CPA, Enrolled Agent, Bookkeeper What’s the Difference?

You may hear the terms accountant or bookkeeper thrown around quite a bit, especially around tax time.  I want to help you understand some of the distinction between the terms Certified Public Accountant (CPA), Enrolled Agent (EA) and bookkeeper.

CPA - Certified Public Accountant is a license that is issued by each of the 50 states in the United States.  (There are actually 55 jurisdictions that can issue a CPA license which are the 50 states plus the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, and the Commonwealth of Northern Mariana Islands) The first and basic qualification is that you pass the Uniform CPA exam.  In fact the 14 hour exam is the only requirement which is uniform to all the state’s licensing requirements, because there is no nationwide CPA designation.  Most states also require 30 hours of college level accounting education and 24 hours of college level business courses or some states simply require a bachelors degree plus a total of 150 hours of college level courses.  There are generally experience requirements, working for another CPA, and continuing education requirements to obtain or keep  a CPA license also.

While many CPA’s spend a significant amount of time working in the tax field, taxes are actually only about 1/4 of the knowledge testing covered by the CPA exam.  There are in fact many CPA’s who rarely deal with taxes and instead work in other fields such as financial reporting, information systems, financial consulting or industry accounting.

EA - Enrolled Agents, much like CPA’s, must pass a competency examination.  Unlike CPA’s, the EA examination is administered by the Internal Revenue Service and is a very comprehensive test specifically of the individual’s knowledge of tax laws.   You can also become an EA, if you have worked for the IRS for 5 years in a job that required you to regularly interpret tax laws and regulations.  EA’s have continuing education requirements to insure they stay knowledgeable about changes in tax laws and requirements.

Bookkeeper - Although there are organizations that offer training and certification for bookkeepers, working as a bookkeeper does not usually involve a license or examination in the same way being a CPA or EA does.  A bookkeeper may actually perform many of the same jobs as a CPA or EA, including preparing tax returns.  Currently the only requirement to prepare tax returns professionally is that you register with the IRS and obtain a Preparer Tax Identification Number or PTIN.  The service has announced that soon it will begin requiring all tax return preparers who are not already attorneys, CPA’s or EA’s to pass a basic competency exam to obtain a PTIN.  While anyone with a PTIN can prepare and file a tax return for you, only a CPA, EA or attorney can represent a client with the Internal Revenue Service.

Hopefully you now have some insight into the world of CPA’s, EA’s and bookkeepers and can use that knowledge to help you make an informed decision it you need to engage the services of an accounting and/or tax professional. Ready to hire? Check out the Outright Directory for a list of Outright-certified CPA’s, EA’s, and bookkeepers to choose from!

Interested in becoming a CPA, EA or bookkeeper? Check out these resources on careers in accounting.

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