Public vs. Private - That is the Question
Updated: Dec 19, 2018
This longer than normal post is for my tax and accounting friends questioning whether to make a career in public accounting or private industry, and is a topic on which I feel I can offer solid advice and insight. I have 9 years of tax public accounting background, with a couple different sized firms, plus 3 years in two different corporate tax roles with large, privately held companies.
In college, it seemed like public vs. private was the conversation buzz in my academic circles as we approached graduation, and everyone had an opinion so the varying advice was overwhelming. Fast forward a couple years into your career, and dang it you’re likely still having the same discussions! I’ve gone back and forth twice now, because sometimes you have to take opportunities when they are in front of you, and also there are honestly things I love (and don’t love, to be gentle) about both public and private.
I’ll break it down below and cover some of what I feel are pros and cons of both worlds. Caveat that I have only experience working on and for non-publicly traded companies. I've heard that adds a level of complexity and stress, but cannot personally attest to this.
Public Accounting Pros
· A wealth of experience is gathered by having a diverse client base and doing repetitive processes. I’ve often described public accounting as boot camp, whereby you’re thrown into a sink or swim environment that if you make it out of, you’re in much better shape than when you started! It’s an extremely valuable education and you get out what you put in.
· An opportunity to specialize, if you choose, and get very good at your craft. Caveat – do not pigeon hole yourself too early! Get out there and explore first, find what it is you’re passionate about and then specialize.
· Surrounded by like-minded individuals who you can relate to and bounce ideas off of. Friends and family don’t want to discuss tax at dinner? Having trouble understanding a code section? No problem – your coworkers got your back.
· Exciting, fast-paced environment, where learning is constant. I cannot stress enough how important public accounting can be to your knowledge base and discipline.
· You’re a hired gun, rather than a cog in a wheel or cost center. You’re a tax and accounting James Bond, it’s sexy, it’s thrilling to come in as the expert and save the day! (Don’t mess up tho). You’ll have whatever you need to do your job because you’re sales, not an expense.
· Networking, client interaction, socializing. Are you good at golf, eating, drinking, and talking? You’re in the right spot.
· Flexibility to work from home, adjust your hours as you need. You’re going to be working a ton, so most firms have become progressive to retain you. This means that you can work from home as needed, or come and go as fits your schedule so long as you get your hours in and work done. Most firms have also implemented “summer hours”, where you can flex your weekly hours to work more Monday – Thursday and take Friday afternoon off.
· In tax especially, there is seasonality and less busy times where you can relax a little more than your friends in other industries might. Reminder this comes because you work your heiny off at other times during the year.
· Compensation tends to be a little higher in public accounting versus private industry, especially in the early years of your career. You will also in turn command a higher salary if you make the jump to private after a few years in public. This is what most people end up doing.
· Working long hours with people develops lasting relationships. I have a group of friends from a firm I worked for years ago that even though every single one of us have moved on from that employer, we still hang out often! Shout out - love my girls!
Public Accounting Cons
· Hours. You’re going to be working a ton seasonally and the higher up you get, the more you’ll work year-round. Unless you don’t really care, in which case, you should probably have a heart-to-heart with yourself and find something that you do care about and go do that. You’ll work more as you make your way up the chain because you do care, about your clients, your coworkers, and your career. It’s fulfilling, but exhausting, thankless work that your family may not understand.
There is the option to work a reduced schedule, and I know plenty of people who this works wonderfully for either for a few years while the kids are young, or permanently. If you do this, hold firm on your agreed upon hours, because you are taking a salary reduction!
· Alongside long hours comes turnover. Most large public accounting firms have very high turnover, and the small ones aren’t always that much better. ‘Turn and burn’ is a common phrase used whereby the company knows they will eventually lose you, but will work you like crazy until you leave! Again, that’s more of a big firm motto – but if you find yourself in this environment, try to learn as much as you can so you can be highly valuable to a different company when you leave.
· Charge hours. If you know what I’m referring to – enough said. If you don’t, know that you will be expected to account for somewhere around every 6 minutes of your work day. Every. Day. You will log this time into a little hours tracking system so ideally your firm can bill clients based on how much time you spent working on a project.
While this is all well and fine, the company will then generate reports to monitor your hours and compare you to every other person in the firm doing what you do, some firms will even show these metrics to all employees to spur competition. If you’re taking too long, you’ll get talked to, and so you feel an intense pressure to hurry up but at the same time not make any mistakes.
Then you have utilization, which tracks how much of your time you spend chargeable! So if you feel like you took too long on a project and don't want to log all that time you'll get scolded for later, you get whipsawed on utilization because it looks like you were just in the bathroom for 3 hours at a time. I personally disliked this aspect of public accounting because I’m a curious person who likes to research and understand beyond just getting it out the door. There's got to be a better way!
· Review notes. I don’t mind review notes, but many people have a really hard time with this topic because no one loves getting told how they messed up. Basically after every project you do as a preparer, you’ll get review notes from the reviewer that you’ll need to fix and then resubmit the corrected project (tax return, audit).
I think it depends on how review notes are worded, and ideally they should be an opportunity to teach the preparer rather than reprimand. However, some people either aren’t great at communication, or take things too personally, so feelings can easily get hurt in this process. For example: I know that I tend to be direct to the point in my review notes, and that can come off as harsh, but I never meant it that way. You do have to develop some thick skin in this business, and here is an area of opportunity to do so!
BTW - if you don’t understand a review note, ask for clarification! I always gave the benefit of the doubt that the preparer just made a mistake and if they didn’t understand, they’d ask. Because in my mind, going over every review note in person can be demeaning if the preparer doesn’t require this level of intervention. Not to mention the pesky charge hour metrics mentioned above!
Private Accounting Pros
· Work life balance. Most successful organizations thrive on having a great culture and really want you to have a good life outside of work. It’s refreshing when you find it. Beware that this isn’t every company, make sure to do your homework and read reviews.
· Less hours. Private accounting and tax do have their busy times, but they generally are far less intense and do not last as long as in public accounting. Again, read company reviews to make sure, I've heard of private friends working more than public!
· Ask an expert. Sometimes you are allowed to outsource an issue if you don’t have time or want reassurance that what you’re doing is correct. It takes a little of the pressure off.
· Research your heart out if you have time. I love private industry for the fact that I can really dig into an issue if we need. The goal is by far to get it right, rather than rush it out the door.
· Make a real impact to the company. You can get involved in many ways and improve your own department or participate in company wide efforts.
· Many successful private companies have great benefits, like profit sharing. Pensions have mostly gone away, but more private companies have profit sharing or are becoming ESOPs and contributing to it on your behalf without any money from you!
Private Accounting Cons
· Same old. You’re working on one big client year round rather than wheeling and dealing with several. Looking at the same spreadsheets and information can get stale. To counter that, try to find an organization who has a continuous improvement culture and participate in that mindset, or volunteer for special projects.
· Slow progression. Public accounting tends to promote people quickly, maybe to keep people happy when they are making big sacrifices in their personal lives? Private industry progression is slower, so if you’re wanting a promotion every couple years you’re in the wrong place. Title isn't everything, though, you can make a difference at any level.
· In your own world. Depending on the size of your company, you might be on a smaller team where you don’t feel as understood as you would in public accounting. You also don’t get to network near as much because you’re not in sales anymore – you’re a cost center and you have a budget for your department on what you can spend!
Remember that every person has different goals in life, there is no one size fits all answer! I have found that as much as enjoying the work is important, even more important can be enjoying your surroundings while you’re doing it. Great coworkers can turn that dumpy project frown upside-down!
Hopefully this will all help you make a decision if you’re finding yourself at a crossroads that I have been at more than once. Just remember, “There are two paths you can go by, but in the long run – there’s still time to change the road you’re on.” – Led Zeppelin, Stairway to Heaven