CPA vs. EA: What’s the difference, and which one do you need?

Let’s say you are the finance lead of a growing tech startup. Your Board of Directors is emphasizing the importance of tightening internal controls, preparing for an upcoming investor audit, and addressing complicated federal tax issues, all within the next twelve months. Between hiring a CPA firm that can perform audits of financial statements and advise on assessments of internal controls, or relying on an Enrolled Agent to manage tax filings and represent you with potential IRS audits, what would you do?

This post will explore exactly what CPAs and EAs can and can’t do, examine the differences in credential requirements and costs, and also the differences in their scopes of practice and career paths, along with a decision-model so you can move forward with confidence on a course of action appropriate for your needs.

Credential Overview:

Certified Public Accountant (CPA):

• Governing Bodies: CPAs are licensed in all 50 states (also in DC, Puerto Rico, U.S. Virgin Islands, Guam, and the Northern Mariana Islands), subject to the national oversight of the AICPA and NASBA.
• Education: Nearly every jurisdiction mandates that candidates acquire a bachelor’s degree and further credit hours amounting to 150 semester hours—30 hours beyond the standard 120-hour bachelor’s degree—usually achieved through graduate studies or certificate credentials.
• Unified CPA Exam: Delivered by the AICPA and the NASBA at Prometric test sites, the Exam consists of three main four-hour sections (Auditing & Attestation – AUD; Financial Accounting & Reporting – FAR; Regulation – REG) and one four-hour discipline section of your choice (Business Analysis & Reporting; Information Systems & Control; Tax Compliance & Planning) for a total of 16 hours of testing.
• Experience and Ethics: 1–2 years (2,000 hours) of experience as a licensed CPA, as confirmed by NASBA’s Experience Verification service, are needed for candidates. A separate ethics examination—typically drawn from the AICPA Code of Professional Conduct—is also required by most states to be passed at a minimum of 90% (licensure) or 70% (renewal) based on state jurisdiction.

Enrolled Agent (EA):

• IRS History & Authority: EAs are federally approved tax professionals who are directly licensed by the IRS, tracing their heritage to Civil War-era “Irish Tax” agents and codified by the Railway Tax Act of 1894 and the Treasury Department Reorganization Act of 1884.
• Special Enrollment Exam versus IRS Employment Pathway: Most EAs earn their credential by passing a three-part Special Enrollment Exam (SEE) in Individual Taxation, Business Taxation, and Representation/Practice/Ethics; each section is $267 at appointment (total $801) and non-refundable. Alternatively, candidates with five years of qualifying IRS employment can waive the SEE.
• PTIN Renewal & CPE Requirements: To retain EA status, practitioners should possess an active Preparer Tax Identification Number (PTIN), renew it each year, and accumulate 72 hours of continuing education every three years (at least 16 hours each year, including two hours of ethics) from certified IRS providers.

Scope of Practice & Representation Rights:

Certified Public Accountant (CPA) Scope of Practice:

• Audit, attestation, and other assurance services: CPAs only have the authority to conduct independent audit engagements, making formal opinions on financial statements using Generally Accepted Accounting Principles (GAAP). CPAs’ audits give “reasonable assurance” that statements have no material misstatement and entail extensive testing of transactions and internal controls and thus enhance investor, lender, and stakeholder confidence. In addition to full audits, CPAs also conduct review engagements—consisting of analytical procedures and inquiries—and compilation engagements, where CPAs give financial information without assurance, all under AICPA guidelines.
• Advisory and Consulting Services: Based on their significant financial experience, Certified Public Accountants (CPAs) offer advice on business appraisal, forensic accounting, risk management, mergers and acquisitions, and strategic planning. In “management advisory” or “financial advisory” services, CPAs counsel clients on how to maximize processes, institute internal controls, and analyze complex financial information, with no federal limit on the extent of these non-attest services.
• Tax Preparation & IRS Representation: Although CPAs are most commonly linked with audits, they also prepare personal, corporate, partnership, and trust tax returns and, as a result of licensure, can represent clients before the IRS on audits, collections, and appeals. CPAs are the only professionals with unlimited federal representation rights under IRS regulations (Form 2848), and, in most states, that includes any tax issues, whether or not they prepared the return.
• State Licensure and Mobility: Because a license to practice as a CPA is awarded by each State Board of Accountancy, practice rights in the past have been state‐by‐state. The new AICPA/NASBA model legislation is moving toward an “individual‐based practice privilege,” in which CPAs can practice for clients in several states under one license if they meet certain requirements in peer review and ethics.

Enrolled Agent (EA) Scope of Practice

• Federally Authorized IRS Representation: EAs are the sole federally appointed and regulated by the IRS tax professionals with unlimited authority to represent any taxpayer—individuals, businesses, estates, and trusts—in all their IRS affairs, such as examinations, collections, and appeals, and before the Appeals Office. This is enshrined in Treasury Department Circular 230, which makes EAs (as well as attorneys and CPAs) qualified representatives of all tax disputes without limitation to clients whose tax returns they prepared.
• Tax Preparation and Planning: Aside from representation, EAs complete and submit federal tax returns for all taxpayers. They recommend compliance alternatives, examine return positions, and assist clients in reducing liability and complying with the tax code. EAs, in contrast to CPAs, cannot sign audit or attestation reports but can provide in-depth technical advice on taxation issues ranging from personal deductions to sophisticated corporate transactions.
• Qualifications and Maintenance: Future EAs get certified either by sitting for the three-part Special Enrollment Examination (SEE) on individual tax, business tax, and practice before the IRS, or by gaining five years of qualifying experience with the IRS. Enrolled EAs are required to keep a PTIN and take 72 hours of continuing professional education every three years to reenroll, keeping current with changing tax law and regulations.
• Practice Restrictions: EAs’ jurisdiction is limited narrowly to federal tax issues; they cannot perform financial statement audits, reviews, or compilations under GAAP. Their advisory jurisdiction does not apply to non-tax services like business valuation or general consulting, though the majority of EAs are attached to CPA firms or specialty tax boutiques to provide ancillary services under one umbrella.

B2B Businesses in the USA:

B2B businesses—whether manufacturing businesses and wholesalers or SaaS businesses and professional services consultancies—are subject to conditions that demand stringent financial reporting, internal controls, and stakeholder trust.

• Audit & Assurance Requirements: Public companies, private companies raising capital from third parties, or regulated companies (e.g., SEC-reporting companies) need to have formal audit opinions on their financial reports. Only a CPA-licensed professional can conduct GAAP-conforming audits and provide the necessary opinions, placing your financials in conformity with lender, investor, and regulator audits.
• Investor & Lender Confidence: Venture capitalists, banks, and private-equity sponsors always demand review reports or audit statements prior to investing capital. CPAs are capable of providing these attest services, enhancing credibility in loan committees and boardrooms.
• Sophisticated Advisory Requirements: Business-to-business firms are typically faced with complex issues like transfer pricing, cross-border tax structuring, or enterprise risk management outside the narrow tax compliance horizon. Certified Public Accountants offer end-to-end advisory services that include business valuation, forensic accounting, and strategic planning to fuel growth and improve operational efficiency.

Regulatory Compliance & Reporting: Most B2B industries (e.g., healthcare, financial services) are governed by industry-specific regulatory systems that incorporate specialized accounting treatments. CPAs stay current with these standards—whether under GAAP, IFRS, or industry guidance—and can help your business stay in strict compliance.

Supplement EA Expertise: Even in B2B environments, there will generally be a requirement for in-depth tax-code expertise—particularly for intricate company returns or IRS matters. EAs can complement a CPA staff with an emphasis on IRS audit defense and tax controversy, offering unlimited federal representation rights under Circular 230.

B2C Companies in the USA:

B2C enterprises like neighborhood stores, restaurants, doctor’s offices, and web-based consumer-facing enterprises have certain priorities that revolve around streamlined taxation, compliance, and customer-oriented cash flow.

• Tax Preparation & Compliance: For the majority of B2C firms, tax return preparation and filing of individual or business tax returns (Form 1120, 1120S, 1065, etc.), quarterly or annually, is the greatest financial concern. Enrolled Agents, whose certification is regulated by the IRS, are tax return specialists of all kinds of federal tax returns and are frequently able to prepare them at a lower cost than CPAs.
• IRS Representation & Controversy Resolution: When an owner of a B2C is in an IRS audit, collection action, or penalty assessment, an EA’s unlimited practice rights with the IRS can efficiently solve disputes. This discipline is especially valuable for small-business owners who don’t have in-house tax experts.
• Cost-Effectiveness for Small Operations: Since EAs only handle tax affairs and have less expensive credentialing fees (SEE fees of $267 per component compared to CPA exam and education fees), they tend to share savings with clients, making them suitable for price-conscious firms and uncomplicated accounting requirements.
• Seasonal & Ad-Hoc Support: The majority of B2C companies require seasonally oriented tax support rather than ongoing advisory services. EAs’ seasonal engagements can be scheduled for tax-prep peak seasons, or they can be ad-hoc hired to deal with IRS notices, with flexibility without the expense of a full-time CPA retainer.
• Value-Add CPA Services: For growing B2C businesses—new-site openings, merchant financing, franchising—CPAs still provide necessary services such as cash-flow projections, internal control setup, and strategic tax planning in addition to basic compliance. Having both CPAs and EAs on staff gives complete financial and tax-code nuance coverage.

Hybrid Considerations:

Most U.S. companies, particularly mid-market and high-growth B2B or B2C, profit from a hybrid approach.

• CPA-EA Partnerships: Hire a CPA firm to provide audit, advisory, and financial reporting services while retaining an EA for specialized IRS representation and technical tax-code assistance.
• In-House Credentials: Big corporations can hire both CPAs and EAs as in-house employees or as a component of an outsourced financial shared-services department to maximize cost and responsiveness for all financial and tax issues.
• Scalable Models of Engagement: As businesses transition from B2C startups to B2B suppliers, or vice versa, the requirements for credentials shift. Consumer-facing businesses in their early stages may first engage an EA and subsequently onboard a CPA as the audit, advisory, or compliance complexity increases.

To sum up, the decision to choose a CPA or EA for your U.S. B2B or B2C company will come down to the services you need them for: CPAs for multi-faceted audit, assurance, and business advisory services versus EAs for niche, cost-effective tax compliance and representation before the IRS.