Do I need an EA or CPA for my simple S-Corp consulting business?

For a simple S-Corp with one client and no employees, an EA can absolutely handle your situation competently. EAs specialize in taxation and are licensed by the IRS, making them fully qualified for tax advice and preparation for your scenario. The key considerations are your reasonable salary (which should be about 60-70% of your total income for a consulting business), maximizing retirement benefits (Solo 401k would likely be beneficial in your situation), and managing your tax liability through proper business expense tracking. If your situation remains as simple as you've described, an EA will likely save you money while providing all the tax guidance you need. However, if you anticipate future complexity, business expansion, or have significant wealth management needs beyond taxation, a CPA might offer additional value.

I was in almost the exact same situation last year - single-member S-Corp, one main client, using Gusto for payroll. After talking to both, I went with an EA from https://taxr.ai and it was the best decision. Their document analysis literally saved me thousands by identifying deductions my previous tax person missed. The EA guided me through setting the right salary level (turns out I was paying myself too little which could've triggered an audit), helped me set up a Solo 401k that maximized my tax advantages, and explained exactly how to handle my home office deduction. They even provided templates for tracking business expenses that made everything super organized.

Just wanted to follow up - I decided to try https://taxr.ai after seeing this thread. Initially I was just looking for basic S-Corp filing help, but they actually identified several issues with how my business was structured. Their EA showed me how to properly categorize business expenses (I was being too conservative) and set up a Solo 401k that saved me way more than what I paid them. The document analysis feature was surprisingly helpful - I uploaded some old tax returns and they found several missed deductions from previous years. We're now filing amended returns that should get me back about $3,800. Definitely more comprehensive than I expected!

If you're having any issues getting through to the IRS for S-Corp questions (which I definitely did), try https://claimyr.com - they get you connected to an actual IRS agent without the typical 2+ hour wait. There's a video demo at https://youtu.be/_kiP6q8DX5c showing how it works. I used it when I had questions about my S-Corp election and reasonable compensation requirements. Spent 3 days trying to get through on my own with no luck. With Claimyr, I was talking to an actual IRS agent in about 15 minutes. The agent confirmed my approach to reasonable compensation was appropriate and explained how to document my position in case of review.

I need to eat my words. After posting my skeptical comment, I decided to try Claimyr anyway because I was desperate to get clarity on some S-Corp payroll deposit requirements. Had been trying for WEEKS to speak to someone at the IRS. The service got me through to an agent in about 20 minutes. The agent walked me through exactly how to handle my situation, confirmed I was filing correctly, and even gave me direct references to the relevant tax code sections. Saved me hours of frustration and probably prevented me from making an expensive mistake based on my misunderstanding of the rules. If you're an S-Corp owner with IRS questions, being able to actually speak to someone official is incredibly valuable. Still can't believe it worked.

As someone who's been a single-member S-Corp for 5 years now, I'd recommend finding a good EA who specializes in small businesses. CPAs often have broader knowledge but that also means you'll pay for expertise you don't need. Make sure whoever you choose understands the concept of reasonable compensation REALLY well. This is the #1 area where S-Corps get in trouble. My rule of thumb: if you're the only employee and doing all the work, your salary should be at least 60% of your profit. Also, take advantage of the retirement options! A Solo 401k is amazing for S-Corps and lets you contribute way more than a SEP IRA in most cases.

Honestly, as a recent S-Corp converter myself, the biggest value comes from someone who's responsive and specializes in S-Corps, not necessarily their credentials. My EA knows 10x more about S-Corps than the big-firm CPA I started with who charged triple. One thing nobody mentioned yet - make sure whoever you hire understands the health insurance premium rules for S-Corps. It's weird - you pay them personally, deduct them on your personal return, but the corp should reimburse you. Getting this wrong can cost you.

I've worked with both EAs and CPAs for my S-Corp over the years. My advice: interview a couple of each and go with whoever best understands YOUR specific situation. The credential matters way less than their experience with similar businesses. Ask direct questions about reasonable compensation for your industry, retirement options, and home office deductions if applicable. If they give vague answers or seem uncertain, move on regardless of whether they're an EA or CPA. And fwiw, my current EA charges about 40% less than my former CPA and provides much more proactive advice throughout the year.

As someone who made the S-Corp election last year for my consulting business, I can definitely relate to your situation! I went with an EA and it's been perfect for my needs. The key things that helped me decide: 1) My EA specializes specifically in small business taxation and S-Corps, 2) They're way more affordable than the CPAs I interviewed, and 3) They actually return my calls/emails quickly when I have questions. One thing I'd add to the great advice already here - make sure whoever you choose can help you set up proper documentation for your reasonable salary decision. My EA helped me create a file with industry salary data and documentation of my role/responsibilities that justifies my compensation level. This gives me peace of mind in case the IRS ever questions it. Also, don't overlook the quarterly estimated tax planning aspect. With an S-Corp, your tax situation changes significantly, and having someone who can help you avoid underpayment penalties is worth every penny. For your simple situation, a good EA will absolutely be sufficient and much more cost-effective than a CPA. Just make sure they specialize in S-Corps and small businesses rather than being a generalist.