5 Types of Accounting You Should Know About Before Making a Career Decision

A career in accounting is promising for several reasons. Firstly, accountants are always in demand, and they’re needed in every industry. You can be a public accountant, or you can choose to specialize your services anywhere you choose. While technological advancements, such as improvements to your accounting software program, will allow for increased automation of tedious tasks, your roles as an advisor and analyst will still be extremely valuable. In fact, it’s projected that employment for accountants will grow by 6% from now until 2028.

Like in any field, competition for higher-level jobs will be fierce. Candidates with professional certifications or advanced degrees in accounting are likely to have an advantage over others. To understand how to prepare for your role, it’s important to know what kind of accountant you want to be. Here are some of the main branches of the field.

Financial Accounting

This is the process of recording business transactions. Specifically, a financial accountant makes different kinds of financial statements based on past transactions. These can include income statements, balance sheets, and cash flow statements. A small business might hire a bookkeeper who’s familiar with Quickbooks to handle its financial accounting needs, but larger companies are likely to have a highly experienced accounting team.

Financial accountants produce their statements in accordance with generally accepted accounting principles (GAAP). Those with a Certified Public Accountant license will generally have an easier time securing a position since the license speaks to their abilities.

Personal Accounting

Sometimes called financial advisors, a personal accountant is hired by an individual to help them keep track of income and expenses. While individuals aren’t required by law to keep financial books and records, hiring a personal accountant can still make your life easier. They can handle your bookkeeping as well as prepare any tax forms you may need.

A personal accountant may also be able to offer advice on how you can invest your money or whether taking out a loan makes sense. For example, personal loans Oregon could make sense if you’re trying to buy a house in Portland. Your advisor can help you make sure you can get the right loan amount, afford your monthly payments, and tell you if your credit history lets you qualify for lower interest rates.

Managerial Accounting

Also called management accounting, this is where an accountant interprets and analyzes financial information to report it to managers. Generally speaking, the purpose is to help managers make properly informed business decisions. A company’s performance needs to serve its overall goals. Managerial accounting processes can vary greatly depending on the intended users. These accountants will often review past business decisions as well as prepare budget statements, analyze costs, and produce financial forecasts.

Tax Accounting

These accountants help businesses and individuals prepare for tax season. They help businesses legally reduce the amount of taxes they owe and prepare tax returns for the organization. They’ll also help prepare any required employee tax forms whether these are W-2 forms or 1099’s.

Many accountants will use custom 1099 envelopes and W-2 envelopes. These make your business look more professional, and custom stationery acts as a form of advertising. No matter what, tax accountants will work to protect all of your sensitive information.

Forensic Accounting

A forensic accountant will use accounting and investigative skills in legal affairs. Most commonly, these accountants look into potential cases of fraud, embezzlement, identity theft, and other financial crimes. They often testify in court, and they also prepare visual aids to support their evidence.

Forensic accountants may be hired by accounting companies, government agencies, insurance companies, or banks. One of their most important roles is to quantify damages suffered by those in legal disputes, and their knowledge of courtroom processes helps them stand out from other accountants.