It's clear you want to be the best you can be, professionally, and a big part of unlocking your potential in the accounting industry is earning certain certifications. Many accountants want to become certified public accountants (CPA) while others have their sights set on becoming an enrolled agent (EA). But which one is right for you?
The decision depends on a lot of different factors, such as deciding what kind of colleagues and clients you want to work with and which areas of accounting interest you the most. It's helpful to compare the differences between a CPA and an EA so you can decide which one is the best choice for your career.
Job description for a CPA
Certified public accountants are consultants for a range of topics related to money management, taxes, financial services and other accounting areas. Their clients may include businesses or individuals who need help in financial planning. CPAs are experts in a broad range of accounting and finance-related topics and are certified by a state.
Job description for an enrolled agent
The federal government oversees the licensing of EAs and with this title, EAs can represent clients before the IRS. Enrolled agents are more specialized than CPAs, as their professional skills center on taxes for individuals and businesses. Almost every aspect that relates to taxes can be handled by an EA, from estate taxes and retirement taxes to corporate taxes. EAs can represent individuals and businesses with the IRS if they are facing an audit. EA credentials are awarded by the IRS and are effective in every state.
Comparing EAs and CPAs
There are pros and cons attached to each type of certification. Both EA and CPA certifications can enhance any accountant's career, but it's important to look at the differences between them to properly compare.
Education and certification
One of the key differences between a CPA and an EA is what it takes to earn the designation. A CPA applicant must meet all the education requirements as outlined by their state, then pass the CPA exam. EA applicants must pass all three parts of the Special Enrollment Examination (SEE) or have five years of experience as an IRS employee in a tax-facing field.
The CPA exam is four 4-hour tests that cover Financial Accounting and Reporting (FAR), Auditing and Attestation (AUD), Business Environment and Concepts (BEC), and Regulation (REG). Applicants have 18 months to pass all four exams. Some states also require an ethics exam.
The EA exam is a three-part test that each consist of around 100 multiple choice questions. The sections include Individuals; Business; and Representation, Practice and Procedures. Applicants have two years in which to pass all parts of the exam.
Eligibility to practice
CPAs can only practice in the state they are certified in, while EAs can practice in all 50 states because their license is awarded at the federal level. EAs are not as common but as clients recognize their specific skills, the demand is growing. CPAs are widely known in the business and accounting world.
CPAs offer more broad accounting services while EAs specialize in tax issues. For accountants who really want to focus on tax issues, the EA is the way to go. EAs usually do not branch out into other areas of accounting that are not tax related. CPAs can focus on taxes as well as other topics that have little to do with taxes, such as corporate finance or auditing.
On average, CPAS make more money than EAs annually. A CPA’s average salary is around $62,000 while the average EA salary is around $50,000. As with any salary reporting, a lot depends on various state and regional differences, which have an impact on both clients and earnings.
There's no wrong answer when it comes to deciding whether it's best for you to study to become a CPA or an EA. Both are prestigious positions that will give you a lot of additional income per year. When you look at the differences and similarities between a CPA and an EA, you can see that either one will help you achieve your professional goals.
Interested in learning more about the salary outlook for accountants? Check out this blog post.