EA vs CPA – What is the Difference?
When you're looking to hire a tax professional, you want someone knowledgeable — someone you can trust to get the job done and keep your personal information secure.
Two of the more common tax professionals are:
1. Certified Public Accountant (CPA)
2. Enrolled Agent (EA)
EAs and CPAs both can be tax experts, and the work they do is often similar, but there are some differences between an EA vs CPA. To understand the difference between an EA and a CPA, you should start with the responsibilities of each.
What is an EA (Enrolled Agent)?
EAs are federally authorized and licensed tax practitioners who:
• EA’s typically is a tax professional who focuses on managing tax arrangements for businesses and private entities. They boast a wide range of tax knowledge in such tax related subjects such as income, estate, gift, payroll, levies, returns, credits, retirement taxes, and tax planning.
• Many EA’s also focus on representation of taxpayers before the IRS on matters ranging from collections to IRS Audits and Appeals. Additionally, EA’s:
Provide tax advice.
Prepare and file income tax returns for individuals, partnerships, corporations, estates, trusts, and other entities with tax-reporting requirements.
An EA is the highest credential awarded by the IRS. You will want to seek out an EA for any tax-related issues. In fact, IRS says they are uncontested experts on such topics since that is their focus.
To become an EA, candidates must pass a three-part test, apply to the IRS, and pass a background check.
To maintain the EA designation, they must:
Comply with strict ethical standards established by the Department of Treasury.
Must complete at least 72 hours of continuing education every 3 years.
Many EAs are also members of the National Association of Enrolled Agents, which has even higher standards for continuing education, as well as its own Code of Ethics.
What is a CPA (Certified Public Accountant)?
Certified public accountants, or CPAs, have a more flexible and expansive repertoire than EAs. They deal in all sorts of realms within the tax world, making them a great choice if your questions involve multiple topics.
CPAs are state-licensed accounting professionals who:
Auditors
Accountants
Accountants
Business advisors
Corporate accountants and executives.
Tax consultants
To become a CPA, candidates must pass a four-part exam and comply with education and experience requirements. The exam is the same no matter which state it's taken in, but every state has its own education and experience requirements. Most require at least a bachelor's degree and at least two years of public accounting experience.
Each state also has its own rules for maintaining the license, but most require at least 40 hours of continuing education per year, with four of those hours covering ethics.
Each state's board of accountancy, CPA society, and other regulatory agencies have ethical rules and regulations that CPAs must abide by.
Many CPAs are also members of the American Institute of CPAs, which has its own Code of Professional Conduct.
Choosing which to work with - an EA vs. CPA
EAs and CPAs are both knowledgeable, experienced professionals who are required to maintain high ethical standards. The primary difference between an EA vs CPA is that EAs specialize in taxation, and CPAs can specialize in taxation, but many may take on another specialization such as Auditor or working in corporate accounting.
So, how do you know when to work with one over the other? That depends on the type of services you need.
Working with an EA
If you need help with an IRS issue, such as a collection problem or an audit, an EA might be your best bet. They’re typically adept at dealing with the IRS, and some EAs even worked as IRS agents before opening their own practices.
EAs are a great option if you need tax preparation and tax planning advice for an individual or business. EA’s can perform accounting, bookkeeping, payroll that they then use to prepare a tax return. Most EAs also provide all the same services that CPA’s do except they EAs can't provide compiled, reviewed, or audited financial statements like CPA’s can.
Working with a CPA
CPAs are federally approved to represent you in all matters before the IRS. Those that specialize in tax preparation can also typically help you with tax and financial planning, accounting needs, and most other financial tasks that you might have.
Additionally, if you have broader accounting needs — for instance, your bank requires a reviewed financial statement to comply with loan covenants, A CPA may be your better choice.
When deciding between working with an EA or a CPA, you can rest assured that both types of professionals are well-trained. They must pass rigorous exams and can do difficult and demanding work for clients. And because tax attorney fees can often climb well into the four figures, both CPAs and EAs are also an affordable alternative for those who need help figuring out tax obligations. Be sure that if you choose to consult with either type of professional you have a solid handle on your finances and measure your expectations.
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