What is an Enrolled Agent?
An enrolled agent (EA) is a federally-authorized tax professional who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels (examination, collection, and appeals) of the Internal Revenue Service. They are licensed to practice anywhere In the United States and are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before. In addition to taxpayer representation, enrolled agents often provide tax consultation services and prepare a wide range of federal and state tax returns. An EA must pass a comprehensive exam on taxation, and accounting as it relates to taxation in order to get their license. They must also satisfy annual continuing education requirements in taxation.
What Is a CPA?
A CPA is a certified public accountant and is licensed by the state. In California, to earn the prestige associated with the CPA license, individuals are required to demonstrate their knowledge and competence by completing a program of study in accounting at a college or university, passing the Uniform CPA Exam, and obtaining a specific amount of professional work experience in public accounting.
CPAs provide a wide range of services and are employed in public accounting and other professional services firms, business and industry, government and education. CPAs in public practice are engaged by their clients for a variety of services including accounting, auditing, tax, personal financial planning, technology consulting and business valuation. CPAs employed in business, industry and government are likewise responsible for activities from accounting and financial reporting, implementing and managing internal controls and information systems, to compliance with tax and other laws and regulations and other areas of business and financial management.
When the public thinks of CPAs, they often think of auditing: the process of examining, testing and verifying a publicly held company’s financial records. But the number of CPAs in California who perform audits, reviews and other attest-type services is dwindling. Bottom Line does not perform this type of work either, but has relationships with CPAs who do. These are naturally complimenting relationships as a CPA who performs either a certified audit or a review must remain independent from the client and their day-to-day transactions – which is why Bottom Line is an ideal choice for managing a company’s books. The CPAs at Bottom Line specialize in taxation and small business accounting and bookkeeping needs.
How is an enrolled agent (EA) different from a certified public accountant (CPA)?
CPAs are licensed by their state to practice accounting and taxation. They must pass an exam on accounting, of which only a portion relates to taxation. The emphasis of their education is primarily on accounting for public corporations and issuing certified accounting (financial) statements that the public can rely on for various purposes — hence the initials CPAs. From a practical standpoint, however, most of this work goes to large firms, so most CPAs generally do the same work as EAs but have a heavier bookkeeping practice.
By definition: EAs specialize in taxation.
CPAs specialize in accounting. Taxation is only their specialty if they make it so. Many EAs do bookkeeping as an accommodation to their tax clients. CPAs do taxes as an accommodation to their bookkeeping clients. Both can do management, financial consulting, bookkeeping, payroll, and financial statements for small businesses.