Let’s face it, the Certified Public Accountant (CPA) exam is a beast. It can take years to complete, and even then your journey might not be over. That doesn’t mean you can’t start reaping some rewards of being a credentialed accountant though. You can obtain a CPA certificate, which acknowledges that you’ve passed the CPA exam. So, what are some of the benefits of having a CPA certificate vs a CPA license?
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Overview of CPA Certificate and CPA License
Before covering the key differences between the two, let’s understand what each one is:
CPA Certificate
A CPA Certificate is an acknowledgment that you have successfully passed the Uniform CPA exam, nothing more. There are no work experience requirements to satisfy nor any continuing professional education (CPE).
Having a CPA certificate may not seem like much, as it’s only a temporary status until you meet the remaining requirements to earn your CPA license. However, it’s a substantial enough achievement that it can allow you to start reaping career benefits.
Many companies set passing the CPA exam as a requirement to earning promotions and becoming eligible for year-end bonuses. If you’re in the job market, you may even be eligible for roles that list “CPA” as a requirement.
There are some limitations though. CPA certificate holders cannot be an owner or partner in a public accounting firm. Also, you generally won’t be able to add the “CPA” letters after your name until you earn the license.
CPA License
Once you satisfy the work experience requirements and (if necessary) complete the CPA Ethics exam, you’ll finally earn your CPA license.
With a CPA license under your belt, you can finally add the “CPA” title on legal, unofficial, and official documents, and sign audit reports and tax returns. CPAs can also be partners or owners in a public accounting firm. To maintain your license, you’ll then need to complete 120 hours of CPE every 3 year cycle.
Now that we understand the definition of CPA certificate vs license, let us sum up the key differences between the two.
Differences between CPA License vs CPA Certificate
Here’s a roundup of the key differences between a CPA Certificate vs CPA License:
- Work experience: There’s no work experience requirement to earn a CPA certificate. To earn your CPA license though, you’ll need to complete one to two years of qualifying work experience in the accounting field. Precise requirements can vary from state to state.
- Continuing education: To maintain the license, CPA license holders must necessarily average 40 hours of CPE credits each year, or 120. Since CPA certificate holders aren’t officially licensed, they don’t need to complete any CPE.
- Legal rights: CPA certificate holders are permitted to perform regular accountant duties but can’t perform certain regulated tasks like signing tax returns or representing clients in tax court. They also cannot be a partner or owners of a public accounting firm. CPAs can do all of these things.
- Professional titles: Some U.S. states allow CPA certificate holders to use the professional “CPA” title next to their name in limited circumstances. Most states only allow CPA license holders to use the “CPA” designation.
- Renewal fees: A CPA certificate is issued once candidates successfully pass the CPA exam and since the results are permanent, no renewal of the certificate is required. On the other hand, a CPA license has to be renewed every few years, with the renewal fees varying from state to state. License renewal is necessary to maintain the credential.
Requirements to CPA Licensure
To become a licensed Certified Public Accountant (CPA), you’ll need to complete a combination of education, work experience, and pass the CPA exam.
CPA license requirements are established by individual state boards of accountancy, so licensing requirements are not uniform. However, there are several common hurdles to getting a CPA license across states. These are typically called the “3 Es”.
- Education: To earn a CPA license, you’ll need to earn at least bachelor’s degree and complete 150 semester credit hours of general education. Certain states will allow you to sit for the CPA exam with only 120 credit hours, but the remaining 30 hours must be completed before getting licensed.
- Exam: Complete all four sections of the CPA exam within the 18-month testing window.
- Experience: Must acquire at least one year of experience in the relevant accounting field, although many states require 2 years of work experience.
On top of these requirements, many states require another “E”, passing the Ethics exam.
The CPA ethics exam tests your understanding and judgment around ethical problems CPAs may face in their professional careers. CPAs deal with sensitive and confidential information of clients and ensuring the integrity of the profession is of the utmost importance.
The ethics exam isn’t nearly as difficult as the actual CPA exam, but it will require some effort to study the rules and conduct expected of the profession. Most candidates take the ethics exam after passing the Uniform CPA exam as one of the final steps toward earning their license.
Summing it All Up
Hopefully the differences between a CPA certificate vs CPA license are much clearer. While a CPA certificate simply signals that you’ve passed the CPA exam, it’s still worth understanding how it can benefit your career and what limitations you’ll have until you earn your CPA license.
