What is a CPA or Certified Public Accountant?
A Certified Public Accountant (CPA) is an accounting professional who has completed a minimum of three years of college education and is certified in accordance with strict guidelines. To obtain a CPA license, an individual must pass a 14-hour state accountant exam and complete an additional 40 hours of professional training each year to maintain their license.
CPAs are skilled in taxation and are authorized to prepare audited financial statements, a service that ordinary accountants cannot provide. Investors in publicly traded corporations receive these income statements and balance sheets.
Similar to solicitors in the United States, CPAs are limited to offering services within their licensed jurisdiction. To become a CPA, candidates must also have spent at least eight years under the direct supervision of another CPA.
What is an EA or Enrolled Agent?
An enrolled agent, sometimes known as an EA, is a tax preparer who specializes in the management of corporate or private entity tax arrangements. Aside from tax returns, the EA is knowledgeable in the following areas:
- Income Tax
- Payroll Tax
- Estate Tax
- Retirement Tax
- Non-Profit Tax
To become a government-recognized tax specialist, an individual must pass a qualifying exam to become an Enrolled Agent (EA). The revenue authorities regard Enrolled Agents as having a higher level of expertise in tax matters than Certified Public Accountants (CPAs). Enrolled Agents are authorized to represent their individual or business clients during tax collection, audits, and appeals.
The Main Difference
Both types of data serve an important purpose, with one being regulated at the state level and the other at the federal level. To embark on a career as a Certified Public Accountant (CPA), individuals must complete 150 hours of education and successfully navigate the four parts of the CPA exam, which encompass Financial Accounting and Reporting, Auditing, Business Environment and Concepts, and Regulation. The CPA designation is issued by individual states, which helps to define its practice within those jurisdictions; however, there are opportunities for reciprocity in specific situations. CPAs and Enrolled Agents (EAs) are both committed to upholding high ethical standards in their professional conduct.
Enrolled Agents are recognized as federal tax specialists, equipped with the authority to represent taxpayers before the Internal Revenue Service (IRS) without any restrictions. To qualify as an EA, candidates can either pass a rigorous three-part examination that thoroughly covers the tax code—addressing individuals, businesses, and representation practices—or they can gain relevant experience by working for the IRS for a minimum of five years in a role that involves explaining and implementing tax code provisions. Furthermore, all EA candidates must successfully complete an IRS background check that includes a review of their personal tax history, ensuring a commitment to ethical practices within the field.
EA vs. CPA career path difference
As a registered agent, you specialize in tax matters, such as preparing taxes for individuals and businesses or advising customers. Tax preparation franchises and working for a CPA are good options for you. A CPA’s job options are substantially broader, and they can work for the government, the business sector, or people. CPAs hold positions such as CFO, controller, tax specialist, and auditor, to name a few. CPAs can perform for the government, large and small businesses/corporations, non-profit organizations, or independent contractors.
EA vs. CPA time differences
To become a Certified Public Accountant (CPA), you typically need to invest around 8 to 9 years in education and work experience. Before you can take the CPA exam, you must complete 150 hours of academic credit. Keep in mind that the pass rate for the CPA exam is very low, and you have only 18 months to pass all four parts of the exam. If you live in a region that requires two years of professional experience and utilize the full 18-month testing period, you should expect a total commitment of about eight and a half years.
In contrast, becoming an Enrolled Agent (EA) takes less time. To qualify, you must pass a three-part IRS exam before applying for a license to practice. It’s possible for the IRS to waive this exam requirement if you have relevant experience. Many individuals seeking EA status often have a background in tax preparation and have previously filed tax returns.
While both CPAs and EAs possess extensive knowledge of tax regulations, their requirements differ. CPAs typically need to complete accounting coursework at a college or university, meet specific experience requirements, and pass the Uniform Certified Public Accountant Examination. However, the exact qualifications can vary by state or jurisdiction.
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