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Enrolled Agent or CPA for Tax Preparation – Everything You Need to Know

We will start with personal individual tax preparation and go into the second half for small, medium size business tax preparation.

With tax season now fast approaching many people are looking into the possibility of hiring an EA enrolled agent or CPA for individual tax preparation purposes.

Getting your taxes and records in order by yourself is a big ask, but one thing that is for certain is that you must do everything in your power to stay on the good side of the tax man. Fall onto the IRS’ radar for the wrong reasons and, one way or another, you will pay what you owe, and then more besides.

Doing your own taxes is a laborious affair, not to mention the fact that it is stressful, time-consuming, technical, and very difficult. Because of this, more and more people choose to hire professional tax service providers such as an EA enrolled agent or CPA for individual tax preparation.

But what are the differences between an EA enrolled agent and a CPA, and which would be best for you?

Here’s a look at the differences and benefits of enrolled agents and CPAs.

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What is a CPA?

To begin with, we shall be looking at precisely what a CPA is.

Basically, a CPA, or a Certified Public Accountant will undergo 150 undergraduate hours and will need to pass a 4-part CPA exam.

CPAs generally have a much larger financial repertoire than EAs enrolled agents (tax experts), and they are also more flexible when it comes to reviewing, and or auditing financial statements.

Obviously, this can vary, but generally you’ll find that CPAs do the majority of their work for various public accounting firms.

Because they specialize in more than one field of accounting, they don’t just focus on the one sector. Instead, they can prepare tax returns, audit financials and advise business owners, and assist and advise consultants on all matters relating to accounts, taxes, and finances.

As an example, a CPA would likely be able to offer advice to an individual looking to start their own business, or perhaps buy their first property.

Basically, if you are not only looking for help when it comes to your tax return, but you also require expert knowledge and advice on all things finance-related, a CPA will likely be your go-to.

What is an EA Enrolled Agent?

As we’re looking at an enrolled agent or a CPA for individual tax preparation purposes, we’re now going to look at EAs enrolled agents.

An enrolled agent, which is sometimes abbreviated to EA is a tax expert professional who specializes in managing tax issues for individuals, businesses and/or private entities.

EAs possess a vast amount of knowledge on all things tax related. So, whether you require info about inheritance tax, income tax, tax returns, tax planning, IRS or state representation, form 1040, schedules A, B, C, D, E, F or anything else for that matter, an EA will be ideal.

EAs must either possess at least 5 years of experience with the IRS, or sit an exam in order to become an enrolled agent.

Just to give an idea about just how prestigious an EA is, an Enrolled Agent is the highest credential which is awarded by the IRS.

Of course, these figures vary, but generally you will also find that EAs, and attorneys earn a considerable amount more than CPAs. Typically, in fact, they will earn around $15,000 - $20,000 more each year.

So, when talking about an Enrolled Agent or CPA for individual tax preparation, this is certainly worth considering.

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How are They Similar?

In this next section we’re going to be taking a look at how the two are similar to each other.

People often assume that both professions are virtually identical, but just with different titles, though that isn’t strictly true.

Both CPAs and EAs can enjoy near limitless practice rights before the IRS. This basically means that there are pretty much no limits to the different types of tax-paying clients they can serve, or the tax-related services that they can provide.

Both CPAs and EAs can also represent their clients before any form of IRS or state agency office.

They also must meet certain ethical and educational and academic requirements in order to do what they do.

When it comes to choosing between an Enrolled Agent of CPA for 1040 individual tax preparation purposes, so far as you can see, either would seem a viable candidate at this point.

What are the Differences?

Now we’re going to look at the differences between the two.

Yes, by now you’re probably aware that the two possess a vast array of knowledge and expertise when it comes to taxes and finances.

In order to achieve these credentials, though, the two have to go about things in very different ways.

Requirements can vary from state to state, but typically CPAs must have completed studies in accounting at university or college.

They must also pass the four-part Uniform Certified Public Accountant Examination.

CPAs also not only specialize in services relating to other financial matters like auditing and planning.

EAs however, are required to pass a rigorous three-part series of tests which are known as the Special Enrolment Examination. This series of tests covers business and individual tax laws and representation matters.

When it comes down to a choice between an Enrolled Agent or CPA for 1040 Individual Tax Preparation, many people often go with an EA because their main area of expertise is tax and tax preparation services.

So, who Should you Choose?

If you are looking to get ahead of the game this year and make a start on your 1040 personal tax return, hiring an EA or CPA is something that you have likely considered.

As we’re looking at an Enrolled Agent or CPA for personal individual tax preparation, we now need to determine which would be better.

Well, without sitting on the fence too much, either choice would be very beneficial and would make your life that much easier.

As we mentioned earlier, as Enrolled Agents focus solely on taxes, many often consider them to be the more viable option, though again, it depends on your circumstances.

Get a free evaluation at 1-877-788-2937.

Now, let’s explore small, medium-size business tax preparation for 1120, 1120S, 1065 and LLCs.

Enrolled Agent or CPA for Business Tax Preparation

As you know, running your own business is not a simple or straightforward process. It requires a whole lot of hard work, motivation, dedication, and sacrifice.

Now, different business owners run their businesses in different ways. Some people are better off taking a more “hands on” approach, whereas others specialize in paperwork behind the scenes.

As we’re looking at choosing an EA enrolled agent or CPA for 1120, 1120S, 1065 and LLCs business tax preparation in today’s article, though, we need to look at which of the two would be ideal for your business and getting your taxes in order for the new financial year.

For most business owners, tax preparation is one of the most laborious and time consuming processes in existence. It is something that fills a lot of business owners with dread, and for good reason. Getting your taxes in order is a headache that many business owners could do without, which is why EAs enrolled agents and CPAs are considered.

But as far as an Enrolled Agent or CPA for business tax preparation goes, what’s the difference and which is the best?

CPAs

To begin with, we shall look at precisely what a CPA is.

In simple terms a CPA, or a certified public accountant, is an individual that doesn’t just specialize in one particular niche when it comes to taxes and accounting.

CPAs provide more financial services than enrolled agents, like reviewed, audited financial statements if needed. EAs are tax experts, would provide tax planning, audit representation and more.

Basically, on top of just offering tax-related services, CPAs can also provide a wide range of other services.

Enrolled Agents

As we’re talking about the possibility of choosing an Enrolled Agent or CPA for business tax preparation, we shall now take a look at Enrolled Agents.

Enrolled Agents are often utilized by individuals, such as those that are self-employed and small businesses to help get their tax affairs in order, reliable bookkeeping and best tax planning to minimize tax burden.

Enrolled Agents do of course also work for businesses, but they generally specialize in taxes and very similar related topics.

EAs either have to sit a complex examination to qualify as an enrolled agent, or they must possess a minimum of five years of experience in working for the IRS.

Get a free evaluation at 1-877-788-2937.

Enrolled Agent or CPA for business tax preparation?

Now that we know the key differences between the two, we will now look at several reasons to choose an EA or a CPA for your business tax preparation.

Reasons to hire an EA

Several key reasons to hire an Enrolled Agent to get your business taxes in order for the financial year include the following:

  • Experience – More often than not, you’ll find that Enrolled Agents have first hand experience of working for the IRS. This is very useful because this insider knowledge can be utilized by them, for their clients. Knowing how the IRS operates is a massive benefit.
  • Highly prestigious title – Becoming an EA Enrolled Agent is a highly prestigious title. In fact, it is the highest credential that the IRS awards, and your business could definitely benefit as a result.
  • Specialist niche – If your business simply needs somebody to prepare your tax return and ensure that your business taxes are in order, EAs are very useful. Because Enrolled Agents specialize in taxes, you know exactly which services you are getting for your money.
Reasons to hire a CPA

Now that we’ve looked at the benefits of hiring an Enrolled Agent for your business tax preparation we’re now going to take a look at several reasons to hire a Certified Public Accountant. These benefits include:

  • Thorough accounting – For business owners, bookkeeping and paperwork are amongst the most tedious parts of running a business. CPAs are very beneficial for business owners because they have experience with all things finance-related, and that includes tax returns and audited financials, bookkeeping.

    CPAs will help you to keep important records and receipts and to get your books in order to streamline business for the future. CPAs will provide financial evaluations on a regular basis and will help you to get your books and records reviewed, audited and in order for large bank loans.

  • Wide range of services – As we’re looking at the option of choosing an EA Enrolled Agent or CPA for business tax preparation, CPAs could be useful for business because they offer additional services.

    EAs often just focus on tax-related issues, whereas CPAs can offer financial planning, business advice, both offer advice on issues such as wage garnishment, bank levy, Form 1120, and Form 1120S, 1065, LLCs and much more besides. Having this additional advice will prove very useful for a number of business owners.

  • Manage your business assets – All businesses, no matter how large or small, will have assets. Needless to say, as a business owner it is in your best interest to protect these assets and keep them safe. This is where it pays to have a CPA or EA on hand.

    CPAs possess the necessary skills, training, and expertise to handle all manner of business-related issues such as reviewed, audit financial statements. They can offer expert knowledge and guidance to business owners on how to correctly utilize and protect business assets and keep them safe.

  • Business advice – Finally, despite them specializing in finances and accounting, CPAs can also offer expert knowledge and guidance for business owners. They’ve been in the business a long time and have worked with plenty of businesses over the years and as a result they’re in the perfect position to offer you useful business advice.

So, out of an Enrolled Agent or CPA for business tax preparation, who should I choose?

When deciding on whether to go with a CPA or EA for tax preparation, it’s important to weigh up the pros and cons of each and to consider your own circumstances.

Most large businesses tend to go with CPAs as they offer additional services, reviewed, audited financial statements for large bank loans. For smaller, medium-sized businesses looking to keep things simple, compliant, though, EAs could be better.

Get a free evaluation at 1-877-788-2937.

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Mike is a true professional. He really came thru for me and my business. Dealing with the IRS is very scary. I'm a small business person who works hard and Mike helped me see that they are not that scary after all. He was always there with the answers I needed and was very good about calling me back which I appreciated since your first reaction is to freak out and ask a million questions. He solved a messy case and worked very hard to resolve it. His rates are VERY reasonable for the amount of work he does! I give him my highest recommendation! Marcie R.
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Mike was incredibly responsive to my IRS issues. Once I decided to go with him (after interviewing numerous other tax professionals), he got on the phone with the IRS immediately (as in the same day I signed with him) to squash an impending issue. And he worked directly with them to quickly come to a resolution I am very happy with. I'd highly recommend reaching out to Mike to see if he can help you with any IRS issues. I'm very satisfied! Marshall W.
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I’ve seen and heard plenty of commercials on TV and radio for businesses offering tax help. I did my research on many of them only to discover numerous complaints and unresolved tax issues. I found Mike Habib through my own online search and contacted him. He was very professional with great communication, always answering my questions and concerns. Mike resolved my complicated tax problem just as he said he would. I would definitely recommend his services to family and friends. Nancy & Sal V.
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