EA vs CPA – From working in management to becoming tax professionals, accounting students have plenty of options when it comes to credentials and specializations. We’ll talk about two of the tax related credentials, the Enrolled Agent (EA) and Certified Public Accountant (CPA), explain how they’re different, and help you decide which credential is right for you.
What Area Do You Want to Practice?
Which credential you get is highly dependent on which area you want to practice. The two general areas accountants go into right out of school are audit or tax, although there are plenty of areas accounting professionals can go in to.
If you’re interested in going into audit, or aren’t sure which route you want to take, the CPA license is the better option. It opens doors to more career choices compared to the EA credential because CPAs can work in audit, tax, industry, government, not-for-profits or for themselves. However, as we’ll cover below, the path to becoming a CPA is more challenging than that of an EA.
EAs are federally licensed tax professionals who can legally represent taxpayers before the IRS. They specialize specifically in tax issues. Given this definition, it makes sense for accountants interested in working specifically in tax to become EAs. It’s worth it to note that CPAs can also specialize in tax and represent taxpayers before the IRS, but time restraints and career specialization may make becoming an EA the better option.
Both CPAs and EAs will see salary benefits after becoming licensed. However, CPAs generally earn more over the course of their career: the average salary for a CPA is $62,410 per year while the EA average salary is $49,291.
Licensing Commitment Differences
The CPA credential takes a significantly bigger commitment than the EA credential and is specific to each individual state. To become a CPA, students must complete 150 hours of college credit, with a specific number of units covering accounting and business concepts. CPAs must also pass all four parts of the CPA exam (Auditing and Attestation, Financial Accounting and Reporting, Business Environment and Concepts, and Regulation) within an 18-month window. Each section of the CPA exam has around a 50% pass rate, and the rate for passing all four parts of the exam in a row is between 10 and 20%. CPAs must then gain a certain amount of work experience hours, depending on their state, under direct supervision of a CPA. Between school an work experience requirements, the time commitment to become a CPA is around 6-7 years. CPAs are regulated on the state level, and have to apply for licensure in other states should they change locations or work in multiple states.
The EA credential requires passing a three-part exam administered by the IRS before applying for licensure. Alternatively, candidates can become licensed if they work for the IRS in a qualified position for five years. An EA is a nationally recognized professional, meaning he or she does not have to become re-licensed in different states. Despite the lower salary, if you’re interested in working specifically in tax and don’t have the ability to commit 8 years to becoming credentialed, the EA credential is a great option.
Which Should I Go For?
Being either a CPA or an EA will put you in a class of elite professionals and make you stand out from the crowd. It really boils down to how much time you’re willing to commit to a credential and what area of practice you’d like to go into. If you want to specialize as a tax professional but don’t want to tackle the CPA exam or licensure requirements, the EA route is perfect for you. But if you aren’t sure which practice area you’d like to go into or want to try a few different roles, the CPA credential is the better option. Do your research, and find out which credential fits your career goals and time restraints.