The difference between EAs and CPAs


What’s the difference and why would a professional pursue one versus the other? To begin, where these licenses come from vary. An enrolled agent (EA) is licensed at the Federal level by the IRS. CPAs are licensed by their individual state boards of accountancy. There can be some variation in rules from state to state in terms of requirements for a CPA license to be obtained, however for the most part the requirements are similar.

Enrolled agents are required to pass a three-part test that covers both individual and business tax issues. The exams focus heavily on tax and compliance rules and very little focus input on accounting, especially GAAP basis accounting.

The CPA exam is a four-part test that consists not only of tax law and compliances issues, but also focuses on auditing and attestation rules, general business and economics as well as financial reporting.

Both licenses are considered to have full ability to represent their taxpayer clients before the IRS.

In general, it is considered less time consuming and less difficult to obtain an EA license. With a smaller variety of topics that have to be studied for the exam it can make the examination process less cumbersome than the CPA license. Additionally, enrolled agents do not have an experience requirement to obtain their license.

Enrolled agents also have a less cumbersome continuing education requirement. EAs are required to obtain 72 hours of continuing education every three years as compared to the CPA requirement of 120 hours for their renewal.

So which one do you get?

The CPA license is still considered the premier public certification in the accounting industry. Because of its diversity in knowledge base and experience requirements, a licensed CPA often has the ability to work on both accounting and tax issues for their employers and clients. But not everyone is interested in the diversity, which often can be difficult later in your career when you start to focus on a particular specialty.

Both licenses are considered to have full ability to represent their taxpayer clients before the IRS.

Most firms, and most CPAs, at some point will choose a “concentration”, whether that be GAAP and attestation services or tax services. Even within those particular vocation choices, some will choose to funnel their niche down further into particular industries. The constantly changing laws and compliance regulations make it difficult for licensees to keep up with every possible industry and service area.

For those looking to focus specifically on tax, an enrolled agent license may be the preferred option. In general it will take less time to obtain this certification and because there is no experience requirement an aspiring enrolled agent may not be forced into a job change position in order to pursue their designation.

Whatever your choice, it is important to think about where you really want to see your license take you. The very first accounting professor I ever had in college told us that with a CPA license you could virtually have any accounting job and the variety of options was huge. That was the initial attraction for me. I wanted the ability to pivot my career as I continued to grow and learn what I enjoyed the most. But if that diversity isn’t your goal, focusing on an EA designation might be a better next step for your career goals.

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