There are instances in business that will require the services of a tax professional for financial advice and informed guidance. Different roles and obligations make a Certified Public Accountant's (CPA) job role different from a Public Accountant (PA) or Enrolled Agent (EA).
What is a CPA or Certified Public Accountant?
The CPA is an accounting professional who is certified within stringent standards after at least three years of a college education. A CPA licensee must also have taken a state accountants exam that lasts 14 hours, and an additional 40 hours of annual professional training for the maintenance of the license.
The four-part CPA exam is an AICPA administration which consists of:
- Auditing and Attestation
- Business Environment and Concepts
- Financial Accounting and
- Reporting and Regulation
The part that covers taxation is reporting and regulation, giving a certified public accountant the ability to write audited financial statements which a regular accountant cannot. These income statements and balance sheets are provided for the investors of companies that trade their shares on the stock exchange.
A Certified Public Accountant is limited to offering services in the jurisdiction they are licensed in, much like solicitors in the US. To become a CPA, one must have undergone the direct supervision of another CPA for not less than eight years. This is before you are allowed to sit the extremely low pass rate exam for the certification that determine what is a CPA.
What is a PA or Public Accountant?
The PA offers accounting services from a public accounting firm which range from audits, consultations, and taxes. A Public Accountant only has a bachelor’s degree in accounting but can proceed to gain additional educational credit to become a Certified Public Accountant. The public accountant also performs specialty forensic accounting services for businesses, private individuals, and organizations.
A public accountant is, therefore, the stepping stone on which regular accountants can become CPA's, after 8-9 years and on passing the AICPA exam.
The concentration varies the public accountant's duties into specific issues such as taxation. Mostly the EA works with income tax filing and tax returns to give their clients comply with regulations. Forensic accounting, which involves financial fraud investigations, is another branch of specialization for public accountants.
Education for public accounting is vital to mention when answering the question, what is a PA? Strong business finance and mathematical skills must be augmented with thorough organization abilities. The term public accountant means that they are not internal and do not depend on their client for their welfare.
This makes a PA more unbiased and objective when analyzing and interpreting accounting information. The public accountant’s allegiance is with the public and therefore seeks to maintain professional accounting and general ethical standards due to the faith placed on them by the public.
What is an EA or Enrolled Agent?
- Income Tax
- Payroll Tax
- Estate Tax
- Gift Tax
- Inheritance Tax
- Tax Levy
- Retirement Tax
- Non-Profit Tax
For the EA to become a government recognized tax specialists, a qualifying exam is done and passed. The enrolled agent represents their individual or business clients on tax collection, audits, and appeals. The revenue authorities perceive enrolled agents as tax experts above the Certified Public Accountants.
The licensing authority for enrolled agents is the government tax revenue collection agency, giving them unlimited representation rights of clients to that body. A three-part exam that is tax comprehensive is administered by the tax authority which covers:
- Businesses and
These modules are tax-focused and an employee of the tax revenue authority who has over five years of regular application or interpretation of the tax code can also qualify for an EA license.
Helpful Resource: What is an enrolled agent and when do you need one?
Comparative differences between a CPA vs. PA vs. EA
While a Certified Public Accountant is certified by the state, an EA or enrolled agent is federal government approved. CPA’s are also more flexible in their responsibilities as opposed to the enrolled agent who is a tax sector accounting specialist. The CPA and PA act as a business, organization, or individual broad scope accountant, which means tackling all financial management and planning services for them.
What is a CPA when representing clients to the revenue and taxation authority?
A CPA and an EA enjoy the same preferences and privileges of representing clients at the IRS. While an enrolled agent specializes in taxation, they may work for a CPA or a tax preparer. The CPA has more job options since the government, individual or private business sector needs them as budget controllers, tax specialists, and auditors.
A CPA can work for themselves, small or large corporations or non-profit companies where they ultimately become Chief Financial Officers.
What is a PA vs. CPA vs. PA in the job, education, and salary comparisons?
The Certified Public Accountant handles broad tax and financial accounting while an enrolled agent micro focuses on taxes for individuals and private businesses. The PA does entry-level accounting duties from a public accounting firm that must have a CPA as a partner.
The CPA has undertaken more than 150 hours of undergraduate studies and must have passed the CPA exam while an EA requires five years of tax revenue experience as well as passing the EA exam. Bachelors or Masters in an accounting-related field is the preferred education levels for PAs.
The CPA charges a minimum fee of $90 as a retainer per month, which does not exceed the average of $300 or hourly rates of $25 to $30 while an EA usually charges less. The Public Accountant asks for an annual salary of about $73,000 as of a 2015 study by the US Bureau of Labor Statistics.
What to Look for When Seeking the Services of Either a CPA vs. EA vs. PA?
The professional qualifications of the Certified Public Accountant, public accountant, and enroll agent makes them all suitable to work with. While the PA is also capable of doing the job of an EA, the range of focus to taxation services may be limited. The CPA is the more general scope accounts advisor for small and medium enterprises or individuals.
There are strict professional ethics that must be upheld by CPA vs. EA vs. PA. Candidates for a CPA or EA certification undergo governmental background exams that scrutinize their tax histories. A public accountant can become an EA while waiting to achieve certified public accountant status. There is, therefore, a greater demand for the high expertise that comes with a CPA, though micro accounting EA’s also fetch good salaries.
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