Why should A CPA consider becoming An Enrolled Agent?
Are you a CPA looking to capitalize on the hot job market? If it is true, then you must know how earning the Enrolled Agent designation can be the most effective way to make the next step in your career.
Although, we understand that earning an additional designation is a daunting task, especially for CPAs who practice. So, to make your journey from choosing EA designation as a career to becoming an enrolled agent easier, we have this guide for you.
Before you decide to become an EA, read this article!
Certified public accountants (CPAs) are accounting professionals who prepare, record and analyze financial documents. They are accounting professionals who have passed the CPA Examination and met state licensing requirements to earn the CPA designation.
CPA is professional designation that allow accounting professionals to be more flexible and mobile. A CPA is typically only licensed in one state, but reciprocity laws permit them to become licensed in other states as well.
Auditing and review
Tax preparation and consulting
Consulting services
Financial planning
Litigation consulting
Public Accounting: Licensed CPAs work for a variety of clients and provide accounting, auditing, tax, and consulting services. In addition, there are the following roles that are commonly performed:
Budget analyst
Tax examiner
Business systems analyst
Business, Government, and Not-for-Profits: The CPA profession spans a wide range of positions, from staff accountant to financial analyst, to CFO. In addition to recording, analyzing, and reporting financial information, their responsibilities also include maintaining financial records. Besides budgeting, they can also perform internal audits. Roles that may be available include:
Staff-Financial Accounting & Reporting
Staff-Tax Accounting
Staff-Internal Audit
Specialist: In recent years, CPAs have been called on to provide specialized services. Specialization determines what kinds of roles are available, what sort of salary you'll earn, and what kind of environment you'll work in. Finding a specialty you truly enjoy and following your interests is the best way to succeed. By conducting risk assessments and analyzing and implementing system improvements and revisions, information systems specialists assist organizations in managing their information technology, including the massive amounts of data collected.
Forensic Services: CPAs who specialize in forensic accounting investigate fraud, bribery, money laundering, and embezzlement. By collecting and examining evidence, they enable the courts to determine if a crime has been committed or a dispute has been resolved.
Financial Advisor: In addition to providing financial advice to individuals, CPAs also assist them in making informed financial decisions regarding home purchases, college savings, business startup, and retirement planning.
An enrolled agent (EA) represents taxpayers before the Internal Revenue Service (IRS) as authorized by the United States government. To become an EA, you must pass an exam. Along with this, you must have sufficient experience as an IRS employee.
In general, enrolled agents are available to help clients throughout the year. EAs often develop strategies for dealing with IRS matters as part of their job duties. EAs help their clients to reach satisfactory agreements about payment plans, estimations, and settlements.
As an enrolled agent, you should be prepared to perform the following duties:
A CPA who becomes an Enrolled Agent can expand their practice beyond traditional accounting and taxation. The Internal Revenue Service (IRS) allows EAs to represent taxpayers in matters such as audits, appeals, collections and EA accounting.
The Enrolled Agent credential can lead to a variety of professional opportunities. Tax consulting, tax planning, and tax representation are possible careers for CPAs with an EA degree.
A tax specialist, an Enrolled Agent is knowledgeable about tax laws and regulations. In addition to tax planning strategies, IRS regulations, and compliance requirements, this expertise can enhance a CPA's understanding of complex tax issues.
Enrolled Agents are the only professionals recognized by the IRS. Regardless of where the IRS office is located, they can assist clients with all tax issues, including audits and appeals. When dealing with tax authorities, this authority enhances a CPA's credibility.
It is possible for CPAs to operate an independent tax practice after becoming an Enrolled Agents. As a sole practitioners, EAs can provide tax services to clients, work as consultants, or establish their own tax firms. With this independence, you are able to control your work schedule and client base, as well as make business decisions independently.
EAs and CPAs both undergo similar training. There are basically the same steps, but you need to fulfill the requirements differently. Check out how CPA vs EA requirements differ.
Enrolled Agents - A person can either become an enrolled agent through the EA exam, also known as the Special Enrollment Exam (SEE), or by working previously at the IRS. A tax experience of several years makes passing the exam considerably easier. However, there are no prerequisites for taking the exam. The exam can be scheduled and taken as soon as you have obtained a Personal Tax Identification Number (PTIN).
The IRS requires candidates to pass a background check, submit an application, and pass a three-part test to become an EA.
Certified Public Accountants (CPAs) - CPAs, on the other hand, must pass a four-part examination in addition to meeting education and experience requirements. There are no differences in the exam no matter where you take it, but each state has different requirements as far as education and experience go. Public accounting positions generally require a bachelor's degree and two years of experience.
The estimated salary for enrolled agents is between $43,300 and $65,600 per year
The annual salary of a CPA usually ranges from $52,800 to $83,800.
The average CPA earns more than an EA, and CPAs enjoy increasing earning potential as they advance in their careers. While tax season is a time when enrolled agents have the opportunity to earn extra income, there are also some disadvantages. Along with this, CPA and enrolled agent salaries also depend on their experience and knowledge.
According to the reports enrolled agents typically earn between $50K to $85K per year
Whereas CPAs typically earn between $105K to $175K per year.
In deciding whether to study to become a CPA or an EA, you don't have a right or wrong answer. There is a lot of additional income you can earn per year from both of these positions. Despite the differences and similarities between CPAs and EAs, both can assist you in reaching your professional goals.
If you're considering a whole new career path or already working as a tax preparer, becoming an Enrolled Agent (EA) is a great choice. The following are the reasons why becoming an enrolled agent could be the best thing you can do for your career as a tax professional!
An EA is the only credential given out by the IRS. The IRS and taxpayers will view you as a credible resource if you receive a passing score on the three-part Enrolled Agent exam. You earned the EA status after spending hours studying tax forms and regulations.
You have the knowledge of tax matters to instill trust in American taxpayers if you pass the Special Enrollment Examination. Among the highest standards for this credential are enforced by the National Association of Enrolled Agents (NAEA). Getting certified as an enrolled agent requires substantial training that earns you higher responsibilities and respect in the tax industry.
Tax codes are constantly updated by the Internal Revenue Service to reflect changing economic and political conditions. Since EAs deal with tax laws every day, they need to stay on top of them. Thus, you are already included in the IRS's National Database of Credentialed Preparers. The IRS Annual Federal Tax Refresher Course is required for other tax preparers to demonstrate compliance with regulations. It's not necessary for EAs to do so! As a result, you'll already have good relations with the IRS.
Despite the fact that income taxes will not go away anytime soon, enrolled agents will always be needed. Since the American Civil War, enrolled agents have been providing competent representation to American taxpayers and protecting their rights. EAs are considered to be the pinnacle of the tax profession, so they can provide a wide range of services beyond tax preparation.
The role of an enrolled agent will never go away because income taxes aren't going anywhere any time soon.
People are increasingly seeking help with their tax obligations due to the current economic climate. It is difficult for any person to comprehend the complicated tax laws and the detailed regulations surrounding them. There is an increasing need for enrolled agents as IRS enforcement activities increase. Enrolled Agent salaries have increased as a result of the increase in demand for Enrolled Agents.
There are some tax preparers who do not have the right to represent clients. Enrolled agents, CPAs, and attorneys are restricted from participating in this program. In addition to audits, payment/collection issues, and appeals, you also have unlimited representation rights before the IRS.
Tax preparers who are enrolled can take on much more responsibility and provide a broader range of services. It goes without saying that higher salaries come with more responsibilities.
It includes helping customers with audits, representing them at IRS appeals offices, preparing and filing documents on their behalf, corresponding directly with the IRS, attending hearings or conferences, and providing written advice on business transactions' tax implications to third parties.
Having the opportunity to work as an enrolled agent is both a challenge and a rewarding experience. People will appreciate what you do because you save them money. There are cases in which you can prevent people from having to deal with some serious tax problems as well.
"If you enjoy helping people, then being an enrolled agent may be an enjoyable and rewarding career choice."
It is not everyone's cup of tea to help people navigate the intricate tax system simply because they lack the expertise. In addition to having the smarts and liking to help people, becoming an enrolled agent could be a rewarding and enjoyable career choice.
For CPAs passionate about tax law and helping individuals navigate the complexities of taxation, becoming an Enrolled Agent can provide a sense of personal and professional fulfillment.
CPAs and EAs are both valuable professionals in the accounting and tax fields, each with its own advantages and career opportunities. CPAs have a broader scope of services and generally higher earning potential, while EAs specialize in tax matters and have a more focused practice. Furthermore, becoming an EA typically requires fewer educational and experience requirements compared to becoming a CPA. This can make the path to becoming an EA more accessible and less time-consuming for individuals who are primarily interested in tax-related work.
The decision to become an Enrolled Agent depends on the career goals and specialization of the accountant. An EA credential can benefit those who want to specialize in tax planning, preparation, and representation. By doing so, they will be able to offer clients specialized tax services and expand their professional opportunities.
Both CPAs and Enrolled Agents have the authority to represent clients before the IRS. They can handle tax matters, such as responding to IRS notices, representing clients in audits or appeals, and negotiating tax settlements. However, CPAs may have broader representation rights depending on the state they are licensed in.
Jason Dinesen (LPA, EA) is an entrepreneur, tax expert, and CPE Presenter. Dinesen brings over 15 years of experience helping individuals and businesses with accounting, bookkeeping, tax preparation, and business advisory in various industries. Dinesen is a regular CPE Presenter at MYCPE ONE. He has coached more than 200k+ accounting, taxes, and HR professionals on various topics of accounting, individual taxation, corporate taxation, and professional ethics. Jason has developed a strong following within the professional community for tax-related subjects. Dinesen is known for sharp tax interpretations, and he quickly brings his analysis of the latest tax updates and IRS guidance to the professional community.
