Independent Accountant – An independent accountant is a certified public accountant (CPA) or a chartered accountant (CA) who examines the financial records and business transactions of a company or an individual with whom they are not affiliated. An independent accountant is also known as an independent auditor or an external auditor.
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What does an independent accountant do?
An independent accountant performs various auditing, tax, and consulting services for clients, such as:
They verify the accuracy and reliability of the financial statements and disclosures of a client, such as a public company, a nonprofit organization, or a government entity. An independent accountant also expresses an opinion on whether the financial statements are prepared in accordance with the applicable accounting standards and regulations. An independent accountant may also perform other types of audits, such as compliance audits, performance audits, or forensic audits.
They prepare and files tax returns and reports for clients, such as individuals, corporations, partnerships, trusts, or estates. An independent accountant also advises clients on tax planning strategies, tax compliance issues, tax controversies, and tax implications of various transactions.
They provide various advisory services to clients, such as business valuation, financial analysis, risk management, internal control evaluation, mergers and acquisitions, litigation support, fraud investigation, or business restructuring.
Why is an independent accountant important?
An independent accountant is important for several reasons, such as:
Protecting the public interest
An independent accountant serves as a watchdog for the public interest by ensuring that the financial information provided by clients is reliable, transparent, and compliant with the relevant laws and regulations. An independent accountant also helps to prevent and detect fraud, errors, misstatements, or irregularities that may affect the financial health or reputation of clients or their stakeholders.
Enhancing the credibility of financial information
An independent accountant enhances the credibility of the financial information provided by clients by expressing an independent and objective opinion on its fairness and accuracy. An independent accountant also follows professional standards and ethical principles that govern their conduct and performance.
Providing valuable insights and recommendations
An independent accountant provides valuable insights and recommendations to clients based on their expertise and experience in accounting, auditing, tax, and consulting. An independent accountant also helps clients to improve their financial reporting quality, internal control effectiveness, operational efficiency, risk management practices, tax compliance status, and business performance.
How to become an independent accountant?
To become an independent accountant, you need to have the following qualifications and skills:
You need to have a bachelor’s degree or a master’s degree in accounting or a related field. You also need to pass a professional examination and obtain a license or a certification from a recognized body, such as the American Institute of Certified Public Accountants (AICPA) or the Institute of Chartered Accountants in England and Wales (ICAEW). Depending on your location and specialization, you may need to meet additional requirements or regulations.
You need to have relevant work experience in accounting, auditing, tax, or consulting. You can gain experience by working for an accounting firm, a corporation, a nonprofit organization, or a government entity. You can also gain experience by doing part-time jobs, internships, volunteer work, or apprenticeships in accounting-related fields.
You need to have various skills to succeed as an independent accountant, such as:
- Analytical skills: You need to be able to collect, process, and interpret financial data and information using various tools and methods.
- Communication skills: You need to be able to communicate effectively with clients and stakeholders using oral and written forms. You also need to be able to prepare and present clear and concise reports and recommendations.
- Problem-solving skills: You need to be able to identify and resolve issues and challenges that may arise during your work. You also need to be able to provide creative and innovative solutions that meet the needs and expectations of your clients.
- Ethical skills: You need to be able to follow professional standards and ethical principles that govern your conduct and performance. You also need to be able to maintain confidentiality and integrity in your work.
How to start your own independent accounting practice?
If you want to start your own independent accounting practice, you need to take the following steps:
Plan your business
You need to have a clear vision and mission for your business. You also need to define your target market, your services, your pricing strategy, your competitive advantage, and your goals and objectives. You also need to prepare a business plan that outlines your financial projections, marketing strategy, operational plan, and risk analysis.
Register your business
You need to register your business name and structure with the relevant authorities. You also need to obtain any licenses or permits that are required for your business. You also need to open a business bank account and set up an accounting system for your business.
Promote your business
You need to market your business and attract potential clients. You can use various methods such as creating a website, social media, networking, referrals, advertising, or events. You also need to build a strong reputation and credibility for your business by delivering high-quality work and excellent customer service.
Manage your business
You need to manage your business effectively and efficiently. You need to keep track of your income and expenses, invoices and payments, taxes and compliance, contracts and agreements, and client relationships. You also need to maintain your professional development and education by staying updated on the latest trends and developments in accounting.
Independent Accountant Salary
The average annual pay for an independent accountant in the United States is $67,577 as of February 2023. However, this may vary widely depending on whether the independent accountant works as an employee or a contractor.
Independent Accountant Salary as an Employee
An independent accountant who works as an employee for a public accounting firm or a private company may earn a salary that is similar to other accountants or auditors in the same field. According to the U.S. Bureau of Labor Statistics (BLS), the median annual wage for accountants and auditors was $77,250 as of May 2021. The lowest 10% earned less than $47,920, and the highest 10% earned more than $132,910. The BLS also reports that the top-paying industries for accountants and auditors were:
- Finance and insurance: $81,660
- Management of companies and enterprises: $80,790
- Manufacturing: $78,020
- Government: $75,280
- Professional, scientific, and technical services: $74,540
The BLS also reports that the top-paying states for accountants and auditors were:
- District of Columbia: $111,280
- New York: $102,740
- New Jersey: $94,890
- Virginia: $90,270
- Connecticut: $88,920
Independent Accountant Salary as a Contractor
An independent accountant who works as a contractor or a freelancer may charge an hourly rate or a fixed fee for their services. According to ZipRecruiter3, the average hourly pay for an independent contractor accountant in the United States is $35.71 as of February 2023. However, this may vary widely depending on the scope, complexity, and duration of the project. According to Accounting Smarts, self-employed accountants make about $35 an hour, resulting in an annual income of around $73k.
According to ZipRecruiter, the average weekly pay for an independent contractor accountant in the United States is $1,173 as of February 2023. However, this may vary widely depending on the number of hours worked and the frequency of payments. ZipRecruiter also reports that the weekly pay range for independent contractor accountants was:
- 25th percentile: $836
- 50th percentile (median): $1,173
- 75th percentile: $1,557
- 90th percentile: $2,356
Frequently Asked Questions (F&Qs)
What are the two types of accountants?
There are many types of accountants, but the two most common are:
- Public accountants work for accounting firms that provide accounting, auditing, tax, and consulting services to businesses, individuals, and other organizations.
- Private accountants work for businesses or organizations, keeping track of their financial records and preparing financial statements.
Should an accountant be independent?
Yes, an accountant should be independent. Independence is essential for accountants who provide auditing and other attestation services. This is because auditors are responsible for providing an impartial opinion on the financial statements of their clients. If an auditor is not independent, there is a risk that they may be biased in their opinion, which could mislead investors and other users of the financial statements.
Can you be a self-employed accountant?
Yes, you can be a self-employed accountant. There are many benefits to being self-employed, including:
- Freedom: You have the freedom to set your own hours, work from anywhere, and choose your own clients.
- Income potential: As a self-employed accountant, you can earn more than you would as an employee.
- Professional growth: As a self-employed accountant, you have the opportunity to learn new skills and grow your business.
What makes an accountant independent?
Accountant is independent when they are able to perform their duties without being influenced by any outside factors. This means that they are not beholden to any particular person or organization and that they are able to make objective decisions based on the facts.