Why Become a Tax Preparer?

Tax preparation is a highly in demand and profitable field since all earning individuals and businesses need to prepare taxes every year. The professional career is flexible, as you can work from home, part-time, or full-time, whichever option feels best for you. The most interesting and unknown fact about this career is that you don't need years of college education to begin. Moreover, seasoned tax preparers can develop their expertise, acquire advanced credentials, and enhance their income over time.

Steps to Becoming a Tax Preparer

1. Complete a Tax Preparation Course

To become a tax preparer, you must take a tax preparation course, which will introduce you to the fundamentals of tax law, filing requirements, and the use of the latest tax software. These courses are available at most community colleges, online, and tax companies, and can take from a few weeks to several months to complete.

2. Obtain a Preparer Tax Identification Number (PTIN)

Anyone who prepares tax returns for a fee must get a Preparer Tax Identification Number (PTIN) from the IRS. To get the PTIN, one needs to apply to the IRS. The application is easy and can be done online at the IRS website. The PTIN is a unique number that must be included by tax preparers on each return they prepare. This requirement is standard as well as a security measure to make sure no fraudulent activity is taking place. 

3. Choose the Right Tax Preparation Software

Nowadays, e-filing is more common than paper filing, for which all tax preparers require tax software to prepare and submit returns effectively. The company offers tax software for their workers, but independent tax preparers must buy their own. Useful tax preparation software includes Drake Tax, TurboTax, and many more.

4. Understand State-Specific Requirements

Although the IRS has federal-level requirements for tax preparers in place, various states also have specific certification or license requirements. 

5. Apply for an Electronic Filing Identification Number (EFIN)

If you intend to prepare 11 or more tax returns per year, you need to get an Electronic Filing Identification Number (EFIN) from the IRS. This identification number permits you to file tax returns for clients. The IRS performs a background check while you apply for an EFIN.

Challenges of Being a Tax Preparer

With the increased implementation of tax laws, tax preparation is now one of the most demanding jobs, but it does come with its challenges: 

• Tax Laws Constantly Change: Every year tax laws are revised, and tax preparers must keep up with continuing education, which can be a very time-consuming task.
• Handling Difficult Clients: clients sometimes talk for a long time to share the financial documents; in some cases, they might have incomplete documents or not correct documents, which can lead to compliance issues. 
• Seasonal Income Fluctuations: The peak season for this profession is from January to April of every year. In this time, preparers get a lot of work, whereas the rest of the year work load is low, which results in lower income. 

How Long Does It Take to Be a Tax Preparer?

The timeline for becoming a tax preparer is based on how soon you finish your tax course, register for your PTIN, and, if required, obtain the additional state requirements. On average, you can begin working as a tax preparer within a few weeks to a few months. However, experience and establishing a client base may take a couple of years. 

Networking and Career Growth in Tax Preparation

Creating a successful career as a tax preparer is not all about education and technical knowledge; in this career, networking and professional development by doing additional certifications are more important as they will help you create a client base for yourself. Knowledge is one of the few ways to grow in this field.

• Join Professional Associations: Professional associations such as the National Association of Tax Professionals (NATP) provide networking, training, and industry news.
• Attend tax conferences and webinars:  IRS-hosted events, tax software companies, and industry organizations offer great information and networking opportunities. Which help in learning new software and new practices. 
• Engage in Online Communities: to be aware of the industry and its changes, use platforms like LinkedIn, Facebook groups, and tax professional forums. great venues to ask questions, learn from others, and keep up with industry trends.
• Seek mentorship: at the start of your career, it is very beneficial if you work with an experienced tax preparer; they will be able to assist you and will give you the opportunities to learn and practice your skills. This would prevent you from making costly mistakes and speed up your learning curve.
• Offer Value to Clients: With ongoing knowledge of tax law developments, delivering high-quality customer service, and informing clients, you can create loyal clients and increase your business via referrals.

Conclusion

Becoming a tax preparer is a wonderful career path for individuals who are interested in dealing with numbers, assisting people, and looking for a work setting that offers flexible hours. No matter whether you wish to be an employee of a company, an independent contractor, or an entrepreneur, there are many opportunities available in this career path. With the proper credentials, knowledge of tax law, and established client base, you can have a rewarding and successful career as a tax preparer.

If you need professional training, expert advice, or career advancement in tax preparation, SK Financial CPA is here to assist. With extensive experience in tax services and financial consulting, our professionals offer valuable insights and assistance to prospective tax preparers. Call us today and discover how we can assist you in establishing a successful career in tax preparation!