Whether you’re filing your personal taxes or launching a tax preparation business, understanding the different types of tax professionals can save you time, money, and potential headaches. Each type has its own qualifications, strengths, and roles in the world of taxes. Choosing the right one depends on your individual or business needs, and knowing who does what can give you confidence when it’s time to make a decision.
Let’s break it down 👇
1. Tax Preparers
These are individuals who help clients prepare and file tax returns. They might work independently, with a company, or seasonally. They are often the first point of contact for many taxpayers during filing season.
They include:
- Storefront preparers (like H&R Block or Jackson Hewitt) who serve a high volume of walk-in clients.
- Independent local tax pros working for themselves or in small offices.
- Volunteers in programs like VITA (Volunteer Income Tax Assistance) offering free help to low-income individuals.
Most tax preparers have no official credentials, but many complete training programs to improve their skills. However, they cannot represent clients before the IRS unless they are credentialed (EA, CPA, or Attorney) or participate in IRS-approved programs like the AFSP.
📝 Note: Always ensure your preparer has a valid PTIN (Preparer Tax Identification Number) issued by the IRS.
2. Enrolled Agents (EAs)
EAs are tax professionals authorized by the IRS, making them the only federally licensed tax practitioners with unlimited rights to represent taxpayers before the IRS. This means they can handle audits, collections, and appeals on your behalf.
To become an EA, one must:
- Pass a rigorous 3-part Special Enrollment Exam or qualify through prior IRS experience.
- Complete a background check to ensure integrity.
- Maintain their license through 72 hours of continuing education every 3 years.
EAs are often experts in tax code and are ideal for individuals or businesses needing help with tax planning, compliance, or representation.
💼 Best for: Clients needing a knowledgeable tax expert with full IRS representation rights.
3. Certified Public Accountants (CPAs)
CPAs are licensed by individual states and are trained professionals with expertise in accounting, taxes, and financial analysis. They are not only tax preparers but also financial advisors.
To become a CPA, candidates must:
- Earn a degree in accounting or a related field.
- Pass the comprehensive CPA exam.
- Gain relevant work experience (varies by state).
- Complete annual continuing education to keep their license active.
CPAs can provide services beyond tax returns, including audit support, financial consulting, and business strategy. They are especially useful for small business owners or individuals with complex financial portfolios.
📚 Best for: Clients needing in-depth financial services and tax planning support.
4. Tax Attorneys
Tax attorneys are lawyers who specialize in the legal side of taxation. They can provide legal advice, represent clients in tax court, and help with estate and trust planning.
To practice, they must:
- Hold a law degree and pass a state bar exam.
- Often, they pursue further study such as an LL.M. in Taxation to specialize in tax law.
Tax attorneys are vital when facing serious tax problems, including IRS disputes, tax evasion investigations, or complex business formations. They also play an important role in tax-efficient estate planning.
⚖️ Best for: Complex legal tax issues, business structuring, and litigation.
5. AFSP Participants (Annual Filing Season Program)
The AFSP is a voluntary program created by the IRS to encourage non-credentialed tax return preparers to increase their knowledge and professionalism.
To participate, preparers must:
- Complete 18 hours of IRS-approved continuing education annually.
- Agree to uphold specific ethical standards.
Those who complete the program receive a Record of Completion and gain limited representation rights before the IRS—only for clients whose returns they prepared and signed.
🔐 Best for: Preparers seeking credibility without pursuing a full credential like EA or CPA.
6. Service Bureau Owners
Service Bureau Owners are experienced tax professionals who provide branded tax software and business support to other preparers. They operate as back-end providers, empowering tax preparers to run or expand their businesses.
Their services include:
- Selling or licensing co-branded tax software.
- Providing technical support, onboarding, and training.
- Managing multiple preparers or offices using centralized tools.
They generate income through multiple streams:
- Software licensing and reseller models.
- Fees set within their tax ecosystem (Service Bureau/Transmitter Fees).
- Markups on ancillary services like audit protection.
- Rebates from bank product volume.
📊 Best for: Pros ready to become business leaders in the tax space and support others in growing.
So… Which One Do You Need?
If you’re:
✨ A taxpayer → Start with a credentialed preparer (EA, CPA, or Attorney) for security and peace of mind.
🚀 Starting a tax business → Look into becoming an EA or join a starter program with software and support.
📈 Looking to scale → Consider becoming a Service Bureau and build your own network of tax pros.
Final Thoughts
No matter where you are in your tax journey, there’s a professional for every stage — and for those with big goals, there’s always room to grow into the next level. Understanding your options is the first step toward making smarter tax decisions and growing your business.
Want help choosing the right path as a tax pro or launching your own tax business? Contact NTO Software Solutions – we’ve helped thousands of tax professionals level up with the tools, support, and software they need to succeed.