Should I Become A Tax Return Preparer?Are you thinking about becoming a tax return preparer? Maybe you aren't sure if it's for you. Or maybe you aren't sure how to go about it. Maybe you're looking for ideas or for confirmation that starting a tax preparation business is a good idea. I'm sure this website will be a good resource for you.
What is a Tax Return Preparer?Most people think a tax return preparer is a nerdy person stuck in a dreary office with a computer working long hours from mid January through April 15th and churning out Federal Income Tax Returns for H and R Block or for a CPA firm.
This is a stereotype that doesn't even come close to reality. That might be one way to get started in the profession, but it certainly isn't how you have to end up. Yes, you can make it a part-time business to help pay the bills while you pursue your "real" interest--and many do--but consider the possibilities for turning it into a full-time passion.
A competent professional tax return preparer has so many avenues to pursue that it can be hard to decide. But make no mistake, specialization is the key to being profitable. Here are just a couple of areas you could specialize in:
- Child Daycare businesses.
- Real Estate Investors
- Day Traders
- Nonprofit organizations (charities)
- Social Clubs
- Homeowner's Associations / Condo Associations
- People who work from home
- Foreign students and workers (international tax issues)
- Retired persons
- Health care professionals
- Quickbooks Training
- Business Valuations
- IRA and Retirement Account specialist
- Divorce tax issues
- Bankruptcy tax issues
- IRS Problem Resolution
As a tax professional you'll be presented with many opportunities to advise your clients on issues that have a huge impact on their lives. If you take your work seriously and invest your time in becoming educated and experienced in one or more areas, your income can skyrocket in proportion to the value you provide to the clients who trust you.
Preparing tax returns and giving tax advise isn't just about crunching numbers on a computer or calculator. It's about developing a relationship with people who develop a strong trust in you and who rely on you to guide them.
What is the Demand Like for Tax Preparers?This is the wrong question. There is always a strong demand for competent professionals in all fields. You should be asking WHERE is the biggest demand for tax preparers. It is true that the lower end of the market--simple returns that can be done in 10 minutes--has become a commodity market. Unless you do volume business like the big franchises, it's tough to make money, and the pay at the big franchise operations is pretty low. But that's not where you should be focusing your efforts. You should be looking for a niche market you can serve with specialized expertise.
Each year the tax laws become increasingly complex and penalties for non-compliance get steeper. The Affordable Care Act has introduced incredible complexity into the tax code. Competent and caring professionals are in great demand.
But What About the Flat Tax. Or a National Sales Tax. Isn't That a Risk?Are you kidding? How many years have they been talking about a flat tax? Nobody in Congress is even taking that seriously. There is just no way that Congress is going to give up the carrot-and-stick system of deductions, credits and penalties that the current tax system gives it to influence the American people.
It is possible--perhaps even likely--that we will eventually have a national sales tax. But it will be in ADDITION to the regular income tax, not in place of it.
What is the Chance of Doing Away With the IRS?Zero. That's the chance. Congress has just handed control of the nation's health care system to the IRS. It is getting bigger and more powerful by the hour, not smaller.
What Skills and Personality Traits Do I Need To Be a Successful Tax Preparer?You need to enjoy helping people. You need to have some comfort level with complexity and numbers. You don't need algebra, calculus, trigonometry, geometry or anything like that, but you should be able to add, subtract, divide, multiply, and understand percentages, decimals and fractions.
You should have considerable tolerance for technical details and you should be able to concentrate on a task for long periods of time to bring a task to completion. You should be able to network with other professionals and make decisions when the right answer may not be clear.
When you are in school, the teacher asks you a question and you pretty much know which chapter of the book the answer will be in. Out in the real world of tax preparation and advising, YOU will have to determine IF there is a question, WHAT the question is, WHERE to find the answer, and HOW to know if the answer is right.
You'll also need a strong sense of ethics because you will be presented with situations every day where it is tempting to "bend" the rules in favor of your client or yourself. You must know your limits and be willing to refer a client to someone else if you don't have the training or experience to meet their needs.