Many people maybe wondering what exactly is the difference between an enrolled agent and a CPA. And if they both handle tax accounting questions and preparation, why is there two different types of certification if you will. You also will likely be wondering, how you can become an enrolled agent or CPA and which one is more popular and has better job opportunities. Hopefully by the end of this article, you will have a better grasp on the differences between EA’s or enrolled agents and CPA’s.
Enrolled Agent vs CPA: What’s The Difference Anyway?
When it comes to handling tax matters, individuals and corporations either will hire a Certified Public Accountant (CPA or enrolled Agent (EA) to handle their tax related matters. Both CPA’s and EA’s have to demonstrate their proficiency and are either licensed at the state or national level.
An EA is an individual who is licensed and can act as an agent on behalf of individuals or corporations before the IRS. In order to become an EA, all you must do is pass the Special Enrollment Examination (SEE), which is a three part exam that covers many individual and corporate tax questions. While it is generally recommend that you have some accounting or finance related education or work experience, the fact of the matter is there are no formal requirements necessary to obtain your EA certification.
Generally speaking, individuals who pass the EA exam can expect to either work for a tax advising company or run their own individual practice and work on behalf of a number of clients. Not only is obtaining an EA certification a lot easier than earning a CPA license, but it’s also a great way to get some formal experience in the accounting field, before deciding whether to obtain your CPA license.
Enrolled Agent Work From Home
One question some accounting professionals have, is whether there is more opportunity to get work from home jobs or consulting work, if they obtain their Enrolled Agent or CPA license. Of course it is going to vary between each job seeker, but overall there is more opportunity for enrolled agents to find consulting and work from home opportunities, since they are able to practice on a national basis. Whereas, while there are indeed telecommuting or work from home job opportunities that Certified Public Accountants can find, generally since they are licensed on a state by state basis, there isn’t going to be as many opportunities available.
Also there are a lot of advantages working for a CPA or tax advising firm and going to work at an office everyday, especially if you are just starting out. For starters, you will be able to interact with colleagues more readily and if you need help with a particular matter, you can easily ask your fellow coworkers.
Do CPA Firms Hire Enrolled Agents
One question many people have is if they can still get a job at a CPA firm, if they only have their enrolled agent certification. In general most CPA firms will not hire you directly if you only have your enrolled agent certification. Of course there is always exceptions to this rule, but generally CPA firms will want you to either have your CPA license or be working towards getting your license. That said, if you are looking to get an internship at a CPA firm while you are still in school, then obtaining your enrolled agent certification can certainly help your chances of obtaining an internship. Also, if you already have your CPA license, also obtaining your enrolled agent certification or similar professional certification is a great way to set yourself apart from other candidates.
Certified Public Accountant’s – CPA’s
CPA’s on the other hand, are individuals who have at a minimum an undergraduate degree, will have over a dozen hours of formal classroom accounting experience and will have passed the grueling CPA exam. Not only that, but they will have to demonstrate their ability, under the direct supervision of an active, licensed CPA in order to work on their own.
Certified Public Accountants, generally will work at corporations or for accounting firms, providing audits and record keeping for companies. Many individuals who obtain their CPA license, will work full time for a company as a CFO or part of a companies finance department and work on a variety of accounting and finance areas, and general operational reports necessary for the business.
Due to the additional educational requirements, and experience CPA’s can expect to earn a fair amount more than EA’s. However, that said, there are certainly enrolled agents out there that keep incredibly busy and do make more than some CPA’s.
The average salary EA’s can expect to make is between $40,000 – $55,000 a year once they have obtained their certification. On the other hand, CPA’s can expect to earn between $70,000 – $120,000 a year, depending on their experience and type of work they perform. Additionally, if a CPA is employed by a larger corporate as their CFO, with stock options and salary and other bonuses, CPA’s can earn significantly more than $120,000.
It is also important to consider the recognition of earning your CPA license vs EA certification. Overall, individuals and corporations all know and recognize CPA’s, it is one of the leading ways to demonstrate your familiarity with accounting principles, auditing and tax preparation. Whereas, less individuals and even fewer employers recognize the value and experience of enrolled agents, and many companies will favor a CPA over an EA. So, when you are trying to evaluate the differences between ea vs cpa salary, you not only want to consider entry level salary expectations, but also how much more you may make over your career by obtaining your CPA license.
To wrap things up, you maybe wondering if you should obtain your EA certification or CPA license. If you already have a CPA license, then most definitely you should take the EA exam, it’s not that difficult and there are a number of EA review training programs on the market, that will help you prepare, such as the Gleim EA Review or Fast Forward Academy EA Review courses.
If you don’t have your CPA license or EA certification, and are wondering which to obtain, it will depend on your circumstances. If you have a four year undergraduate degree in an accounting or finance field, and only require a few more additional hours of accounting credits, then preparing and obtaining your CPA license can open more doors. Of course, if you only want to handle tax prep matters and don’t see yourself doing audits and compiling general accounting and financial reports, then the enrolled agent exam would be better suited for you. Also consider the type of job or career expectations you may have, for instance if you want to work for an accounting firm, chances are they will require you have your CPA license or require you obtain one within at least one year of working for them. While some EA’s do work at accounting firms, it’s fairly rare and they generally have decades of experience and come highly recommended in the field.