When becoming a licensed tax professional, most consider choosing among two well-known paths – CPA (Certified Public Accountant) or EA (Enrolled Agent). Both certifications are great and will assist you in getting a good job, promotions, and earning a reasonable income. While you might consider them to be the same, there is some basic difference between the two, and you must choose the one that suits you the best.
Difference Between a CPA and EA
CPA – Certified Public Accountant
A Certified Public Accountant is a state-level accreditation awarded after completing 150 undergrad hours and a 4-part examination. The four main areas covered in the examination include Auditing and Attestation, Financial Accounting, Business Environment and Concepts, and Reporting and Regulation. Every individual must clear all four disciplines before being awarded the certification.
Taxation is covered under the Regulations section and is considered an essential component of the overall certification. Because the accreditation is state-level, you can only practice within a specific jurisdiction. A CPA and an EA need to keep high ethical standards.
EA – Enrolled Agent
An Enrolled Agent has a federal license, which makes them eligible to represent clients in front of the IRS. Because the IRS approves their license, they can work anywhere in the country without any restrictions. They must, however, clear a comprehensive three-part examination that deals with areas like Businesses and Representation and Practice and Procedures. Everything about taxes is covered in these subjects. You can also become an enrolling agent if you have worked in the IRS at a position where you had to apply the tax code as part of your job. The IRS often performs a background check into your finances and tax liabilities before granting the license.
The difference in career paths
A CPA and EA have a considerably varied career paths as they are required to perform to the best of their skill set. The career choices for a Certified Public Accountant are far greater than an Enrolling Agent as they can work for the government, the private sector, individuals, and other organizations for managing their financial matters as well as tax filing. An EA, on the other hand, is a specialized professional who only deals with issues related to taxes, which results in a limited career path. However, an enrolled agent will take care of tax needs better than anyone else.
The difference in the amount of time
It takes around 7-8 years to become a fully functional Certified Public Agent because you are required to complete 150 credit hours before sitting for the exam. In some states, you may have to gain some experience by working under a licensed CPA for a certain period. After that, you have 18 months to take the exam, which already has an extremely low pass percentage. Even if you do everything right and do not waste any time, it will still take you around eight years to become a professional Certified Public Agent.
On the other hand, becoming an EA requires far less effort as you only must clear the three-part examination. If you have enough experience working with the IRS, you may even be exempted from the examination and given the license directly. However, you will have to provide proof of a proficient record in handling tax-related issues.
The difference in salaries
Typically, a CPA would earn more than an EA. However, that entirely depends on where you fall on the career continuum. An enrolling agent with significant experience under their belt could earn more than a Certified Public Agent. However, being CPA offers better career growth and advancement opportunities. The yearly median salary for a professional accountant is close to $62,000, while it is around $49,000 for an agent.
One drawback of being an EA is that the income seems to flatten out once it reaches a certain peak. While for public accountants, there is no such limit, and they can even become the CFO (Chief Financial Officer) of an organization.
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