Business CPAs, Accountants, EAs, Oh My: The Differences Between Them
When choosing an accounting service for your business, knowing what you need can be tricky. Is an accountant the right choice? What about a CPA or Enrolled agent? What do all these titles even mean, and what are the differences between them? Let's take a look at the different types of accounting expertise, so you can better understand what's right for you and your company.
CPAs and Accountants
Let's start with the basics: all CPAs are accountants, but not all accountants are CPAs. All accountants have completed college coursework to learn the ins and outs of accounting, but CPAs – or Certified Public Accountants – have taken that a step further. To obtain a CPA license, additional college coursework is necessary to learn about upper-level accounting, auditing practices and business structures. Then, several extremely rigorous exams are administered – and only about half of all people who attempt these exams pass on the first try!
Once licensed, CPAs also have legal obligations to their clients and are considered fiduciaries, or professionals with a legal agreement to act in the best interest of their clients in a trustworthy manner. There is also a strict code of ethics that CPAs are expected to meet. CPAs and accountants both can prepare tax returns, but a business CPA may be more knowledgeable in the various business tax laws and codes as a result of the additional education and exams. Additionally, only a CPA may represent you before the IRS in the event of an audit.
Enter the Enrolled Agent
An EA, or Enrolled Agent, is licensed by the IRS as a tax practitioner who is also granted the right to represent taxpayers before the IRS, in the event of an audit or other tax situation. There is no education or training required for other accounting principles or business practices for EAs.
Obtaining the license requires passing a three-part exam that focuses on individuals, businesses, representation, and IRS practices and procedures. All candidates must also pass a federal background check that includes their personal tax history. Many enrolled agents go on to pursue CPA licensure, and some CPAs may choose to obtain EA status if they wish to dive deeper into IRS codes, laws and procedures.
Which Do You Need?
Certified Public Accountants are considered the highest level of accounting professionals and can perform virtually any accounting service your business would need with expert care and the highest levels of trust and confidence. Of course, this level of expertise typically costs more than a basic accountant, so it might not make sense to have a CPA on staff for routine accounting needs. For companies with a robust and trustworthy accounting department, perhaps only tax expertise is periodically necessary, and an enrolled agent can offer his or her skills. Or, in the event of an audit, you may wish to hire an EA to represent your company when dealing with the IRS.
In many cases, a combination of services is best for many businesses, to ensure that proper care of financial details is taken while also keeping budgets in mind. No matter which level of service you need, you can always trust the experts at Fair, Anderson & Langerman for reliable accounting and business CPA services. Contact us today at 702-870-7999 to learn more.