How to Become a CPA: The 3 Critical Steps

Wondering how to become a CPA?

The requirements to become a CPA vary from state to state but generally include completing a certain number of college-level accounting courses, passing the four-part Uniform CPA Examination, and meeting work experience requirements. While the path to becoming a CPA may seem daunting, the rewards are well worth the effort.

As a CPA, you will have the satisfaction of knowing that you are helping businesses and individuals make sound financial decisions. In addition, CPAs earn a competitive salary and enjoy job security in an ever-changing economy.

State-by-State CPA Requirements

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Episode Timestamps

• 00:00 How to Become a CPA
• 00:21 3 Main Steps to Become a CPA
• 01:29 Education
• 02:43 The Uniform CPA Exam or the “CPA Exams”
• 04:07 Important Organizations in Accounting
• 06:52 Experience
• 07:54 Key Questions
• 08:02 How Long Does It Take to Become a CPA?
• 08:29 How Much Does It Cost to Become a CPA?
• 09:15 Is It Hard to Become a CPA?
• 09:53 Do CPAs Make Good Money?

How to Become a CPA: Video Transcript

So you’re thinking about becoming a CPA or you’re at least checking out the requirements or what it takes to become a CPA. There are three main steps to becoming a CPA or the three E’s and they are education, the exams, meaning the uniform CPA examination, the four CPA exams, and then the experience.

3 Main Steps to Become a CPA

Now we will go further into the details of those three main steps. But first, the CPA exams are the one thing that you have control over how long they take you. With the education requirements, a bachelor’s degree or hitting the 150 hours, that just takes as long as it takes. You have to get 150 hours. With the experience requirements, meaning you typically need one to two years of experience working in accounting under a CPA.

That also just takes as long as it takes. Depending on your state. It’s either one to two years. However, the CPA exams, those can take you as little as six months if you really get your study process dialed in and you’re dedicated and you study every day, or for some people, they turn into a multi-year nightmare.

Now if you’re pretty sure that you are headed down the path of becoming a CPA, then make sure to subscribe to our YouTube channel and our podcast because we focus on what I just mentioned, the strategy side of how to study effectively and efficiently so that the CPA exams don’t take you multiple years.

Alright. So let’s go deeper into the three big requirements.

Education

So for the education requirement, this is the same across the board, you need 150 hours, credit hours. Now, where it varies state to state is the specific number of accounting credits and how those are divvied up between different accounting subjects or business credits, things like managerial accounting or cost accounting or financial reporting classes or auditing classes.

So depending on the state, those requirements are a little bit different. But across the board, you need a bachelor’s degree which is going to be 120 hours and then you need 30 more hours. So most people end up doing a Master’s degree in accounting because a Master’s degree in Accounting is right around the 30 to 36 credit hours and it just completes that requirement for you.

And if you’re going to do 30 credit hours of graduate degree classes, you might as well turn that into a Master’s degree. But some people just do the required amount above and beyond their Master’s and then get the CPA by doing the CPA exams, and meeting the experience requirements.

And then again, some states do just require a Master’s degree and typically that can either be a MBA or a Master’s in Accounting.

The Uniform CPA Exam or the “CPA Exams”

So going on to the second “E” or the second big requirement, that is the uniform CPA examination. So the CPA exams. When you hear people say the “CPA exams”, that is what they’re referring to; the Uniform CPA Examination. But people say CPA exams because there are four sections.

There are four separate exams that comprise the uniform CPA examination. So a few things to know about the CPA exams. The CPA exams is typically the most difficult part of this process for people because you go through college, typically, most people that do a Master’s in accounting or that are planning on becoming a CPA, they will start out working in public accounting.

So you start in this very high demand job and in your spare time, whatever that is, you’re trying to pass these exams that for the most part are much more difficult than any individual class that you had in college. So you get your review course and that’s a literal library of information covering the topics on the four different exams and it’s just basically a self-study thing.

So it requires discipline, you have to be strategic about how you get through all the material on specific timelines so that you do it within a reasonable amount of time without forgetting everything that you’ve studied. So the CPA exams are the most difficult part of this process.

Important Organizations in Accounting

So a few organizations to be familiar with. Obviously, you’ve heard of the AICPA or the American Institute of Certified Public Accountants. The AICPA, they create and score the CPA exams. Then there’s also NASBA or the National Association of State Boards of Accountancy. So NASBA assists all the different state boards with credential evaluation.

So all those education requirements and what credits you took, you submit that to NASBA and they evaluate those credentials. They also assist with application processing. So when you submit your application to sit for the CPA exams, you submit that to NASBA, and then NASBA also reports CPA exam scores.

So for example, in most states, after you take a CPA exam section, you will be logging into a candidate portal on NASBA’s website to actually check your score and get your score report. And then there’s Prometric, they proctor the exams. So when you actually go to take a CPA exam section, you show up to a Prometric testing center and they check you in, fingerprint you, you take the exam at Prometric.

So then there’s the four CPA exams themselves. So you have Audit, BEC, FAR and REG. So audit covers auditing. BEC stands for business environment and concepts. FAR stands for financial accounting and reporting, and REG stands for regulation. REG covers the tax code and business law.

A passing score on the CPA exams is 75 and above. As I mentioned before, it is not easy to get just a 75. In fact, the pass rates are right around 50% for all four sections or the fail rates, however you want to look at it. The exams themselves when you’re sitting there taking the exams, they consist of multiple choice questions, task-based simulations, which are meant to simulate actual work duties that you would be doing as a newly licensed CPA.

And then there is a written communications portion on the BEC exam. In most states, you can typically sit for the exams once you have 120 credit hours but you have to add that 30 other hours to get to 150 to actually be licensed. But again, the CPA exams are very rigorous and so most people don’t really mess with them while they’re still in school trying to finish those last 30 hours.

However, it does happen, some people do it. We have a few people that we’ve interviewed on our podcast for example, Zach. He passed all four CPA exams while he was still in his Master’s degree. And then after you’ve passed the four CPA exams, in most states there will be one or two ethics exams or some form of an ethics exam that you need to take.

Experience Requirements

So going on to the third big step, that’s the experience portion. So you need to work under a CPA which broadly just means, you know, working at a CPA firm, you get that experience. And so in most states that’s one year, some states it’s somewhere between one and two years. But again, you don’t need to have passed the CPA exams for that one year experience to start.

Let’s say you get out of school, you get recruited, you start working at a public accounting firm and, you know, at the six month mark, you finished the four CPA exams, then you would just have six more months of working, gaining the experience to be eligible to actually get your CPA license. So one year of experience. And then after you actually get your CPA license, there will be CPE requirements, and it’s typically 40 credit hours per year.

So these are just continuing education classes that you can either take in person or online. And depending on the state, you might report those every other year or every year, but typically it’s around 40 hours of CPE credits each year.

Key Questions

So a few key questions related to how to become a CPA would be, how long does it take to become a CPA?

How Long Does It Take to Become a CPA?

Well, if you take four years for your bachelor’s, one year for your master’s or your 30 graduate level credits, and then let’s say a year for the CPA exams and then a year of experience. But that year of experience can be, you know, happening as you’re getting your CPA exams done. So four years for the Bachelor, one year for your Master’s, one year for the experience slash CPA exams, that puts you at six years.

How Much Does It Cose to Become a CPA?

Another question would be how much does it cost to become a CPA? Let’s start with the master’s degree. So a master’s degree, again, a master’s degree in accounting will typically be a 30 to 60 credit hour program. So that will be somewhere between $30,000 to $60,000.

Then once you’re ready to formally study for the CPA exams, you’ll get a review course. A lot of times your firm will pay for this or reimburse you once you pass the four exams but a CPA review course is going to be an investment of somewhere between $1500 to $3,000. And then the exam fees will be somewhere between $1,000 to $2,000.

So that puts the total cost of getting your CPA license somewhere between $30,000 to $60,000 not considering your bachelor’s education.

Is It Hard to Become a CPA?

Another very common question is, is it hard to become a CPA? Again, the CPA exams are definitely the hardest part of this process.

For some people, it turns into a multi-year nightmare. For some people, they go through that multi-year nightmare and they never actually pass all four so they don’t actually become a CPA. But then again, on the other side, if you learn how to study strategically and you’re constantly improving your study process and you’re dedicated, you don’t miss days of studying and you really just nail the process, you know, you can pass the CPA exams studying two to three hours a day in five to six months in some cases.

Do CPAs Make Good Money?

And then another common question is, do CPAs make good money? The best thing to compare it to would be, let’s say an accounting professional that goes through their whole career and never gets their CPA, versus that same person in a parallel universe that did get their CPA.

The CPA, there are studies out there that it is somewhere between a million extra dollars to a million and a half extra dollars that you will get paid for doing the same jobs as you go through your career in accounting. So it is an investment with a very high ROI. If you are going to go into accounting, it’s well-worth the one to two years of hassle and you know, the thousands of dollars to make the investment to get your CPA, if you’re going to be working in accounting anyways, because you will get paid more every day for the rest of your working career than you would otherwise without having your CPA, to the tune of 1 to 1.5 million extra dollars over what you would make by not having your CPA.

So that’s a brief rundown of what it takes to become a CPA. I hope you found that helpful. Again, our YouTube channel and our podcast where we interview successful CPA candidates, it is full of the strategy side of how to study effectively, how to get the most out of your review course, how to get really good results from your review course without having to sit in front of your review course all day so that the CPA exams don’t become a complete nightmare.

So check out some of our other videos or subscribe to our channel so that you get notified when we release other videos about the strategy side of studying for the CPA exams.