What it takes to become a professional tax preparer

Taxes can be overwhelming which is why there is such a large market for tax preparation services. There are many different types of tax preparers and each title has certain requirements that must be maintained in order to establish its position. Below is a brief introduction to the different types of tax preparers available as well as some general tips on what to look for when choosing the right one to prepare your taxes.

General Tax Preparer

There are several different routes that are taken to become a general tax preparer. For larger companies like H&R Block or Jackson Hewitt, they will provide their employees with training on how to serve customers with their tax needs and how to spot common tax return errors and omissions.

Enrolled Agent

Enrolled agents are required by the IRS to have 72 hours of professional education every three years to retain their designation after passing a standardized test.

Certified Public Accountant (CPA)

To become a CPA requires about five years of school and a very rigorous test. There are many different options when it comes to filing your taxes every year and with better software and training coming out, the process has become a much smaller headache.

How to Choose

When there are this many options to have your taxes done, the hiring process of a preparer becomes a contest of who is the most qualified. People will trust brands that they see on TV or advertisements, or perhaps they will seek out an accounting educated individual for advice or expertise.

By obtaining more knowledge on taxes and the different requirements that each preparer must go through in order to obtain their designation, you will have a better foundation on which to make your tax preparation decision when it comes time to hire a tax preparer.

Proper Credentials and Liability Coverage

Although a tax preparer's certifications and awards are one metric to base your decision on, one of the most important factors is whether or not they are covered with liability insurance.

If you're thinking about outsourcing your tax preparation this year, make sure that the preparer is covered with reliable insurance. This is a good indication that they take their job seriously and that if there are any errors or omissions with your tax documents, that there will be insurance coverage to resolve your dispute.

Jim Cochran is the founder and President of Business Insurance Now, a company offering errors and omissions insurance for accountants and bookkeepers. Jim's experience in the insurance industry allows him to understand the best policies when it comes to liability insurance for tax preparers.