Enrolled Agent vs. CPA: What Does a Career and Compensation Look Like?
Enrolled agents usually don’t work for a firm. They have their own clients and therefore can work at home with flexible hours. Many CPAs start out in audit firms, but as they accumulate experience, they can launch their own CPA firms and have their own clients.
According to Payscale.com, enrolled agents typically make between $33K to $80K a year, while CPAs make between $49K to $115K per year. Enrolled agents also have the opportunity to earn extra money during tax season. I have a reader who actually made more during those few months than he usually earns for the year in retail.
Finally, if you’re wondering how the IRS views enrolled agents and CPAs, the answer is that the IRS puts them on the same level.
Enrolled Agent vs. CPA: How Much Value Do They Add?
Both enrolled agents and CPAs can supply their clients with superior service. To prove it, let’s start by looking at how enrolled agents add value and then consider the assistance CPAs can provide.
The EA Advantage
Enrolled agents are tax specialists.
EAs work on tax matters only, so they can specialize in certain areas such as tax preparation or tax resolution. Therefore, CPAs who specialize in tax should consider obtaining the EA so they can display their tax expertise.
The EA designation is a federal credential.
Since the enrolled agent credential comes from the IRS and includes the unlimited right to practice on a federal level, EAs can work with clients who have filings all across the United States.
Enrolled agents are a more affordable option than tax attorneys.
Usually, enrolled agents can perform the same services as a tax attorney for a much lower price. For example, enrolled agents can represent their clients in civil resolution cases.
Taking the EA exam is faster than taking the CPA Exam.
As you probably remember, the EA exam only has three parts, while the CPA Exam has four.
Additionally, the questions on the REG CPA Exam section are harder than those on the EA exam. The REG questions don’t go into as much detail about tax, but they are more varied and complicated, partially because the CPA Exam contains multiple-choice questions and task-based simulations. The EA questions are easier, so most candidates only need a few months to pass the EA exam as opposed to the 12-18 months typically needed to pass the CPA Exam. In this case, the benefit of the EA exam is that the sooner you can get licensed, the sooner you and your clients can enjoy your improved status with the IRS.
The CPA Advantage
CPAs can handle both accounting and tax matters.
A CPA’s expertise mainly lies in accounting and auditing, but most can provide tax filing services as well. This combination is attractive to small businesses that need both audit and tax services, preferably from the same team.
CPAs can take a holistic approach for better tax planning.
For businesses, hiring a CPA is the more sensible option because someone who “knows the numbers” can make better tax plans.
