EA Part 2 study guide: Businesses
By Haresh Ratnagrahi, Founder, HiPrep (CPA, FCA, CMA (US), CISA, CRISC)
EA Part 2, Businesses, covers business entities, accounting methods, assets and depreciation, and specialised returns. Plan 60 to 100 hours, learn the forms for each entity, and practise basis and depreciation calculations.
Key takeaways
- Sole proprietors: Schedule C and self-employment tax.
- Weeks 1–2: sole proprietors and accounting methods.
- Confusing which form each entity files.
- Sole proprietor: Schedule C.
- Know the cost basis, the recovery period and the method, then apply the convention.
What Part 2 covers
Sole proprietors: Schedule C and self-employment tax.
Partnerships: formation, basis, allocations and distributions.
Corporations: C corporations and S corporations.
Accounting methods, inventory and cost of goods sold.
Assets and depreciation, including MACRS and Section 179.
Exempt organisations, trusts and estates.
An 8-week plan
Weeks 1–2: sole proprietors and accounting methods.
Weeks 3–4: partnerships.
Weeks 5–6: corporations.
Week 7: depreciation and specialised returns.
Week 8: mocks and review.
Common mistakes
Confusing which form each entity files.
Forgetting basis limits on losses.
Mixing up Section 179 limits with bonus depreciation.
Entity forms cheat sheet
Sole proprietor: Schedule C. Partnership: Form 1065. C corporation: Form 1120. S corporation: Form 1120-S.
Depreciation made simple
Know the cost basis, the recovery period and the method, then apply the convention. Section 179 is an election to expense within limits.
Exam facts at a glance
Enrolled Agent (EA) (US Enrolled Agent), overseen by IRS · Special Enrollment Examination. 3: Exam parts (SEE). 3.5 hrs: Per part: 100 MCQs. 105: Passing score (40–130 scale). 2 yrs: To pass all three parts.
Part 1, Individuals: Individual tax returns, income, deductions and credits. Main topics: Preliminary work and taxpayer data, Income and assets, Deductions and credits, Taxation and advice, Specialised returns.
Part 2, Businesses: Business entities, financial information and business returns. Main topics: Business entities, Business financial information, Business assets and depreciation, Specialised returns and taxpayers.
Part 3, Representation, Practices and Procedures: Practising before the IRS, ethics and procedures. Main topics: Practices and procedures, Representation before the IRS, Specific types of representation, Completion of the filing process.
The path from eligibility to certification
Enrolled Agent (EA): 1. Get a PTIN. Obtain a Preparer Tax Identification Number from the IRS. 2. Register for the SEE. Schedule through the Prometric system. 3. Book at Prometric. Take each part at a Prometric test centre, including international locations. 4. Pass all three parts. Within the two-year window. 5. Apply for enrolment. Submit Form 23 and clear the suitability check.
Who it suits: Commerce graduates and accounting professionals; US tax outsourcing and KPO professionals; CAs and CMAs adding US tax authority; Freelancers who want to serve US clients. Careers it opens: US tax preparation and advisory; IRS representation; US tax outsourcing and GCC tax teams; Independent practice for US clients.
Key terms explained
SEE: The Special Enrollment Examination: three parts (Individuals, Businesses, Representation) that qualify candidates for the Enrolled Agent credential. Each part has 100 multiple-choice questions.
Form 1065: The return a partnership files to report its income, deductions and credits. Each partner receives a Schedule K-1.
Form 1120-S: The return an S corporation files to report its income, deductions and credits. Each shareholder receives a Schedule K-1.
Schedule C: The schedule a sole proprietor uses to report business income and expenses on a personal tax return.
MACRS: The Modified Accelerated Cost Recovery System, the main method for depreciating business property for tax purposes.
Section 179: An election to deduct the cost of qualifying business property in the year it is placed in service, subject to dollar and income limits.
More questions candidates ask
Which should I pick: CPA, CMA or EA? CPA suits audit, reporting and global accounting careers. CMA suits management accounting, FP&A and finance leadership. EA suits US tax and IRS representation, and is the quickest to complete. Our counsellors will map one to your background and goals for free.
Can I take these exams from outside the US? Yes. The CPA, CMA and EA exams are available at Prometric test centres in many countries, including India, the Middle East and Asia-Pacific. Eligibility and registration run through the relevant body: a US state board for CPA, IMA for CMA and the IRS for EA.
Do I need a commerce degree? It depends on the exam. CPA requires a degree plus accounting and business credit hours, which vary by state. CMA requires a bachelor’s degree plus experience. EA has no degree requirement. Book a free eligibility check and we will tell you exactly where you stand.
What are the passing scores? CPA: 75 on a 0–99 scale. CMA: 360 on a 0–500 scale. EA: 105 on a 40–130 scale. All are scaled scores, not percentages.
How HiPrep can help
HiPrep is an exam-prep provider for the CPA (US), CMA (US) and Enrolled Agent exams. Every answer is built step by step, cell by cell, so you see how a result is reached and not only what it is. Explanations are available in English, Hindi, Tamil, Telugu and Kannada, and a mentor is behind the platform for doubts.
You get a Prometric-style simulator with tutor and exam modes, full-length mock exams with a scaled-score estimate and topic breakdown, layered books, one-page revision notes built from your mistakes, flashcards, an AI tutor that hints before it tells, and a study plan that adapts to your exam date and weekly hours.
Start with the free diagnostic: 45 minutes and a topic-by-topic report that shows where you stand before you spend anything.
Frequently asked questions
Is Part 2 the hardest part?
Many candidates find it the broadest because of the number of entities and forms.
Do I need business experience?
No, but practise the entity forms until they feel routine.
Sources and official references
About the author
Haresh Ratnagrahi, Founder, HiPrep (CPA, FCA, CMA (US), CISA, CRISC). Haresh has spent 30+ years in corporate finance, M&A and teaching, including as a professor at Sydenham College of Commerce and as founder of the Finance & Accounts Learning Academy at EXL, where he trained more than 6,000 employees. He founded HiPrep to give CPA, CMA and EA candidates clear teaching, a real exam simulator and mentoring.