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Tax preparation is a great career option for customer-focused professionals with strong mathematical skills. The Bureau of Labor Statistics says that the average salary for tax preparers in 2008 was $35,520, but many earned as much as $66,000 per year. New Yorkers who wish to become tax preparers should know that there are two options for entering this profession. The first option is to work for an established chain; the second option is to start a tax preparation business. Those planning to enter business for themselves should be prepared to make a significant financial investment in software and must submit to at least one background investigation.
Become a tax preparer for an established chain by enrolling in one of their courses. The most popular chains are H&R Block and Jackson Hewitt. These courses are typically nine to 12 weeks long and are usually offered during the late summer and early fall. Some tax preparation companies offer their alumni the opportunity to buy a tax franchise. Other tax students may be asked to fill positions that become available at established locations during tax season.
If you would prefer not to attend classes at a major tax preparation chain, try one the various online tax schools. A listing of these programs can easily be found by searching the Web. Some examples are "The Tax College" and "The Income Tax School." Interested parties should enroll online and will typically study at home. If you would prefer to own your own tax preparation business, see steps two through five.
If you choose not to accept employment with a major chain, you can start a small tax preparation firm of your own. This option is attractive to many tax preparers because it offers the option of working from home in one’s spare time. To get started, you’ll need your own tax filing software. You must choose a “professional version” that offers unlimited uses . Some of the most popular brands are Intuit, TaxAct, TaxWorks, and OLTPro. Your software may cost up to $600, but the expense is tax deductible. You must upgrade your program each year as tax laws and standard deductions change yearly.
Register your business with the appropriate New York Authorities. Before you can conduct business in the state of New York, you must legally register the name of your business, advise your county clerk's office of the way in which you plan to organize the business (i.e., LLC, LLP, sole proprietorship or any other option you may choose), and you must register with the New York State Department of Taxation. This can be accomplished by visiting the New York Business Portal's website, and must be done before providing tax services in the state of New York. It can take 10 to 14 business days to properly file the paperwork necessary to start your business. Refer any questions you may have about organizing a business to a lawyer who is a member of the New York State Bar Association.
Apply with the Internal Revenue Service for E-filing privileges. Most clients will request to have their taxes filed electronically. While this service may seem like a standard privilege for tax preparers, you will not be able to provide this service until you’ve obtained authorization from the IRS. To gain this privilege, you must file the application for an Electronic Filer's Identification Number and admission to the E-file program, or form 8633. This application can be downloaded and mailed or completed on the IRS's website. Candidates must pass a background check including criminal and credit history before E-filing privileges are granted.
Obtain authorization to provide rapid refunds, or “refund anticipation loans.” Refund anticipation loans are underwritten by financial institutions, and are what clients who receive “rapid refunds” actually receive from their tax preparers. Rapid refunds are not issued by the government; rather, the government repays the financial institution for instant funds given to clients when taxes are prepared. If you plan to offer this service, you must apply to provide the service through a company such as Refund Advantage. You will be required to pass a separate background investigation.
You don't have to become a CPA before becoming a tax preparer. If you plan to start a tax preparation business, be sure to register your business with the proper authority in your state.