Something our clients may be surprised to learn is that all of us here at Marc Michaud & Associates have been business owners at one time or another and we bring a broad variety of experience and knowledge to the table. We’ve stood in your shoes, so we understand exactly what you need when completing your taxes. Marc has been preparing taxes and consulting with business owners on tax strategies for years, which makes him your CPA, right? Wrong. Marc actually holds the title of Enrolled Agent, an entirely different credential.
So when the time comes to complete your tax returns, who should you turn to – a Certified Public Accountant (CPA) or an Accountant/Enrolled Agent (EA)? We would wager that most people assume a CPA is the only person qualified to complete tax returns, however this simply isn’t true. In fact, an Accountant or EA is usually a better choice. Want to learn more about each of these titles so that you can find the best fit for you? Keep reading to discover the biggest differences between a CPA and an EA.
What is an Accountant or EA?
Accountants or Enrolled Agents are individuals who specialize in taxes. They can provide advice on tax preparation and planning, file returns for individuals; partnerships; corporations; estates; and trusts, represent taxpayers before the IRS, and assist with collections and audits. An EA focuses on taxes and taxes only. Accountants who are also Enrolled Agents are generally more well rounded when it comes to understanding the everyday needs of small business owners.
What is a CPA?
Like an EA, a CPA can assist individuals, businesses, and other organizations with taxes, but they also specialize in broader financial arenas. CPAs can be auditors, accountants, advisors, consultants, or financial planners. While a CPA is qualified to prepare your tax return, they may focus their attention on other financial matters and not provide tax services.
The main difference between an EA and a CPA is that EAs specialize in only taxation, while CPAs can specialize in taxation and more. While this is an important point if you’re seeking a professional that has extensive training in tax preparation, there are a few other ways to differentiate an EA from a CPA.
An EA is a tax professional who is licensed at the federal level by the Internal Revenue Service and holds unlimited rights to represent taxpayers before the IRS. Enrolled agent status is the highest credential awarded by the IRS. Therefore, not all CPAs have achieved this status.
CPAs are licensed at the state level which limits their scope of practice to their own state unless an exemption has been granted. However, CPAs can assist with broader accounting needs than an EA.
One major difference between the two is that Accountants cannot do financial audits. We actually have a client that has multiple shareholders and they have an audit done annually by an independent CPA firm. The CPAs are not involved in any of the day to day bookkeeping, just the end of year audit. When there are multiple investors/owners it is not uncommon to have an audit done, to prove to the owners/shareholders the funds are being used as reported – a system of checks and balances per say.
Does an Enrolled Agent sound like the right person to prepare your taxes? Give us a call today to get started.
Phone: (603) 601-4515
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