Why You Should become an EA and not CPA?

In the field of tax and accounting, Enrolled Agent (EA) and Certified Public Accountant (CPA) are the two most prominent designations. Both designations have their merits and limitations. This guide here intends to illustrate why becoming an Enrolled Agent. Why could EA be a better choice for qualified professionals to begin their careers in the field?

In this article, we'll delve into the factors that set EAs apart from CPAs. How to become an Enrolled Agent, and the essential information to guide you on this rewarding career path.

Let's begin!

EA Vs CPA

We already know that both EAs and CPAs are licensed professionals, they both have the ability to handle tax issues for individuals and businesses. Then, how earning EA certification is the game changer for your professional career? Below are some reasons.

Authority:

• EA License has Nationwide Authority: The IRS, which is the federal government's tax agency, authorizes Enrolled Agent certification to operate nationwide.
• State level Authority: CPAs are licensed by any one of the 55 states in the U.S., limiting their authority to that state.

Educational & Experience Requirements:

• An EA does not require a college degree or professional experience. However, you must pass a three-part exam and complete a background check. 
• In order to become a CPA, you need a bachelor's degree in accounting and pass a four-part exam.

Time to become licensed:

• To become an EA, you need to pass the Special Enrollment Examination (SEE), which is a three-part exam. The amount of time it takes to prepare for and pass these exams can vary, but it can typically be done within a year or so.
• To become a CPA, you need to meet educational requirements (typically a bachelor's degree with a certain number of accounting and business courses), pass the CPA exam (a four-part exam), and often acquire professional experience in public accounting. This process usually takes several years.

Therefore becoming a CPA generally takes longer compared to becoming an EA.

Specialized focus:

The primary focus of an EA is tax preparation and representation. This means EAs have a deeper understanding of tax law and procedures than CPAs.

Earning According to Payscale.com:

• Enrolled agents typically make between $50K to $85K a year. However, Enrolled agents' main source of income is during the tax season, where they earn a lot in comparison to other designations.
• CPAs: CPAs make between $105K to $175K per year.

Enrolled Agents Vs CPAs

Why Become An Enrolled Agent?

You should take the EA course if you intend to maintain a career in US taxation. There are several job opportunities available for individuals interested in this profession. Fortune 500 companies, international banks, shared services, financial institutions, and the Big 4 need EAs for their accounting systems. The following Enrolled Agent jobs are available to those who enroll:

• Work for a Big 4 accounting firm as an accountant.
• Obtain work experience with multinational corporations.
• Incorporate the practice into the American market.
• Establish a partnership with worldwide companies
• Coordinate with KPO and BPO taxation departments.
• You should engage shared service centers and F&A firms in your work.

How to Become Enrolled Agent?

Accounting graduates with a basic understanding of the subject matter are eligible to apply for EA certification. But applicants must demonstrate proficiency in tax topics. There are two ways for students to enroll as agents:

1. Complete the special three-part IRS examination

The Special Enrollment Examination consists of three sections (Businesses; Individuals; Representation, Practices, and Procedures). Candidates must passed that to become an EA. You can take all three components of the exam in any order. To obtain the EA certification, you only need to pass all three exam parts.

2. IRS Experience

The candidate must have worked in a job for the past five years. In this job, they should have dealt with and understood the rules and regulations of the Internal Revenue Code. These rules and regulations relate to taxes such as income, inheritance, gifts, employment, or excise taxes.

4 Steps To Become An Enrolled Agent via EA Exam

Here are a few steps to become an Enrolled Agent:

Step 1: Obtain a Personal Tax Identification Number (PTIN)

To obtain a PTIN, you need to provide your social security number and personal and business details. Additionally, you must disclose any criminal record and submit your previous year's tax return. You must also explain any tax responsibilities and provide information on any professional certifications obtained in the U.S.

You can set up your IRS account once you've gathered all the information you need. Next, you will need to apply for your PTIN. After approval the PTIN will be send to you via email. Check the enrolled agent eligibility!

Step 2: Study for The SEE (Special Enrollment Examination)

The EA exam has three parts:

Part 1: Individuals

Part 2: Businesses

Part 3: Representation, Practices, and Procedures

There is a lot of information available online about the exam on the IRS's website. Despite this, there is no set path of study on the website, so it is hard to determine what is relevant to the exam based on all of the information. Instead, consider taking an EA Review course to help you study faster and more effectively.

myCPE is a one stop platform offering EA Exam Prep Course that include 100+ hours of video lectures, 3,000+ practice questions, EA review questions and many other features. 

Step 3: SEE Exam

Registration

As soon as you have finished studying for the exam, it's time to register. It doesn't matter in what order you take them. Registration for the SEE can be done at Prometric's website; be sure to schedule early, as slots can fill up quickly. In addition, you should review the Candidate Information Bulletin.

Take the SEE

In order to pass the SEE, all three parts must be passed within two years. A multiple-choice exam lasts for 3.5 hours and consists of 100 questions. The minimum passing score is 105. Enrolled agents must pass all three parts of the exam to become certified.

Step 4: Apply for Enrollment

By completing Form 23, you can apply for enrollment to practice before the IRS only after passing EA Exam. There is a $30 application fee. Also pass a sustainability check, this includes tax compliance checks and background checks are conducted on applicants who apply for enrollment.

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Maintaining Enrolled Agent Certification

As an enrolled agent, you will need to maintain your EA certification in the future.

Every three years, enrolled agents must renew their licenses. By doing this, EAs are informed about any changes to the tax code.

The IRS will send you a reminder when your renewal cycle is approaching. You can complete the renewal process online or by mail using Form 8554.

Enrolled Agent Requirements: 72 hours of Continuing education is a must.  EAs must complete these in a rolling period of three years (the enrollment cycle). However, two hours of ethics must be completed every year.

Enrolling as an agent is a smart career move that can open you up to a world of possibilities.

Getting ready for the Special Enrollment Exam?

To prepare for the EA exam, you can take advantage of several EA review courses. The Enrolled Agent review course you need is available regardless of your learning style.

For more courses at myCPE, you can join our unlimited Access Plan that allows you to attend 12,000+ hrs courses on 500+ subjects for multiple designations.

FAQs

1. What is an enrolled agent salary in the USA?

The average salary of an Enrolled Agent ranges from $50K to $85K as of July 25, 2023.

2. What are the opportunities for enrolled agents in the USA?

EAs are licensed by the federal government. It gives them a broader scope of practice. A taxpayer may be represented by an enrolled agent from any state in the country. Foreign citizens can also be represented on tax issues by them. Your career will also be more secure with EA.

A taxpayer may be represented by an enrolled agent from any state in the country. Foreign citizens can also be represented on tax issues by them. Your career will also be more secure with EA.

3. Can I attend self-study courses to Pass the EA exam at myCPE?

Yes! At myCPE you can register for EA prep Exam courses where you can find On-Demand courses. All these courses are created by expert speakers and experienced EA professionals.

4. What is the EA exam pattern?

There are 100 multiple-choice questions (MCQs) in each component, and each component lasts for 3.5 hours. Every section (50 MCQs) is followed by a 15-minute break. Following the exam, students can print their results as soon as they are released.

Jason Dinesen

President, Dinesen Tax & Accounting, P.C.

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. 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.