Enrolled Agent vs CPA: Which One is Better for You?

What's better CPA or EA?

If you are a tax professional that wants to advance your career, it can be difficult to choose from the alphabet soup of certifications available. Two popular choices are the CPA and EA, but which one is better?

 

Both are great certifications that will help you get promoted, earn a higher salary, and guide your career, but which one should you get?

 

Let’s compare each one and see which is right for you!

What is an EA?

An EA is authorized by the U.S. Department of the Treasury to represent taxpayers before the IRS for audits, collections, and appeals, according to the National Association of Enrolled Agents (NAEA).

 

EAs advise, represent, and prepare tax returns for all sorts of individuals, partnerships, corporations, estates, trusts and pretty much any entity with tax-reporting requirements.

EA’s focus on preparing taxes and many specialize in tax resolution.

 

Enrolled agents are the only taxpayer representatives who receive their unlimited right to practice from the federal government (CPAs and attorneys are licensed by the states). This means if a company or an individual needs to file in more than one state and eventually needs representation before that state in an audit or resolution case, an EA can do both.

 

People who don’t have the resources to pursue a taxation attorney often hire EAs instead for civil resolution cases. Not only do EAs rates tend to be more affordable, they can offer their tax law expertise to clients in tax proceedings, audit hearings, and appeals. EAs help ensure clients are treated appropriately by the IRS, work out payment plans on the best possible terms, and ensure the IRS follows laws that protect taxpayers.

 

In order to become an EA you must pass an IRS-administered test and complete at least 72 hours of continuing education every three years.

What is a CPA?

 

A CPA’s bread and butter is performing tax, accounting, and financial services to businesses.

 

CPAs help individuals and companies with financial planning, investments, taxes, mergers and acquisitions, and much more. CPAs also perform audits as well as examine the annual reports of public companies.

 

A CPA’s main differentiator is the ability to attest an audit, which means it affirms to the IRS that financial statements are truthful. To do that, a CPA will request bank statements and other proof, which limits the possibility of error.

 

On the average, it takes around 8-9 years to become a CPA. You need to have 150 hours of college credit before you can sit for the CPA exam. Some states also require a certain number of hours worked under the direct supervision of a CPA before taking the exam. The CPA exam has an extremely competitive pass rate and only a 18 month time span to take it.

 

CPA vs EA: Cost of Licensing

The cost of a CPA license depends on a lot of factors. Where you go to school to complete your 150 credit hour requirement will be one cost. And then you will need a CPA review course, which could add more to the total costs of becoming a CPA.

 

The cost for sitting for the exam depends entirely on the state in which you plan to be licensed. There typically is a registration fee and separate fees for each section of the exam. (Re-takes require additional fees.) On top of that will be the cost of the license itself, which averages around $150.

 

And in order to maintain CPA licensure, you will have to take ongoing continuing education (CE) courses, which can also cost a pretty penny. Some employers will pay for all your CPA Exam and continuing education materials, but you may have to foot the bill yourself.

 

To become an EA, you first must obtain a PTIN (Personal Tax Identification Number) from the IRS, which costs $50. The cost of each section of the exam is $111.94. After you’ve passed the exam, you must pay a $30 enrollment fee. That all adds up to $415.82. Enrolled agents also have to take CE courses that fulfill the 72 hour credit requirement every 3 years.

 

EA vs CPA: Salaries

 

Enrolled Agent vs CPA salary

 

CPAs generally earn more than EAs, but that could vary depending on where you fall on the career ladder. An EA with many years of experience could earn more than a CPA who is only in their first year or two in practice. However, if you are a CPA, your income will certainly outpace that of an EA.

 

The median salary for a CPA is $62,123 versus $49,000 for an EA.

 

The income potential for EAs tends to flatten out over time with peak earnings to be around $60,000. CPAs have more opportunities to earn more money. If you are a partner in a CPA firm or a CFO for a conglomerate, you could easily make six figures.

EA or CPA, Which is better?

I think the better question is, why have both? If you are a CPA, then there is no need to become an EA since the CPA is equally qualified to perform the duties of the EA. There are a few cases where it would make sense for a CPA to also become a EA, but it is usually a redundancy for an established CPA to seek EA status.

 

If you enjoy working with taxes and the challenges of keeping up with complicated regulations, then becoming an EA might be the direction to go. Both the time commitment and costs associated with this career choice are far less than those needed to become a CPA.

 

However, a CPA can provide a much broader scope of tax services and career choices than an EA. Overall market demand is greater for CPAs than EAs. But it really all boils down to what your career goals are.

 

If you like accounting work with a micro focus, becoming an EA could be a perfect fit for you. On the other hand, if you are interested in accounting practices that have nothing to do with taxes (such as auditing), then the CPA option is the obvious path.

 

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How to Apply for the CPA Exam Internationally

international CPA application processThe CPA application process is confusing for all, and international candidates often don’t know where to begin. How does one go about the process if you’re not even living in the United States?

Don’t worry, the application process is pretty much the same for everyone, no matter where in the world you are living. I am going to break down how the CPA exam works on an international level so your application process will be the last thing you are stressing about when studying for the test.  

I Don’t Live in the USA: Can I Take the CPA Exam?

You do not have to be a U.S. citizen to be a US Certified Public Accountant (CPA). You do need to meet the Board of Accountancy eligibility requirements in one of the 54 U.S. jurisdictions. These include the 50 states, District of Columbia, Puerto Rico, the U.S. Virgin Islands, and Guam. The 55th jurisdiction, the Commonwealth of Northern Mariana Islands, is not yet ready to accept CPA applicants.

In order to qualify for the exam at one of the international locations, you will first have to prove that you are eligible through application to a state board participating in the International CPA Examination Administration Program. In 2011, the CPA Exam opened up Prometric test centers in Bahrain, Kuwait, Japan, Lebanon, the United Arab Emirates (UAE), and Brazil. The entire CPA Exam is in English, so you must be fluent (I bet you already are if you’re reading this article).

The Application Process for the CPA Exam

international CPA applicationInternational students have an extra hurdle in the CPA exam application process, but other than that the process is the same. If you are planning on taking the CPA internationally, you must have your educational credentials evaluated.

If you didn’t go to school in the US, there needs to be an evaluation of your credits to make sure that you match the educational standard set by the National Association of State Boards of Accountancy (NASBA). This step should be completed before you start the application process, since it can take up to 6 or 8 weeks for your international education to be approved. Check here for evaluation services from NASBA.

The remainder of the application process is basically the same for both U.S. and international CPA candidates. You begin by selecting the U.S. jurisdiction to which you will apply and then you must contact the Board of Accountancy in your chosen jurisdiction to gather the proper application materials. Lastly, you will fill out the application, submit it, and then pay the fees.

Once your education has been deemed qualified, you will receive your Notice to Schedule which will let you register for your CPA exam at a Prometric center. You can see more details for this process in my application process blog post.

You should also look into which test prep you will be using. It’s very important you start that sooner than later, so checkout the best review courses!

 

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6 Things 1st Year Audit Associates Should Know

Expect the unexpected. It’s pretty hard to pinpoint a day in the life of a first year Audit Associate because no two days will ever be alike. Ever!

Every day is different with new situations with multiple different clients. I think that’s the best part of being an auditor. You can’t really say what we do is boring because we always have to be on our toes with whatever may arise.

As a first year associate, you’ll be dealing with the easier audit areas like the cash section and searching for unrecorded liabilities testing, any sections that don’t require a lot of judgment.

As you progress, you’ll be given harder sections and be trusted to work on more difficult tasks. It really all depends on your team, the client, and how big your firm is. The smaller the firm, the more likely it is that you’ll be seeing a lot more sections in your first couple of years.

Now that I’m a Senior Auditor, here are a few things that I wish I knew coming in as a first year Audit Associate:


1. It’s Overwhelming

You will be completely overwhelmed starting out. It’s a guarantee. School does not prepare you in any way to be an auditor. Thanks a lot Audit 101! But really, there’s just no way to learn about auditing from a lecture. You’ll learn almost everything on-the-go as it’s happening and put it into real world applications.

So don’t panic when nothing is clicking in the beginning. It’s normal for a first year associate to not get the big picture for several months in. Even though most things aren’t really coming together like you would hope so, take every task and everything that you’re learning in and go with the flow. It’ll all make sense eventually. If you’re looking for a place to find your first audit job, check out Acctal Jobs.


2. Ask Questions!

If you don’t understand what you’re doing, then ask for clarification. There’s no point in spinning your wheels and wasting time when you don’t understand something. This also avoids rework by your seniors if your work isn’t done correctly.

However, be sure to take some time to try to figure things out yourself using your resources (experienced associates on your team, firm research material, etc.). You shouldn’t always rely on your seniors to baby you through your work.


3. Learn, Learn, Learn

Ask those relevant questions, take notes, and take in those new learning experiences. Don’t do it just to appear like you want to learn. You must be a willing learner without being that one new hire that’s too eager. The last thing you want is to annoy your seniors with redundant and repetitive questions. Seniors are there to help you, not to answer the same questions over and over again.

Take anything that’s thrown your way and learn from it. During your first year you will be asked to do mindless work like binding or making copies. Oh yeah, makin’ copies! The copymeister! (SNL anyone?) Well, we all just have to start somewhere.

Pay attention to what you’re given and use it as a learning opportunity. Get familiar with those reports, memos, or confirmations because you’ll be dealing with them a lot more later on and you’ll be the one responsible for compiling them.

In your first year, you’ll also become all too familiar with those dreaded review comments. Often times they’ll be trivial or even on the verge of condescending but try not to take it personally. These comments are meant to teach you no matter how silly they seem!


4. Communication is Key

Something I didn’t really expect is how important of a role communication (both written and oral) played for an auditor. We’re in constant contact with our clients, coworkers, and supervisors alike.

E-mails and phone calls must ride that fine line of being aggressive, getting straight to the point but at the same time being cordial, even when your client is unapologetically uncooperative. Trust me, you’ll get lots of those clients. Keep your cool, breathe, and always stay professional.


5. Find a Mentor

Connect with a senior or manager that shares the same values and level of work ethic as you. Take those qualities you respect and even the ones you don’t to figure out what kind of leader you want to become.


6. Get Your CPA, ASAP

The first year is confusing and overwhelming and it seems logical to push the CPA exam back until you feel more comfortable in your new position. Well think again. Get that CPA license as soon as you start or even better, try to start before your job begins. Yes, you’ll be more comfortable in your position a few months in but as you move up the ranks, you’ll have more responsibility, more work, and a lot more stress to deal with.

This is coming from someone who pushed it off and ended up studying for FAR at the same time I was promoted to senior. Save yourself the all-consuming stress and just get it out of the way as soon as possible. You’ll thank me later.

Your first year will be one of the most eye opening experiences of your life but it’ll go by in a flash. Soon enough you’ll just be one of the regular staff, talking shop with some beers at happy hour (just don’t get too crazy and act a fool). Take it all one day at a time and have fun learning, young padawans!


 

What Should A 1st Year Audit Associate Know To Succeed? 

RankThings To Know
1.It Can Be Overwhelming
2.Be Sure To Ask Questions
3.Learn, Learn, Learn
4.Find A Mentor
5.Get Your CPA, ASAP

21 Things You’ll Learn Studying For the CPA

Learn From CPA ExamWhen I first started studying for the CPA exams, I had no idea what I was getting myself into. I found it really surprising how much you learn while studying for the CPA exam. Not even just what you’re learning from textbooks but what you learn about yourself at the same time.

Here are 21 things that I learned while studying for my exams that you’ll most likely find out for yourself:

  1. The exams are hard. Like all-consuming, exhausting in every imaginable way, on the verge of insanity, eye-crossing hard. These exams are a true test of your mental capacity.
  2. There is no perfect time to start studying. Just get started already!
  3. Don’t pay for all your exams at once. Just to be on the safe side, pay for a couple at a time. It’s a real possibility that you could end up postponing and run out of time to take those paid exams. You lose that money and have to pay again!  While you’re at it, save money on your CPA courses with our discounts.  Your wallet will thank you.
  4. Life will not stop just because you’re busy studying. For most people, life will actually throw you a few more curve balls than normal while you’re studying.
  5. The threat of failure is real. It doesn’t matter how good of a crammer or how great of a test-taker you were in college. We’re not in college anymore.
  6. The key is practice, practice, practice. Don’t bother rereading chapters you’ve already read, just keep doing practice questions!
  7. Live classes are worthless. Thanks for the lessons on highlighting entire pages though.
  8. Coffee is your best friend. So is a beer right after a stressful day at work. Don’t fight it.
  9. You’ll be an expert on the best coffee shops for studying. You’ll become that regular known as the “girl with the fat books” with your cappuccino already waiting for you.
  10. You’ll develop a Vitamin D deficiency. What does daylight look like again?
  11. Getting into your prometric exam room is way more thorough and annoying than getting through security at the airport. And your every move is being watched…
  12. Those bright yellow sound-blocking earphones in the exam rooms are a blessing. Those prometric keyboards have the loudest keys ever. It’s just a fact that there will be someone right next to you pounding on those old keyboards.
  13. You’ll get annoying encouragements like “you’ll be ok” or “you can do it” or “you’ll get it next time” or “just study harder”. Excuse me, but have you taken these exams? People who haven’t taken the CPA exams have no clue what you’re going through.
  14. Don’t tell anyone which day the results are posted. If they don’t know if you passed, then you probably didn’t. If you passed, everyone and their mama would know already.
  15. You’ll get really good at saying “no”. You won’t even have to make excuses, it’s just a flat out NO. Don’t bother me, I’ve got a date with my textbooks.
  16. Everyone you know will question if you’re dead or alive. When you finally decide to take a break and come out into the world, it’s like that rare Snow Leopard sighting (crikey, mate!). And not to mention, you’ll be the hardest person to get ahold of. They may as well just send a carrier pigeon.
  17. You’ll be out of the loop on all sports and every popular TV show. It’s really ok though. Life is so much better without TV. Wouldn’t you rather be out with friends or family rather than melting your brain with mindless shows?
  18. Negative people who bring you down should be cut out of your life. If they add no value or don’t see that you’re doing good things with your life, why keep them in it? The keepers will see that these sacrifices are temporary and will support your every step in the process.
  19. You’ll find this crazy inner drive that you never knew you had in you. There will be something that keeps you going during all the struggles and pushes you to your limits. For me, it was imagining the day when it was all over and I could finally have my life back. But you’ll find your own motivation.
  20. You may develop some post exam anxiety right before your last exam. The thought of getting back to a life where you don’t have to study seems unimaginable. What are you supposed to do with free time again?
  21. An occasional meltdown is inevitable. Take a minute to throw yourself a little pity party. But then get over it! You’re wasting precious study time.

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Do you have some things that you learned while studying for the CPA exams? Please, feel free to share them below in the comments!

Does it Matter if I Barely Passed the CPA Exam?

The CPA exam tests entry level knowledge required to be a Certified Public Accountant. Getting a perfect score of 99 doesn’t mean you will be a better CPA than someone who got a 75. So don’t beat yourself up if you didn’t get a higher score. The magical 75 proves that you put in the exact amount of study time needed to pass. Your exact CPA exam score has little to do with your career, but it can help you in a few ways.

The CPA exam in made up by four sections in accounting. A higher score on one section could mean that this in an area you should look into when selecting your career path. For example, if you barely studied and got a 90 in the AUD section and actually enjoyed taking that section, maybe a career as an auditor is the right path for you. However, this shouldn’t be the sole determiner for your career path. Instead, use your score breakdown as a hint to what field in accounting you would most likely thrive in.

What Are Employers Thinking?

There are a lot of opinions out there regarding whether or not to put your score on your resume. Some people say that they would hold it against you if your score was higher, while others could care less as long as you passed. To state licensing boards and future employers, passing is the only part that matters.

Imagine if you were having to hire someone from hundreds of resumes. You are not going to take note of every candidate’s score and rank them from lowest to highest in order to make your decision. This would negate all the other important factors that are necessary to be an outstanding employee. Sometimes it can even come off as arrogant if you put your high scores down among a sea of applicants who did not. Remember, all they want to know is if you passed, and here’s why.

It’s public knowledge that the CPA exam is by far one of the most difficult tests in the nation. Committing to take the exam requires hundreds of hours of study and dedication. Passing the exam means much more than the numerical value of your score; it speaks to your ability to take challenges head on and your ambitious work ethic. This is what matters to employers, not the exact score you got on the exam. A good equivalent would be to state the prestigious university you went to on your resume, but leave out your transcript and grades.

The Bottom Line

CPA candidates are hardworking people and employers are looking for these qualities along with others including who you are as a person, what you can bring to the table, and what value you can bring to the company. Employers are not going to be able to discern these important things though your scores. Your chance for an interview or hire is not solely based on passing the CPA exam but instead on a whole bunch of other considerations like your background, extracurricular activities, skills/abilities, education, and whether or not you would make a good fit with the organization’s culture. This is important to remember when stressing about your score, because it is meaningless compared to all the other elements considered to become a hired CPA.

 

CPA Requirements By State for 2017

Requirements to become a CPA are determined based on the 55 U.S. jurisdictions (all 50 states, Guam, Northern Mariana Islands, Puerto Rico, U.S. Virgin Islands, and Washington D.C.). You become eligible by meeting the specific requirements set forth by that state board of accountancy in which you applied for.  Please refer here for your State Board of Accountancy. Below is a summary of each jurisdiction’s requirements.

CPA State Requirements Overview

 

State Credits to Sit For ExamCredits For LicenseAgeCitizenshipResidencySocial SecurityExperienceEthics Exam
Alabama * 150 150 19 Yes No Yes Yes Yes
Alaska 120 (B.A.) or 18 semester hours within completing B.A. 150 19 No No Yes Yes Yes
Arizona 120 (B.A.) 150 18 No No Yes Yes Yes
Arkansas 150 150 None No No Yes Yes No
California 120 (B.A.) 150 None No No Yes Yes Yes
Colorado 120 (B.A.) 120A None No No Yes Yes Yes
Connecticut 120 (B.A.) 150 None No No Yes Yes Yes
Delaware 120 (B.A.) 150 None No No Yes Yes Yes
District of Columbia * 150 150 18 No Yes Yes Yes No
Florida 120 (B.A.) 150 None No No Yes Yes No
Georgia 120 (B.A.) 150 18 No No Yes Yes No
Guam 120 (B.A.) 150 None No No Yes Yes No
Hawaii * 120 (B.A.) or 120 days within completing B.A. 150 18 Yes No Yes Yes No
Idaho 120 (B.A.) 150 18 No Yes Yes Yes Yes
Illinois 150 150 18 No No No Yes Yes
Indiana ** 150 18 No No Yes Yes No
Iowa  120 (B.A.) or 120 days within completing B.A. 150 None No No Yes Yes Yes
Kansas * 150 150 None No Yes Yes Yes Yes
Kentucky 120 (B.A.) 150 18 No No Yes Yes No
Louisiana 150 150 None Yes Yes Yes Yes No
Maine  120 (B.A.) or 120 days within completing B.A. 150 None No No Yes Yes No
Maryland 120 (B.A.) 150 18 No No Yes Yes Yes
Massachusetts 120 (B.A.) 150 18 No No Yes Yes No
Michigan 120 (B.A.) 150 None No No Yes Yes No
Minnesota  120 (B.A.) or 120 days within completing B.A. 150 None No No Yes Yes Yes
Mississippi 150 150 None No Yes Yes Yes No
Missouri Within 60 days of completing education requirements 150 21 No Yes Yes Yes Yes
Montana * 120 (B.A.) 150 None No No No Yes Yes
Nebraska * 150 150 None No Yes Yes Yes Yes
Nevada 150 150 None No Yes Yes Yes Yes
New Hampshire 120 (B.A.) 120B None No No Yes Yes No
New Jersey 120 (B.A.) 150 18 No No Yes Yes Yes
New Mexico 120 (B.A.) 150 None No No Yes Yes Yes
New York 120 (B.A.) 150 21 No No Yes Yes No
North Carolina 120 (B.A.) 150 18 Yes No Yes Yes Yes
North Dakota Within 6 months of completing education requirements 150 None No No Yes Yes Yes
Northern Mariana          Islands 150 150 None No No No Yes No
Ohio 150 150 18 No Yes Yes Yes Yes
Oklahoma * 150 150 None No Yes Yes Yes Yes
Oregon 150 150 None No No Yes Yes Yes
Pennsylvania 120 (B.A.) 150 18 No Yes Yes Yes No
Puerto Rico None 150 21 No Yes Yes No No
Rhode Island 120 (B.A.) 150 None No Yes Yes Yes Yes
South Carolina 120 (B.A.) 150 18 No No Yes Yes Yes
South Dakota Within 100 days of completing education requirements 150 None No No No Yes Yes
Tennessee Within 200 days of completing education requirements 150 None No No Yes Yes Yes
Texas 150 150 None No No Yes Yes Yes
U.S. Virgin Islands None High School Diploma or College DegreeC None No Yes Yes Yes No
Utah 150 150 None No No Yes Yes Yes
Vermont 120 (B.A.) or within 60 days of completing B.A. 120D None No No Yes Yes
Virginia 120 (B.A.) 150 None No No Yes Yes Yes
Washington Within 180 days of completing education requirements 150 None No No Yes Yes Yes
West Virginia 120 (B.A.) 150 18 No Yes Yes Yes No
Wisconsin Within 60 days of completing education requirements 150 18 No No No Yes Yes
Wyoming 150 150 18 No Yes Yes Yes Yes

Notes:

* Two-tiered states. CPA certificate is issued when candidate passes exams. License/permit to practice will be issued when experience requirement is complete.

** 24 semester hours or equivalent quarter hours in undergraduate accounting or 15 semester hours or equivalent quarter hours in graduate level accounting or a equivalent combination of both.

A: Before July 1, 2015: 120 hours with B.A. After July 1, 2015: 150 hours with B.A.

B: Before June 30, 2014: 120 hours with B.A. After June 30, 2014: 150 hours with B.A.

C: Diploma from a 4-year high school or Degree from recognized college or university or Degree from recognized college or university and complete 30 or more semester hours of study in accounting, business law, economics and finance of which 20 semester hours are in accounting.

D: Before July 1, 2014: 120 hours with B.A. After July 1, 2014: 150 hours with B.A.

 

CPA Exam Stats and Facts

We’re accountants! We need our reliable documentation to support our conclusions. Here are some important facts and statistics relevant for CPA exam candidates. 


CPA Exam Testing Windows

Every third month of the quarter is a blackout month when exams cannot be taken. 

QuarterTesting WindowsBlackout Month
1JanuaryFebruaryMarch
2AprilMayJune
3JulyAugustSeptember
4OctoberNovemberDecember

Target Score Release Dates

Day in Testing WindowTarget Release Timeline
Day 1 – 2011 business days following day 20 of the testing window
Day 21 – 456 business days following day of the testing window
Day 46 – Close of window6 business days following the close of the testing window
After close of window6 business days after receiving all scoring data for the testing window

2016 Pass Rates by Section

Passing rate percentages can be taken in a few ways so take the following statistics with a grain of salt. Worried about passing? It’s possible! You failed? You’re not alone! Either way, the exams are hard but you can beat them!

Exam Section% Pass
AUD46.37%
BEC56.55%
FAR46.38%
REG49.41%

Number of CPA Exam Candidates

Number of CPA Exam Candidates


Pass Rates by CPA Exam Section

CPA Exam Pass Rates


Salary Range of Accountants and CPAs

Below are salary ranges derived from the 2013 Robert Half Salary Guide by experience level that can be reached for both public and corporate accounting. Accountants with CPAs tend to make 10 – 15% more than accountants without a certification. CPA salaries on each chart reflect a 15% increase over non-CPAs.

cpa salary ranges


Demand for Accountants

We’re always in demand! Accountants are needed anywhere and everywhere even in a weakened economy. An accountant with a CPA is more distinguished than another candidate with the same qualifications without a CPA. On top of the demand for an accountant, an accountant with a CPA is just that much more sought after.

Per the Bureau of Labor Statistics, the accounting profession is expected to grow 11% from 2014 to 2024. Employment for accountants and auditors in 2014 was 1,332,700 while projected employment in 2024 is expected to increase to 1,475,100.

Accountants and auditors have been ranked #5 as the best jobs of the future according to Business Insider. This takes into consideration both salaries and projected growth in the coming years.

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