CPA vs. EA: Exploring the Key Variances in These Top Financial Experts

When it comes to overseeing your taxes, it’s important to know who you’re working with. There are two types of professionals who specialize in tax preparation: Enrolled Agents (EAs) and Certified Public Accountants (CPAs). While both EAs and CPAs can prepare tax returns and provide tax advice, there are some key differences between the two.

First, let’s talk about EAs. EAs are licensed by the IRS to represent taxpayers before the IRS, which means they can assist with audits, appeals, and collections as well as prepare tax returns. They have passed a comprehensive three-part exam on tax law and must complete ongoing education requirements to maintain their license. While EAs can provide tax advice and prepare tax returns, not all are specifically trained in every area of accounting.

On the other hand, CPAs are licensed by state boards of accountancy and that licensing allows them to perform a wide range of accounting services beyond tax preparation, such as auditing, bookkeeping, and tax planning. They must pass the Uniform CPA Exam, and meet extensive education, and experience requirements set by their state board. The exam covers all areas of accounting and their continuing professional education requirements are more stringent.

Both professionals have the licenses required to prepare tax returns. And both professionals could also advise you about your bookkeeping if they have the training. The difference is the EA’s license does not cover accounting while the CPA’s does. On the other hand, an EA may have 20 years of keeping books in your industry while a CPA may have only two years. Whom you choose depends on more than their credentials.

Now, let’s talk about Nick. Nick was a small business owner who decided to hire an accountant to help him with his tax returns. He found an accountant who charged a lower fee and said they would help with advice. However, as time went on, Nick realized that his accountant was never available.

One day, Nick needed assistance categorizing transactions in his bookkeeping. When he finally got in touch with his accountant, they wanted to charge him for any consultation about it. Nick was frustrated and decided to seek the help of a different accountant.

He found an EA who was able to help him resolve the issue and provide him with advice on how to responsibly manage transactions in the future. Nick realized that the EA’s specialized knowledge would provide him with specific and accurate advice. In addition, this EA had tax preparation services that aligned with Nick’s business needs.

In the end, Nick learned that it’s important to work with a tax professional who has the right expertise for your needs. While both EAs and CPAs can provide tax preparation, and some can do bookkeeping and give you advice, neither is required to have a proactive, personal partnership with their clients.

So, if you need tax preparation or advice, make sure to do your research and find a professional who has the right credentials as well as the expertise for your situation. And, like Nick, don’t be afraid to switch accountants if you’re not satisfied with the service you’re receiving. It’s your money on the line!

Another way to help you stay on top of business and personal finances is to join the Accountable Community. It is a free resource to help you refocus through designing a personal wealth definition that declares what happiness means to you.

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About the Author

Lisa Sretenovic, CPA/CITP/CAAS/CGMA 

Lisa firmly believes that when businesses become more in line with their values and vision, they accelerate their impact and discover their missing velocity, resulting in a positive influence in their greater community.  

And that’s exactly what she’s been empowering entrepreneurs to do for over 3 decades! In her business as The Velocity Detective, she brings financial literacy to both the Wall Street and the Main Street and empowers CPAs to go beyond financial advising by developing proactive personal partnerships with their clients.  

She is also a speaker, author, coach, & volunteer with organizations such as SCORE, Texas Accountants & Lawyers for the Arts, and TXCPA, as well as a leader at Coach Connections.   

Lisa lives in Austin, TX with her husband, Milan.