Accounting
How to make career choices as a young accountant
Young accountants have never had so many options.
Historically, being an accountant often involved little personal agency — most young accountants followed the career path laid before them by their firm, and that path looked much the same from firm to firm. But now with advancing technology propelling the profession forward, new service lines multiplying almost daily, and a labor shortage putting young talent in high demand, new career pathways and opportunities are opening.
The decisions start with picking a firm size and focus area, and continue throughout the career, from committing to the partner path, to going corporate or staying in public accounting, or even starting their own practices. Experts say young accountants should navigate this evolving profession by continually reevaluating their path with an open mind.
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Picking a firm
As firms start shifting their recruiting focus to younger students, sometimes even extending
There are benefits and downsides to each. At small firms, young accountants can become jacks of all trades, have more opportunities to demonstrate entrepreneurship and the opportunity to work with clients faster. Meanwhile, big firms offer prestige, specialization, big-name clients, the opportunity to travel and connections. Many students choose the latter route and aim for one of the Big Four: Deloitte, PricewaterhouseCoopers, Ernst & Young or KPMG.
Jeff Phillips, CEO at Padgett Business Services and cofounder of recruiting firm Accountingfly, thinks the narrative that students receive in school too often skims over the benefits of working in small and midsized firms.
“Don’t buy into the myth that you must start your career at the Big Four,” he said. “They are excellent companies, but there are awesome firms in the Top 200. There are awesome local firms.”
The stereotype is a young accountant starts working in a big firm, grows tired of the grueling hours, and eventually leaves for the
But some experts warn that starting in a small firm may limit career mobility down the line.
“It’s always easier to go from big to small. It’s harder to go from smaller to big,” said Stan Veliotis, associate professor at Fordham University. “Both are possible, but it’s easier in one direction versus the other.”
He said that students risk giving the impression to future employers that they couldn’t get an offer from the big firms — not that they didn’t want to work there.
But Douglas Slaybaugh, a CPA career coach, disagreed: “I’ve seen it go both ways. I’ve got a client right now that’s moving from a smaller firm to a big firm. And there is such a need for resources in the industry right now that if that was ever a thing, it’s less of a thing now.”
Choosing a focus area
It’s difficult choosing a focus area—between tax, audit and accounting, or one of the new possibilities that are cropping—before having actually worked in a firm. Many students may feel they’re sealing their fates with the choice, but the reality is that they can always switch down the line. The best course of action is to just jump.
“Don’t worry too much about a focus area,” Veliotis said. “As long as you have some interest in it, take it, and then you will see over time what you gravitate towards.”
Slaybaugh encourages students to use internships and firm college programs to get a taste of the profession. “Start early and try lots of things,” he said. “You have to start, but you’re never stuck.”
How long to stay
The next question is how long to stay at your first firm. Traditionally, an accountant’s entire career would play out within a single firm — joining as an intern and climbing the ranks until they make partner.
Today, Veliotis says it’s easier for young accountants to leave their firm now that applying for a job can be as easy as clicking a button online. In the past, joining a new firm meant being headhunted or actually running from office to office looking. He recommends staying at least one year in a firm — ideally several years, but never less than one.
“One year is a magical number,” Veliotis said. “In accounting, almost all the disciplines in the accounting firms, all the client engagements, are cyclical, meaning every year, the year finishes and now you have to prepare the tax return, or now you have to prepare the audit or the financial statements. So if a person leaves within a year, it almost looks like something blew up or they couldn’t handle the second cycle.”
Remember, Veliotis said, firms are always taking a risk on young talent — they don’t know how much you know out of college. That’s why it’s important to at least get the first promotion.
From there on, Phillips suggests that accountants reassess their career every three to four years.
“As long as they’re pretty happy with the firm, stay until they’re around a manager level. Your options expand exponentially the longer you stay at that first employer,” he said. “As someone with a recruiting background, we don’t like to see candidates who have changed jobs every 18 months — we just feel like you’re going to change jobs in 18 months on us. So I think there’s a lot of wisdom in sticking something out for a chunk of time to learn how to exist in a firm.”
Slaybaugh thinks accountants should be reassessing more frequently: “Every year, once a year, you should decide whether you’re going to stay in the job you’re in or not. What that does is it removes planned continuation bias, in that we decide we’re going to be accountants based on the circumstances in which we made the decision. Well, times change. Circumstances change.”
Getting your CPA
Most experts agree that getting licensed as a CPA is still important. It provides more career mobility and is a symbol of trust and reliability. But do you really need your CPA?
Slaybaugh says it “depends on the day.” Some non-audit managers and partners don’t have their CPA, so it’s certainly possible to get promoted without it.
“The importance of it still exists. It’s still an important aspect of our society to be able to have that trust in the profession,” Slaybaugh said. He added that getting an MBA plus a CPA can help you become a CFO.
Committing to the partner path
The path to partner, which takes 10 to 20 years on average, is daunting. Luckily, even if an accountant jumps ship before they make partner, at least they’ve gained highly-sought-after experience.
“If you work until you’re about to become a partner and you decide that’s not for you, you have many options available to you, because every company in the world wants to hire somebody with that skillset,” Phillips said.
Experts also recommend interviewing your partners to investigate if the career is right for you. What would they do differently? What do they like and dislike about being a partner? What is the lifestyle like? What are the hours like?
Slaybaugh says if the partner path is for you, you should be yourself from the beginning. For example, don’t pretend you enjoy a niche more than you do, or commit to more hours than you’re actually willing to.
“It’s best to have consistency. Be yourself,” Slaybaugh said. “This has nothing to do with developing as a professional or becoming a better leader; this is about doing things that are against your core values or not resonating with your core values.”
Going corporate
It’s common for accountants to make the move from public accounting to corporate or industry accounting. Often they enter the industry their clients were in, Veliotis said.
“When you make the jump from an accounting firm—where you have a lot of diversified experiences, you’re learning about best practices, you have the stress of client delivery—and you go in-house, you’re very, very powerful on a resume because you know the area,” Veliotis said. “You proved yourself in the most stressful environment there is, which is serving many clients. And then you go to one company, in essence, you just have the one client.”
For those aiming to be a CFO, Slaybaugh recommends staying longer in public accounting to gain more experience. He also noted that you’ll likely experience an immediate pay bump going corporate, but said the salary will eventually be outpaced by what you could’ve made as a partner.
Joining up
Joining professional associations, like the American Institute of CPAs, the National Conference of CPA Practitioners or the National Association of Black Accountants, or state CPA societies, can be an excellent way to practice networking and communication skills. (Communication is an
But while many of these organizations offer virtual meetings, Veliotis encourages young people to go in person for the full benefits and resources.
Owning your own firm
For some accountants, starting your own practice may be the dream, but no one actually teaches how to start a firm.
“If you’re entrepreneurial, the skillsets you’re going to need are that technical knowledge that you probably will not learn in college — you will probably learn working inside of a company,” Phillips said.
The most important soft skills for running a successful firm are a high degree of responsibility and ownership. “It starts and ends with you,” Phillips said.
It’s a great time to start an accounting firm, he added. Demand for services is growing, the economy is growing, there are more niches than ever, and firms that are scaling and shaking loose clients can be grabbed by an entrepreneur.
If you learned nothing else
What remains true for all young accountants — no matter what path they find themselves on, whether they become partners or quit their firms to start their own practices — the most important thing is remaining proactive about making their own choices because the profession will no longer do it for them.
Final regulations now identify certain partnership related-party “basis shifting” transactions as “transactions of interest” subject to the rules for reportable transactions.
The final regs apply to related partners and partnerships that participated in the identified transactions through distributions of partnership property or the transfer of an interest in the partnership by a related partner to a related transferee. Affected taxpayers and their material advisors are subject to the disclosure requirements for reportable transactions.
During the proposal process, the Treasury and the Internal Revenue Service received comments that the
- Increased dollar threshold for basis increase in a TOI. The threshold amount for a basis increase in a TOI has been increased from $5 million to $25 million for tax years before 2025 and $10 million for tax years after.
- Limited retroactive reporting for open tax years. Reporting has been limited for open tax years to those that fall within a six-year lookback window. The six-year lookback is the 72-month period before the first month of a taxpayer’s most recent tax year that began before the publication of the final regulations (
slated for Jan. 14 in the Federal Register). Also, the threshold amount for a basis increase in a TOI during the six-year lookback is $25 million. - Additional time for reporting. Taxpayers have an additional 90 days from the final regulation’s publication to file disclosure statements for TOIs in open tax years for which a return has already been filed and that fall within the six-year lookback. Material advisors have an additional 90 days to file their disclosure statements for tax statements made before the final regulations.
- Publicly traded partnerships. Because PTPs are typically owned by a large number of unrelated owners, the final regulations exclude many owners of PTPs from the disclosure rules.
The identified transactions generally result from either a tax-free distribution of partnership property to a partner that is related to one or more partners of the partnership, or the tax-free transfer of a partnership interest by a related partner to a related transferee.
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The tax-free distribution or transfer generates an increase to the basis of the distributed property or partnership property of $10 million or more ($25 million or more in the case of a TOI undertaken in a tax year before 2025) under the rules of IRC Sections 732(b) or (d), 734(b) or 743(b), but for which no corresponding tax is paid.
The basis increase to the distributed or partnership property allows the related parties to decrease taxable income through increased cost recovery allowances or decrease taxable gain (or increase taxable loss) on the disposition of the property.
The Treasury Department and the Internal Revenue Service proposed new rules for the tax credit for qualified commercial clean vehicles, along with guidance on claiming tax credits for clean fuel under the Inflation Reduction Act.
The
The credit is the lesser amount of either 30% of the vehicle’s basis (15% for plug-in hybrid EVs) or the vehicle’s incremental cost in excess of a vehicle comparable in size or use powered solely by gasoline or diesel. A credit up to $7,500 can be claimed for a single qualified commercial clean vehicle for cars and light-duty trucks (with a Gross Vehicle Weight Rating of less than 14,000 pounds), or otherwise $40,000 for vehicles like electric buses and semi-trucks (with a GVWR equal to or greater than 14,000 pounds).
“The release of Treasury’s proposed rules for the commercial clean vehicle credit marks an important step forward in the Biden-Harris Administration’s work to lower transportation costs and strengthen U.S. energy security,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo in a statement Friday. “Today’s guidance will provide the clarity and certainty needed to grow investment in clean vehicle manufacturing.”
The NPRM issued today proposes rules to implement the 45W credit, including proposing various pathways for taxpayers to determine the incremental cost of a qualifying commercial clean vehicle for purposes of calculating the amount of 45W credit. For example, the NPRM proposes that taxpayers can continue to use the incremental cost safe harbors such as those set out in Notice 2023-9 and Notice 2024-5, may rely on a manufacturer’s written cost determination to determine the incremental cost of a qualifying commercial clean vehicle, or may calculate the incremental cost of a qualifying clean vehicle versus an internal combustion engine (ICE) vehicle based on the differing costs of the vehicle powertrains.
The NPRM also proposes rules regarding the types of vehicles that qualify for the credit and aligns certain definitional concepts with those applicable to the 30D and 25E credits. In addition, the NPRM proposes that vehicles are only eligible if they are used 100% for trade or business, excepting de minimis personal use, and that the 45W credit is disallowed for qualified commercial clean vehicles that were previously allowed a clean vehicle credit under 30D or 45W.
The notice asks for comments over the next 60 days on the proposed regulations such as issues related to off-road mobile machinery, including approaches that might be adopted in applying the definition of mobile machinery to off-road vehicles and whether to create a product identification number system for such machinery in order to comply with statutory requirements. A public hearing is scheduled for April 28, 2025.
Clean Fuels Production Credit
The Treasury the IRS also released guidance Friday on the Clean Fuels Production Credit under Section 45Z of the Tax Code.
Section 45Z provides a tax credit for the production of transportation fuels with lifecycle greenhouse gas emissions below certain levels. The credit is in effect in 2025 and is for sustainable aviation fuel and non-SAF transportation fuels.
The guidance includes both a
“This guidance will help put America on the cutting-edge of future innovation in aviation and renewable fuel while also lowering transportation costs for consumers,” said Adeyemo in a statement. “Decarbonizing transportation and lowering costs is a win-win for America.”
Section 45Z provides a per-gallon (or gallon-equivalent) tax credit for producers of clean transportation fuels based on the carbon intensity of production. It consolidates and replaces pre-Inflation Reduction Act credits for biodiesel, renewable diesel, and alternative fuels, and an IRA credit for sustainable aviation fuel. Like several other IRA credits, Section 45Z requires the Treasury to establish rules for measuring carbon intensity of production, based on the Clean Air Act’s definition of “lifecycle greenhouse gas emissions.”
The guidance offers more clarity on various issues, including which entities and fuels are eligible for the credit, and how taxpayers determine lifecycle emissions. Specifically, the guidance outlines the Treasury and the IRS’s intent to define key concepts and provide certain rules in a future rulemaking, including clarifying who is eligible for a credit.
The Treasury and the IRS intend to provide that the producer of the eligible clean fuel is eligible to claim the 45Z credit. In keeping with the statute, compressors and blenders of fuel would not be eligible.
Under Section 45Z, a fuel must be “suitable for use” as a transportation fuel. The Treasury and the IRS intend to propose that 45Z-creditable transportation fuel must itself (or when blended into a fuel mixture) have either practical or commercial fitness for use as a fuel in a highway vehicle or aircraft. The guidance clarifies that marine fuels that are otherwise suitable for use in highway vehicles or aircraft, such as marine diesel and methanol, are also 45Z eligible.
Specifically, this would mean that neat SAF that is blended into a fuel mixture that has practical or commercial fitness for use as a fuel would be creditable. Additionally, natural gas alternatives such as renewable natural gas would be suitable for use if produced in a manner such that if it were further compressed it could be used as a transportation fuel.
Today’s guidance publishes the annual emissions rate table that directs taxpayers to the appropriate methodologies for calculating carbon intensities for types and categories of 45Z-eligible fuels.
The table directs taxpayers to use the 45ZCF-GREET model to determine the emissions rate of non-SAF transportation fuel, and either the 45ZCF-GREET model or methodologies from the International Civil Aviation Organization (“CORSIA Default” or “CORSIA Actual”) for SAF.
Taxpayers can use the Provisional Emissions Rate process to obtain an emissions rate for fuel pathway and feedstock combinations not specified in the emissions rate table when guidance is published for the PER process. Guidance for the PER process is expected at a later date.
Outlining climate smart agriculture practices
The guidance released Friday states that the Treasury intends to propose rules for incorporating the emissions benefits from climate-smart agriculture (CSA) practices for cultivating domestic corn, soybeans, and sorghum as feedstocks for SAF and non-SAF transportation fuels. These options would be available to taxpayers after Treasury and the IRS propose regulations for the section 45Z credit, including rules for CSA, and the 45ZCF-GREET model is updated to enable calculation of the lifecycle greenhouse gas emissions rates for CSA crops, taking into account one or more CSA practices.
CSA practices have multiple benefits, including lower overall GHG emissions associated with biofuels production and increased adoption of farming practices that are associated with other environmental benefits, such as improved water quality and soil health. Agencies across the Federal government have taken important steps to advance the adoption of CSA. In April, Treasury established a first-of-its-kind pilot program to encourage CSA practices within guidance on the section 40B SAF tax credit. Treasury has received and continues to consider substantial feedback from stakeholders on that pilot program. The U.S. Department of Agriculture invested more than $3 billion in 135 Partnerships for Climate-Smart Commodities projects. Combined with the historic investment of $19.5 billion in CSA from the Inflation Reduction Act, the department is estimated to support CSA implementation on over 225 million acres in the next 5 years as well as measurement, monitoring, reporting, and verification to better understand the climate impacts of these practices.
In addition, in June, the U.S. Department of Agriculture published a Request for Information requesting public input on procedures for reporting and verification of CSA practices and measurement of related emissions benefits, and received substantial input from a wide array of stakeholders. The USDA is currently developing voluntary technical guidelines for CSA reporting and verification. The Treasury and the IRS expect to consider those guidelines in proposing rules recognizing the benefits of CSA for purposes of the Section 45Z credit.
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