Enrolled Agent vs CPA: Which One Do I Need?
The financial field is full of acronyms, from AIR and APR to CD and ETF. When discussing financial help for your business, CPA and EA are two acronyms that may emerge, commonly listed side-by-side or used interchangeably.
While CPA stands for certified public accountant, EA refers to an enrolled agent. However, these two financial professionals differ, and this can cause confusion! If you run a small-to-midsize business and are looking for financial assistance, who should you reach out to? Is a CPA or EA best for your needs?
In this blog, we hope to clear up any confusion on the enrolled agent vs CPA mix-up. In our matchup between the EA and CPA, we define each financial professional and describe their specialties, qualifications, and costs, helping you determine who is best for your organization’s financial needs.
Enrolled Agent vs CPA
We will compare EAs and CPAs with three primary criteria: professional specialties, qualifications for practice, and cost-to-hire.
#1. The Enrolled Agent (EA)
Enrolled agents specialize in tax preparation for both individuals and businesses. EAs represent taxpayers before the IRS.
Enrolled agents are licensed by the IRS.
According to the IRS, EAs can earn their position via two avenues: passing a comprehensive test that includes individual and business tax returns or “through experience as a former IRS employee” for at least five years. The status of enrolled agent “is the highest credential the IRS awards.”
Moreover, the position of EA must be maintained. First, all EAs must operate by rigid ethical standards. Second, EAs must complete 72 hours of continued education every three years.
The IRS continues, “Enrolled agents… have unlimited practice rights. This means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before.”
Thus, while an EA’s expertise only includes tax preparation, their representation rights are unlimited.
The cost to hire a financial professional will fluctuate by experience. However, the average hourly rate for an EA ranges from $12 to $55.
#2. The Certified Publish Accountant (CPA)
Some CPAs specialize in specific areas, like taxation or estate planning. Most have a broad range of accounting, tax, and financial expertise.
Is there a difference between a CPA and an accountant? Yes! While all CPAs are accountants, not all accountants are CPAs. CPAs are trained to perform a wide variety of services beyond an accountant’s expertise, including business consulting, financial planning, auditing, and litigation consulting, and tax preparation.
CPAs also have unlimited representation rights. Additionally, CPAs are licensed by state boards of accountancy, including U.S. territories and the District of Columbia.
Every state has unique requirements for eligibility, but most CPAs earn their title in four steps:
- Accounting Education: Most states require 150 hours of collegiate accounting classes. Sometimes, prospective CPAs chose to pursue a graduate degree, but the degree is not a requirement.
- Work Experience: Some states require on-the-field accounting experience. This requirement is often not extremely long, often about a year.
- CPA Exam: Like EAs, prospective CPAs must pass a rigorous, 4-part exam before earning their prestigious title.
- Ethics Training: Finally, CPAs are called to a high standard of character. Thus, many states require some form of ethics training or ethics exam.
Once these steps are successfully completed, the CPA is ready to begin work in his or her financial field of choice. To maintain an active license, CPAs must complete certain levels of continued education.
The average hourly rate for a CPA is more varied than an EA. Depending on years of experience, rank within their firm, etc., a CPA may charge between $30 and $500/hour.
What About Attorneys?
In the discussion of financial professionals with unlimited representation rights, we must mention attorneys. Could an attorney substitute for an EA or CPA?
Attorneys have undergone rigorous education including earning a law degree and passing their state’s bar exam. However, though some attorneys specialize in tax preparation and planning, most offer a range of other services and are often not the first choice for financial guidance.
Who Should You Work With?
Both enrolled agents and CPAs are knowledgeable professionals, trained to deliver helpful financial guidance. However, one is likely better suited for your financial needs.
Do you need specific taxation guidance?
Both EAs and CPAs are qualified to provide specific taxation guidance. However, EAs are specifically suited to offer guidance for taxes. If budgetary concerns are a factor, an EA is likely the best decision.
Are you looking for general financial assistance?
CPAs can provide a wider scope of financial service than EAs and should be selected in this case. According to one financial resource, CPAs are “equally qualified to do the work of an EA,” have a broader skillset, and have greater “general population demand.”
Do you need financial help that has nothing to do with taxes?
In this case, an EA is not an option. A designated CPA may be able to help your unique financial needs.
Do you need help keeping financial records and managing business funds?
For these tasks, you may neither need an EA nor a CPA. For keeping detailed financial records and managing fiscal resources, a bookkeeper is an excellent option. A remote bookkeeper is cost-effective, flexible, and experienced to help your organization manage your fiscal resources.
MyRQB: Outsourced Financial Professionals
Are you still unsure which financial professional would provide the best assistance for your needs? We recommend doing your own research, reading Google reviews, and getting in touch with the prospective financial professionals.
At MyRQB, we offer outsourced bookkeeping services for small-to-midsize businesses who need time to focus on the fundamentals of running a company. Our highly-trained team of professionals take on the complexities of financial management and record keeping, working closely with the businesses we serve.
Our mission is to provide cost-effective, accurate, and efficient service – 100% of the time. If you’re interested in getting in contact with our team, give us a call at 866-567-4258 or complete our online contact form. A specialist will be in touch shortly!