know that you probably do have the requisite experience to become a CPA, let’s talk about the peskier part: Education.
Based on my research for this project, not a single US state or territory requires you to have an accounting degree to sit for the CPA exam. They only require that you have a bachelor’s degree.
Most of the EAs and late-career unenrolled preparers I talk to actually do have degrees. In fact, I know a lot of EAs with accounting degrees plus Master’s in Taxation. But if you don’t, it’s actually possible to complete a BS in 6 months or less. People do it all the time.
In September 2004, after 8 years of college, I graduated with a BS in Nuclear Engineering Technology as a “working adult”, from the same New Jersey public college as the person in the forum post linked to above did. Thomas Edison State University (NJ), Charter Oak State College (CT), and Excelsior College (NY, private) are the “Big 3” of legitimate, regionally accredited degree completion schools for working adults. Forget about University of Phoenix, Strayer, and all those schools you see on TV. Just look at these three. They’re a lot cheaper, and totally on the up and up.
So if you don’t have a degree, you can get one. Along the way, you’ll want to earn the semester hours necessary in the accounting and business subjects. So, you might as well get the business degree.
I have the BS, plus I worked on two Master’s degrees I never finished. So, I actually have the 150 hours. What I’m missing are all the required accounting classes.
Each state is different, as to what they require to sit for the exam. According to my research, Alaska has the lowest requirement: Only 15 semester hours of actual accounting courses are required, on top of the bachelor degree. However, Alaska also requires 2 full years of experience under direct supervision of a licensed CPA.
So, check on the educational requirements for the state you will get licensed in first. If you’re doing one of the “experience loophole” states like I am, you’re going to need to meet that state’s educational requirement to sit for the CPA exam.
Here in Washington, the CPA Board requires 24 hours of accounting, including 15 upper level credits, plus 24 semester hours of general business.
How do you meet these hours?
It’s not my intention to write an entire treatise on the subject of alternative education, and I can really only tell you about my own experience. Roughly half of the 120 credits for my own BS came from my extensive nuclear power training in the Navy. Another 30 semester hours or so came from testing out of classes via nationally recognized testing programs: CLEP, DANTES, etc. More of these programs actually exist now than when I did all this.
These days, we also have tons of online course opportunities. From MOOCs operated by the likes of MIT and Stanford, to classic “career colleges” and community colleges that have moved online, options are plentiful. Two organizations, ACE and NCCRS, evaluate these types of programs and provide recommendations on transfer credit. The Big 3 distance education schools all embrace these recommendations, as does nearly every public university in America.
So, here are some quick resources for affordably acquiring the necessary legitimate college hours in accounting and business:
- Saylor Academy courses (free/low cost)
- Straighterline (flat rate of $99/mo)
- Penn Foster (cheap and readily transferrable)
- Louisiana State University Independent Learning (popular option for upper division accounting courses)
- Adams State College (I’ll probably take Audit here)
- Colorado State University Competency Based Exams (lots of accounting credit by exam, appears on a legit CSU transcript)
- University of Northern Alabama Professional Accounting Prep Program (popular and affordable option for upper division credits)
A lot of these options are quite affordable. I’ve already passed the CLEP exam for Accounting 101, and will do three classes through Straighterline, and at least two through Penn Foster. Harder classes, like Cost Accounting and Audit, I plan to take “real” classes, or simply try to flail my way through the CSU exam (I have no plans to ever practice as a CPA in audit, so don’t hold it against me that I don’t care about actually learning about auditing).
I’m fortunate to already have 18 hours of general business courses, from my time in my early 20’s changing majors. The remaining six hours I’ll just test out of somewhere.
The education requirement is obviously the biggest obstacle to anybody attempting this late in life. As of this week, I’m a college student again, and at 38, that just feels weird. But there are plenty of people in there 70’s and 80’s every year that finish PhD’s, so I think any of us could handle this.
All told, I expect to invest about $3,500 to complete all the courses I need.
Honestly, I haven’t looked a whole lot at the exam requirements yet. I know that it’s far more difficult than the SEE, but merely because it covers such a broader range of topics.
My plan to tackle the exam is fairly straightforward. I will be taking a CPA Exam Review course for each of the four test sections, and I’ll probably do it live, 2 days a week, in a classroom. I’ll most likely do this once tax season starts, as I’ll have more time on my hands since CPE season and tax resolution season will be over. I will take the review classes more or less in order with the accounting classes I’m taking, so that what I learn in the review class actually helps me in parallel in my college classes.
Then, I’ll take all 4 sections of the CPA exam together inside of a one or two week span in the summer of 2017.
It’s Simple, But Not Easy
So there you have it. Why I have come to the conclusion that it’s worthwhile to become a CPA, and how it can be done. On paper, it’s actually pretty simple, but it won’t be easy.
This is a path I’ve given consideration to for a number of years. Ever since I became an EA, actually. In hindsight, I wish I had done it several years ago, before Colorado increased their educational requirements (they were one of the last states to adopt the 150 hour rule).
It’s going to be 9 to 12 painful months to make this happen, and cost me around $5k total (which isn’t bad, if you think about it). It will open emigration opportunities for me in retirement, create a valuable backup plan for Prolaera, and make me far more marketable if I ever have to return to being an employee (although I shudder at that thought!).
Weigh the pros and cons for yourself, and decide if this might be right you as well.