The tax code is 70,000 pages long. That’s 140 Stephen King novels.
Fortunately, as a tax preparer, you don’t need to memorize the tax code. Most of what you need to know is a small subset of the tax code. Why? Because the tax code covers more than individual and small business taxes.
Thus, it’s not as daunting as it seems to become a tax preparer. You don’t even need to be a CPA to start a tax business. You merely need to take the courses and become licensed.
Here are the steps you need to take in order to become a tax preparer.
1. Study Up
While it’s true you only need a high school diploma to certify as a tax preparer, you shouldn’t settle for high school education. This doesn’t mean going and getting a college degree (although this will certainly increase your skills and competitive edge). It means learning as much as you can about taxes.
If you eventually want to go on to become a CPA, you’ll need that college degree. But you can study tax law without going to school. Find books on how to prepare for certification. Find books on the history of tax law. And read a ton.
2. Take the Prep Courses
There is only so much you can learn from books and the internet. Preparing taxes and doing it well takes insider knowledge other tax preparers and CPA aren’t willing to give away for free.
You can find courses online through colleges and universities. They might be a little pricey, but they’re cheaper than a full college liberal arts education.
Some tax prep businesses will offer courses as well. This might be a good way to get a job. Sometimes working for a larger corporation before striking out on your own can give you the experience without the risk.
Remember, building your own business takes time. Sometimes that amount of time can mean failure. Finding a more secure way to practice tax preparing before starting your own business might be the most table route.
3. Get Your Preparer Tax ID Number
The IRS requires that you register with them before you touch other people’s tax documents. They don’t want just any Joe preparing taxes and spreading false information. This streamlines things for them as they won’t have to audit so many tax documents.
Applying for the PTID is an easy process. Fill out an application and include your name, DOB, mailing address, phone number, SSN, conviction record, tax history (including discrepancies). They don’t want people who already commit tax fraud on their own taxes.
You’ll need to open an IRS e-services account and submit an additional application to become an authorized e-filer. And lastly, you’ll need a credit check and criminal background check.
4. Buy Some Software
You’re not going to be able to keep track of and prepare taxes quickly enough with just Excel spreadsheets. You’ll want some help from your electronic friends.
This is why you should buy software for tax preparers. You’ll increase your efficiency and accuracy if you do.
5. Get a State License
Not all states require this. If you aren’t a CPA or some sort of attorney already, a few will require a license to practice.
The states are these:
- New York