Public vs. Private Accounting: Key Differences

Students interested in accounting may choose a business degree and begin a career working either in the public or private sector.

While beginners may think there aren't too many differences between the two, there are some key factors that separate a public accountant from a private accountant.

Some of these elements include the type of clients worked with, the daily responsibilities, and the licensure or certification required to work legally.

In this article, we will review the full details of public versus private accounting including the degree types and career options for each.

What Is Public Accounting?

Public accounting refers to the field of accounting where professionals provide a wide range of accounting, auditing, tax, and consulting services to individuals, businesses, non-profit organizations, and government entities.

Public accountants typically work for public accounting firms, which can vary in size from small local practices to large multinational organizations known as the ''Big Four'' accounting firms: Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young (EY), and KPMG.

What Is Private Accounting?

Private accounting, also known as corporate accounting or managerial accounting, refers to the practice of accounting within a private sector organization, such as a corporation, partnership, or non-profit entity.

Unlike public accounting, which serves multiple clients, private accountants work exclusively for the organization they are employed by. Their primary focus is on internal financial management and reporting to support decision-making within the organization.

Key Differences Between Public and Private Accounting

The key differences between these two professions have to do with the scope of work and the environment where they conduct business.

Public accountants work for public accounting firms ranging from small local firms to large international CPA firms. They may also be freelancers or self-employed, especially during tax season.

These types of accountants serve a diverse range of clients, including individuals, businesses, non-profits, and government agencies.

On the other hand, a private accountant works internally through a specific company, sometimes organizations and large corporations. They may review enterprise financial reports conduct internal audits.

Educational Requirements

To become a public or private accountant, individuals typically pursue a bachelor's degree in accounting or a related field. An accounting career is best served with a degree in business, entrepreneurship, finance, or accounting specifically.

At this stage, the accountant will learn entry-level skills necessary to excel in a variety of accounting roles. They will learn how to bookkeep, balance financial statements, and review documents for audit analysis and compliance.

Upon obtaining the accounting degree, the student can then move on to either a staff accountant position, typically considered an entry-level role, or try to earn their CPA license.

Training

The next step for public accountants is to become a certified public accountant. While not always mandatory, obtaining a CPA license can enhance job prospects and career advancement opportunities in private accounting. If handling tax returns, financial records, or working on different financial documents for people or businesses, then a CPA certification may be mandatory.

To become a CPA, candidates typically need to meet specific education requirements (often a minimum of 150 credit hours of college coursework), pass the CPA exam, and fulfill relevant work experience requirements.

Duties and Responsibilities

The duties and responsibilities may vary between different positions since one accounting department may not function exactly the same as another.

If working with a single company, then the private accountant must understand the entire financial health of that company.

If working as a public accountant, then the individual may be responsible for working with individuals or companies and understanding the financial goals of each. They may also need to understand tax compliance laws and regulations.

The typical responsibilities include:

• financial reporting
• cost accounting
• tax planning and compliance
• budgeting
• financial analysis

Skills

Qualified private and public accountants should have excellent math skills and be adept using numbers. Ideally, this professional has a good understanding of financial planning and can juggle a variety of clients.

During tax season, some tax professionals find that the hours can be extremely long depending on how many clients they're working with. It's important to have a positive attitude and maintain a good work-life balance.

Some of the personality traits that work best for accountants include diligence, meticulousness, communication, and intelligence.

Work Environment

As mentioned above, the work environment can vary significantly between different accounting offices. Some accounting departments have hundreds of people while others have only a few. If you were planning to work on your own then you may be juggling clients completely on your own.

Public Accounting vs. Private Accounting: Pros and Cons

When considering what kind of specialization you prefer in the accounting sector you may be wondering what pros and cons there are for each. Continue reading for a typical list.

Pros of Public Accounting

Here are some pros to becoming a public accountant.

• Public accounting firms are often well-known and respected within communities.
• There are a lot of networking opportunities.
• This role is in high demand.

Cons of Public Accounting

Keep in mind there are also some potential cons to becoming a public accountant.

• There can be significant client pressure at times.
• Public accountants tend to work long hours.
• Tax season may be highly stressful for some public accountants

Pros of Private Accounting

Here are the typical pros of becoming a private accountant:

• There is potential to grow into better job opportunities, such as chief financial officer.
• You can work with just one company
• There tends to be better work-life balance

Cons of Private Accounting

These are the potential cons of becoming a private accountant.

• You may work in a large corporate environment without much visibility.
• If you prefer to work with multiple clients, then it may be boring to work with only one.
• Regulatory compliance may be more rigid and complicated for enterprises.

Which Option Is the Better Career Path for You?

Deciding which career path is right for you doesn't have to be a daunting task. You should first consider what your career goals are, then dig into the type of work environment you prefer.

Do you like working in large corporate offices, or prefer a small organization? Or would you rather work on your own in tax accounting? Then private accounting jobs may not be the best option.

The key for most accounting and finance roles is to improve fiscal performance. They use a variety of accounting systems to identify new financial opportunities, savings, and compliance regulations.

There are many different jobs in the accounting sector. For example, the job duties of a financial analyst include deeply analyzing the financial documents of an organization. You may be responsible for cutting costs and finding new opportunities to increase the profit margin.