When it comes to accounting and tax planning, you may get easily confused amid the sea of acronyms. But a solid understanding of certain accreditations is key if you’re looking for a licensed tax professional to guide you through your tax needs. When making your decision about whom to work with, you may wonder about the differences between an enrolled agent (EA) and a certified public accountant (CPA). While professionals with both certifications have significant expertise, the choice between them will come down to your personal needs.
A financial advisor can help you maximize the tax efficiency of your investments and assist you in creating and carrying out a long-term plan.
What Is an Enrolled Agent (EA)?
An enrolled agent, or EA, is a kind of tax professional who focuses narrowly on managing tax arrangements for business or private entities. EAs boast a wide range of knowledge in such tax-related subjects as income, estate, gift, payroll, levies, returns, inheritance, non-profit and retirement taxes.
Once EAs have passed their qualifying exam, the federal government recognizes them as tax specialists. Typical EA responsibilities include representing business or individual clients in tax audits, tax appeals and tax collections. Additionally, EAs can also provide tax advice, tax return filing and more.
An EA is the highest credential the IRS awards. A professional with this designation typically makes between $15,000 and $20,000 more than CPAs annually. You’ll want to seek out an EA for any and all tax-related issues. In fact, the IRS says they are uncontested experts on such topics.
What Is a Certified Public Accountant (CPA)?
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. In addition, states approve CPAs, while the federal government approves EAs.
CPAs typically do most of their work for public accounting firms of all sizes. They could be specifically licensed as auditors, financial planners, corporate and executive accountants and tax consultants. So CPAs could assist in all accounting, tax and financial services for the businesses, individuals and other organizations they may represent.
CPAs help clients set and achieve financial goals through money management and financial planning. These goals could include anything from putting down a payment for a home to opening a new branch of business across the country. In other words, a CPA is the go-to if you’re looking for a broad scope of expertise.
What’s the Difference Between EAs and CPAs?
Now that you know what CPAs and EAs do in practice, here’s a side-by-side comparison of their main focuses, wider skill sets and their hour rates:
|Differences Between CPA & Enrolled Agent|
|Professional Focus||Broad accounting, tax and financial services for businesses||Taxes for businesses and individuals|
|Qualifications for Practice||State education requirements (usually 150 hours of undergrad); pass CPA exam||Five years IRS experience; pass the EA exam|
|Hourly rate||Average of $30 to $500, depending on experience, rank within firm, whether CPA is a firm owner||Average of $12 to $55|
EA vs. CPA: Which Is Best for You?
When deciding between an EA or a CPA, you will see that both types of professionals are well-qualified. They can both deliver the financial guidance you may need for your taxes. However, which one you should consult depends largely on which issue you’re looking to resolve.
EAs could help you work through an IRS audit or a collection problem, and they can also perform bookkeeping services that could be useful for businesses when preparing tax returns. CPAs, however, are more adept in meeting your financial planning and accounting needs; and when it comes to tax planning, they can also help you identify tax credits and deductions to lower your tax liability.
Both types of professionals are equally qualified to perform similar tasks, but there are differences in the range of services offered. CPAs can provide a much wider scope of tax services than an EA can. What’s more, general population demand is greater for CPAs than EAs.
If you have accounting needs with a micro focus, working with an EA could be the perfect fit for you. On the other hand, if you are interested in accounting practices that have nothing to do with taxes, such as auditing, then the CPA option may be best.
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 that you have a solid handle on your finances and measure your expectations.
Tips for Managing Your Taxes
- Consider visiting with a financial advisor before speaking with a CPA or EA, so you know exactly where you stand at the onset. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- A free, easy-to-use tax return calculator can tell you how your income, withholdings, credits and deductions impact the amount due on your returns and any credit you may be entitled to.
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