When it comes to accounting, 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 financial needs intelligently. 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). Below we guide you through the EA vs. CPA comparison so you can make the best choice.
A financial advisor can help you maximize the tax efficiency of your investments, as well as assist you in creating and carrying out a financial plan.
What Is an Enrolled Agent?
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 passed their qualifying exam, the federal government recognizes them as tax specialists. An EA’s typical responsibility includes representing his or her clients—businesses or individuals—before the IRS on issues of audits, appeals or tax collection. An EA is the highest credential the IRS awards. A professional with this designation typically makes $15,000 to $20,000 more than CPAs annually. You’ll want to seek out an EA for any and all tax-related issues, as they’re the uncontested experts on such topics, according to the IRS.
What Is a CPA?
In the EA vs. CPA match-up, CPAs have a more flexible and expansive repertoire than EAs. States approve CPAs, while the federal government approves EAs. CPAs typically do most of their work for public accounting firms of all sizes. They don’t just specialize in any one sector of accounting. Rather they can assist as advisors and consultants for all accounting, tax and financial services for the businesses, individuals and other organizations they may represent. CPAs help their clients set and achieve their financial goals through money management and financial planning. These goals could be anything from putting down a payment for a home to opening a new branch of business across the country. CPAs are the go-to if you’re looking for a broad scope of expertise.
EA vs. CPA
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|
Which One Should You Work With?
When making the EA vs. CPA consideration, you’ll realize both types of professionals are well-qualified. Both can bring you the financial guidance you may need when it comes to taxes. However, which one you should consult depends largely on what issue you’re looking to resolve. CPAs are equally qualified to do the work of an EA. The main difference comes in the range of services each offers. 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.
The Bottom Line
When examining the EA vs. CPA choice, you can rest assured both types of professionals are well-trained. They must pass rigorous exams and can do difficult and demanding work for clients. Because tax attorney fees can often climb well into the four figures, the existence of both CPAs and EAs can be a godsend for those on a budget looking to figure out their tax obligations. Be sure that if you choose to consult with either type of professional that you go in with realistic expectations and a solid handle on your finances.
Tips on Filing 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 great financial advisor doesn’t have to be hard. SmartAsset’s financial advisor matching tool can set you up with a top-notch financial advisor in your area within minutes. If you’re ready, 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.
Photo credits: ©iStock.com/sanjeri, ©iStock.com/xavierarnau, ©iStock.com/lovelyday12