How to Become an Accountant? Education is Key
Although some people find employment in entry-level accounting positions (such as bookkeeper or clerk) without earning a diploma, most accounting professionals hold at least a four-year bachelor’s degree. Some choose to pursue more education and go on to become certified public accountants.
If you’re just starting out your school journey—or returning after an absence—you’re in the right place. Here are the accounting education options to get you started on the path to success in the field:
Available online or in a traditional classroom, this degree provides a solid grounding in the fundamentals of accounting and accounting technology. It can pave the way to an entry-level position with an organization’s finance and administration team, such as billing clerk, accounts receivable clerk or staff bookkeeper.
Time commitment: one to two years
Almost all staff accounting positions require a bachelor’s degree, which is available online, in a traditional classroom, or some combination of the two. Specific courses will depend on the school you choose, but expect to study the principles of accounting, business communications, accounting technology, business law and more.
Time commitment: up to four years, depending on your previous college credits
Master’s in Accounting
After a few years in the field, you might decide to move up the accounting ranks into a more challenging role. The master’s in accounting degree opens the door to management-level jobs in a huge variety of industries, from banking to construction to high tech.
Time commitment: one to two years
Getting Certified: CPA
Are your long-term sights set on becoming a Certified Public Accountant (CPA)? After earning 150 credit hours in a master’s degree program, you’ll be eligible in most states to sit for the rigorous CPA exam. Then you’ll need to work under the supervision of a licensed CPA to prove your stuff. Once you’ve successfully met these challenges, the path to senior accounting roles is open.
Online Accounting Degrees
Already juggling a busy life full of work and family commitments? Consider online accounting classes, designed with working adults in mind. The online option is:
- Flexible – Many online schools have year-round, rolling start dates. No more waiting around for spring semester to start!
- Efficient – With short classes, weekly homework deadlines and no need to commute, you can adjust your study schedule to accommodate family and work obligations.
- Mobile – Thanks to mobile apps and interfaces, you can access online classes just about anywhere there’s an Internet connection.
- Affordable – The online option might save you money. There’s no need to relocate, and the tuition cost can be lower than on-campus programs.
How Business Accounting Works
People are starting their own businesses every day. If you’re thinking about joining them, you probably have a vision of what you want that business to be. What may excite you about your business is the product or service you have to offer, the success that you imagine, and the freedom of lifestyle that you are sure will come — in time. What may bore or even frighten you is the plethora of numbers you have to wrestle with. You will be asked business questions that may elicit a blank stare as your response. Cash accounting? Accrual basis? Profit and loss statement? Projections? Huh?
Whether you want to create fine oil paintings or sell pork bellies on the street, your business will require some form of accounting. That term alone can cast a glaze over the brightest eyes, but in this article, we’ll show you that accounting is a process larger than crunching your numbers. It is a tool that will help you “account for” what your business has done, is doing, and hopes to do in the future. Accounting can be a bit like painting a picture, and a little like solving a puzzle. Despite its bad press, it can actually be fun.
Keys to Success
The first step to making accounting fun is to get a grip on the terminology. If your heart skips a beat when someone asks about your balance sheet, you can calm yourself by learning exactly what a balance sheet is and how it can help you. We’ve added a glossary of accounting terms at the end of this article to get you over the hump.
Second, realize that accounting is more than numbers. It includes databases of your customers, your vendors, and your employees, if you have them. The information you keep on these people and companies will help you track your business and plan your future. With proper accounting, you might discover that people in the Florida Keys buy barrels of pork bellies in February. You can legitimately plan a sales trip for the entire month. See? This is getting interesting.
Third, the key to successful accounting is in the establishment of your accounting system and the reliable input of data. You will set up a system that is uniquely yours. Recording the transactions and information is called bookkeeping, and it must be done regularly. You won’t get a good picture of your company if the paint (data) is stored in boxes in the basement. There is nothing harder than the task of going back to find and key in reams of old information. When you do, you stand a good chance of getting something wrong.
How Can Accounting Help Your Business?
Accounting doesn’t just make life easier at tax time and give you a better idea of how your business is doing financially. Accurate accounting can also make you more attractive to clients. Here are some common ways proper accounting can help make your business more valuable for your clients:
1. FINANCIAL STABILITY
When your business finances are in order, you have an accurate view of how much money is coming and going. You can also create more accurate forecasts for future revenue and expenses, so you can make sure you have enough cash reserves to float you through any tough times.
With stable business finances, you can offer your clients a consistent, positive experience. You won’t need to cut costs unexpectedly because money is tight, so you won’t suddenly cut down on employees or take on so much new business that the quality of your work suffers.
2. GREATER EFFICIENCY
Proper accounting offers you up-to-date financial data about your business. And that can help you make crucial decisions about the need for, and timing of, new business investments. Could new equipment make you work faster? Could it mean you deliver better service to your clients?
Accurate financial data helps you decide whether it’s the right time to invest more cash in your company and how those expenses will affect your cash flow.
3. SMARTER MARKETING
Financial records offer you insights into your expenses and cash flow, which in turn can help you make better decisions about marketing your business.
Accurate accounting information can help you decide the right time to launch a marketing campaign and understand whether your marketing efforts are delivering the results you want.
What Are the Basics of Small Business Accounting?
Now that you’ve got a handle on how accounting can help your business, you’re ready to dive into the basic principles of small business accounting. There are three main areas of effective small business accounting:
1. MASTER BASIC BOOKKEEPING
Don’t let the name intimidate you: bookkeeping just refers to keeping track of your business transactions, from revenues to payments. One of your main business goals is probably to make money, and to do that, you’ll need to know how your income compares to your costs. Proper bookkeeping can help by:
- Letting you know if you’re making a profit, or if you’re on track to do so
- Telling you whether you’re in danger of running out of money
- Simplifying tax season by recording information you’ll need to file taxes
2. FILE YOUR BUSINESS TAX RETURNS
Tax season can be a stressful time for freelancers and small business owners, and for good reason: filing taxes becomes more complicated when you’re self-employed. But with proper accounting throughout the year, you can lessen tax-time headaches.
There are different types of business taxes and they vary by industry and by state, but some of the most common include:
- Income Tax: Which requires you to pay a portion of your income to the government.
- Sales Tax: Depending on the type of work you do for clients, you might add sales tax to your invoices that you later pay back to the government.
- Employee Taxes: If your company has staff, you’ll collect taxes from your employees’ paychecks and pass that on to the government.
For a full rundown of filing taxes as a freelancer, check out the FreshBooks blog.
3. CREATE FINANCIAL REPORTS
Accounting reports can help guide important business decisions. You probably face tough choices often—whether to buy pricey equipment for your business, what specific services to offer clients or whether to hire contractors to help with your workload.
There are a number of accounting reports that can help you make these decisions. Some of the most common reports include:
- Cash Flow Statement: Shows you all your financial activities, from the money flowing into your business (earnings from clients) to the expenses moving out (for rent, utilities, staff and more). Clearly, this is an important report to get right
- Profit and Loss Report: Shows your total income and your total expenses for a specific time period. It’s not quite as detailed as your cash flow statement, but it offers a helpful overview of where your business stands financially.
- Balance Sheet: Shows what your company owns versus what it owes for a specific time period. In other words, it gives a snapshot of your financial position at any point in time.
Ways to Help Your Accounting Staff Be More Successful
There is a multitude of ways in which you can help your accounting staff become more productive and reach their personal career goals. Here are just a few…
* Praise employees in front of their peers – Everyone loves a compliment, but there is something about honoring someone publicly that encourages him or her like no other. When praising employees in public, be specific about what they have done right. Remember that the actions you acknowledge and encourage will be perpetuated.
* Train accountants with microlearning – It’s nearly impossible for an accountant to be successful apart from ongoing training. Most accounting firm managers know this and do provide training in some form. What training model does your firm utilize? Whether your training program is traditional (in-person), online, or blended, make use of microlearning. Microlearning allows people to digest bite-sized pieces of knowledge in short periods of time, often via a mobile device. This type of learning can be more fun than lengthy training sessions. It also increases learning retention.
* Choose the right accountants for your firm – If you want your workforce to be successful, hire the right accountants right off the bat. In the article How to Help Your Employees Succeed, Dr. John B. Charney wrote, “Leadership is about more than overseeing a team of people…it is about selecting the right people in the first place and then constantly ensuring everybody on that team is working to the very best of their ability. Make sure all your people are in the right position within the firm.” Hiring the correct employees and placing everyone where they are most effective takes time and practice, but it is key to your accountants’ and firm’s success.