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If I could do it all over again, I would not have gone into tax accounting.
I gathered my accounting undergraduate degree with the idea that I would be an accountant in public industry, either tax or audit. I decided I enjoyed the flexibility of tax accounting because you can work anywhere (ie, home) and auditors have to travel to places I wouldn’t ever voluntary go (ie, count wood in a warehouse in the middle of nowhere). I opted to get a MST, Master’s degree in taxation as my 5th year of higher education, required by my licensing state’s board of accountancy. If I knew then what I know now, I would have gone after the MAAC, Master’s degree in Accounting.
First and foremost, the biggest problem for tax accountants is the lack of industry/private job opportunities. There is a plethora of public accounting positions for tax, but that entails working like a mad man six months a year (six months if you’re lucky; my fellow former KPMG employee worked year round 80+ hour weeks). For every industry tax accounting position, there are easily ten internal auditing/cyclical financial accounting positions. That’s not an exaggeration or hyperbole. If you want to escape public accounting, cyclical accounting and auditing is the way to go. Most people who escape public accounting take their work/life balance very seriously and enjoy a significantly lower number of hours in the office once in industry; there is an understanding amongst all accountants who leave public accounting and enter private accounting that they will not work the insane hours they were once forced into. If you want one of the rare tax positions you will have to work for a large corporation who is actually substantial enough to bring a tax team in house, as opposed to shopping out the work to a public firm which gets the job done in a timely fashion and includes a certain amount of insurance if a tax return is found to be incorrect in case of audit. Where do all these large corporations exist? They exist in massive cities with high living expenses. You won’t find many tax accounting positions in cities with less than 500,000 in population. If your city doesn’t have a major sports team located there, likely you will not find a private tax position there (of course, there are exceptions). Accounting positions with high level financial needs exist in every town in America, but tax positions do not exist in small towns.
Oh, and if you do stumble upon a private tax position in your town it will likely require one of two skill sets. The first is ASC 740 Accounting for Income Tax skillset and the other is State and Local tax skill set. Why is that important you ask? If you work at a smaller firm that is NOT the big 4, you will likely not have a chance to practice corporate provision (ASC 740) work nor will you likely be able to consistently be able to practice consolidated state and local tax work which involves complex nexus issues. The vast majority of this work is farmed out to public accountants in the big 4 firms. I worked for the 5th largest firm in the U.S. in a relatively large city and was begging to get more corporate work and state work. I got some consolidated state work which made me a hot prospect, but never picked up any ASC 740 work. Provision work and quarterly estimates related to ASC 740 is one of the best ways to get out of public accounting but it is genuinely hard to find if you are at a smaller, non big 4, firm.
It’s too easy to get stuck in public accounting if you are a tax accountant, mainly for the lack of jobs and difficult skillset required to exit. For those two reasons alone, you should seriously consider auditing in you enter public accounting.
If that’s not enough, here’s a few more reasons to enter accounting as an auditor, as opposed to a tax accountant.
The transition from a public auditor to a private accountant is very common and well accepted within the industry. If you have taken part in an audit and understand a company’s basic accounting system and you have proven to be a decent auditor/accountant, you’ve got a leg up on any open position at the client you are working on. Chances are there will be a position available in the accounting department which you will qualify for; the position might be considered entry level but with a CPA license and a half a year of audit experience you’ve already got a big head start on the rest of the competition (Staff accountant Sr Accountant Assistant Controller Controller Vice President of Finance, etc.) Case and point, my fellow former audit coworker at my firm only lasted six months before she was fired from the firm. Seven days later she was at a nice, cushy internal accounting position for one of the most respected Pacific Northwest companies we have to offer. She cut her working hours in half and doubled her pay and was on the fast track to a senior internal auditor role which let her travel the world (to places you would actually want to go). Yet there I was, stuck in Tax. I’m happy for her as she really needed to get away from the firm to devote time to her child.
Tax accountants and auditors both have billable hour goals they strive to achieve every year. Depending on the size of your firm (Big 4= 2200-2400 vs Regional Midsize Firm= 1650-1900) you will have varying hours expected to work. Work means billable hours; partners couldn’t care less if you come to work and sit on your rear end browsing Facebook. Billable hours are obsessively monitored and is considered the lifeblood statistic for public accounting (profitability per FTE is also extremely important). My point is that billable hours are stressful and many. For tax accountants, there are no easy billable hours; you are sitting in your chair focusing intently for hours on a single client attempting to resolve their issues and put all the puzzle pieces together, even if they don’t give you all the pieces you need to complete the puzzle. Auditors, on the other hand, have the benefit of picking up a decent amount of their hours traveling. One of my fellow former auditor coworkers admitted that he picks up a decent amount of his billable hours commuting to and from his place of audit; he is on the clock as soon as he leaves his driveway. When I told him that tax accountants don’t have the benefit of picking up those easy hours he admitted how stress free some of his hours were. There are no easy billable hours in tax accounting, unfortunately.
Speaking of missing puzzle pieces, tax accountants frequently don’t receive all the information needed to complete their work on each client but partners take pride in only contacting tax clients once. If there is a hole in equity, you have to figure out and infer a significant amount of information from limited data. Auditors, on the other hand, can make many requests for information; they can’t sign off on the unqualified opinion if they don’t feel confident in their information. There’s an understanding from the accounting department under audit that they need to bend over backwards to assist auditors in everything they need. Tax accountants don’t enjoy this benefit. Tax accountants have the burden of receiving limited information to create a complex tax filing which may generate a tax liability which angers the client. When I wanted to contact a client, I would almost always have to go through a director for permission and most of my requests were denied; we had a “just get it done with what you have” mentality.
That’s my rant for the day. It’s free advice, if you want it. Sorry if it is a rough read with crappy grammar…rushed through it.
I would be curious to hear any dissenting opinions.
Good luck out there.
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