Selecting the right tax professional is a major decision for any individual or business owner. We all know that tax laws become complex with each year. So, the debate over ‘Which is better, EA or CPA?’ must be prioritized if you are seeking expert financial guidance.
Both professionals are highly qualified. Their areas of expertise, licensing, and day-to-day focuses differ significantly. Therefore, L&Y Tax Advisors further elaborates which is better, EA or CPA – so you can choose the right expertise.
Who is an Enrolled Agent?
An Enrolled Agent (EA) is a federally authorized tax practitioner who has earned technical expertise in the field of taxation. EAs are licensed by the Internal Revenue Service (IRS). They are the only tax professionals who receive their credentials directly from the federal government.
To earn the title of an EA, pass a rigorous three-part comprehensive exam. This exam covers individual and business tax returns. Also, gain experience working for the IRS.
The main focus of EAs is 100% tax-based. It ranges from preparation to representing taxpayers in audits and appeals.
Who is a Certified Public Accountant?
A Certified Public Accountant (CPA) is a professional licensed by a state board of accountancy. They are well-versed in tax law. But, their training is much broader that covers:
- Auditing
- Financial reporting
- Forensic accounting
- Business law
To become a CPA, you need:
- A bachelor’s degree
- A specific number of higher-education credits
- Success in a challenging four-part national exam
CPAs are considered strategic financial partners who can manage the entire fiscal health of an organization.
Read: VAT number explanation for US citizens.
EA vs. CPA
To better comprehend which is better, EA or CPA, know that the main difference lies in the scope of practice.
EAs are ‘tax-specific’ experts. Their license is federal. They can practice across all state lines without restriction when dealing with the IRS. For deep-dive tax resolution and specialized IRS advocacy, hire an EA.
CPAs are ‘generalist’ accounting experts. They can certainly handle taxes. They are also authorized to perform audits and provide ‘attest’ services. This is something an EA cannot do. If you need a professional to certify your monetary statements for a bank or the SEC, a CPA is required.
Which is Better, EA or CPA?
Neither EA nor CPA are better because both professionals fulfill different responsibilities. Besides, their expertise cannot be entirely comparable. Therefore, the answer to ‘Which is better EA or CPA?’ depends entirely on your specific needs.
An EA is an excellent and more cost-effective choice if your major goal is:
- Tax compliance
- Minimizing tax liability
- Resolving an issue with the IRS
A CPA is better suited if you require comprehensive:
- Business consulting
- Audited financial statements
- High-level corporate planning
Read: What is a tax district?
The Bottom Line
So, which is better, EA or CPA?
Neither credential is ‘better’ in a vacuum. They serve different purposes. The most successful taxpayers are those who match their professional credentials to their particular monetary challenges.
Whether you choose an EA for specialized tax focus or a CPA for broad accounting authority, ensure that they stay updated on the latest federal and state regulations. This can be the ultimate key to your success.
