Becoming a Tax Preparer in Canada in 5 steps
It is no longer news that Canada is one of the countries that have a high tax rate globally. No wonder the country is continuously developing. The declaration of tax can be lengthy and stressful. Hence professionals will be needed for this task. Big and small firms always need tax preparers to prepare their tax and ensure that they are accurate. So, if you want to know how to become a tax preparer in Canada- you are on the right page!
In this article, we will explore who a tax preparer is, what they do, the types of tax preparers in Canada and how to become a tax preparer in Canada.
What is a tax preparer?
A tax preparer is a tax professional that plays a vital role in helping businesses and individuals to file their taxes and maximize their deductions. Some tax preparers can be certified public accountants, while the IRS can license some.
What does a tax preparer do?
A tax preparer is responsible for completing tax forms to be submitted to the internal revenue service of Canada. The function of a tax preparer is vivid when individuals, businesses, or even an employer needs to file their tax to maximize their deductions.
Without a doubt, tax preparers can either be certified or uncertified. Still, they must be trustworthy because you will be entrusted with valuable personal information about your client’s dependents, annual income, and marital status.
Here are some other roles and duties of a tax preparer in Canada
- Interview the client.
- Gather financial information.
- Complete tax forms.
- File the tax forms.
Types of tax preparers
There are different types of tax preparers in Canada. And we will be looking through every one of them. Stay closely.
#1. Certified public accountants
A certified public accountant is a type of accountant that can either work with a firm or as a lone party. However, they must pass a challenging state exam to get a certification.
As a certified public accountant, you can work with individual businesses or clients to file taxes and other financial situations such as marital assets, business sales, retirement savings, and dual proprietorships.
#2. Enrolled agents
An enrolled agent is a type of agent or tax preparer you can become in Canada with a license from the IRS. Note that you have to complete the challenging exams and be capable of representing clients in court. You must also be able to stand in the gap with your client when they have a challenge with IRS regarding issues with tax payments.
And after receiving your initial license, you must partake in 72 hours of continued education in 3-year increments. By doing this, you can practice anywhere around the world without limitation.
#3. Non-credentialed tax preparers
A non-credentialed tax preparer is a type of tax preparer with no credentials. However, they often have seasoned employees in a large company working to prepare and file taxes for the organization. This taxpayer is cost-effective because they will have to deal with simple tax returns.
#4. Tax attorneys
You will work with large businesses to file corporate taxes as a tax attorney. Often, your services will be needed if you want to meet with the IRS or go to court about tax situations. Your client might also receive a consultation form from an enrolled agent or a certified public accountant to settle the filing matter.
Skills needed to become a tax preparer in Canada
No doubt, you need specific skills to be successful as a tax preparer in Canada. Here we have the list of the common skills you need to develop.
- Critical thinking skills
- Active listening skills
- Communication skills
- Time management skills
- Organizational skills
- Customer service skills
#1. Critical thinking skills
As a tax preparer, you will be dealing with a long list of taxes, which you have to deal with to maximize deductions. Therefore, the ability to think critically is a skill you need to develop to be a successful tax preparer in Canada.
#2. Active listening skills
The ability to listen actively is to listen attentively. As a tax preparer, you must be able to listen to your clients and understand what they have you to do. Also, you must recognize when to ask questions and be fully engaged in the conversation while you listen attentively along the way.
#3. Communication skills
In most cases, you might have to represent your clients in a court hearing by the IRS. The ability to communicate effectively during court hearings and even with your clients is essential. Your oral and written skill must be perfect for communicating intentions appropriately.
#4. Time management skills
Yes, time is essential. Without a doubt, your employer might be a busy person. So it would be best to maximize your time communicating with them and determining what is appropriate for tax filing. In most cases, you will have to deal with deadlines, so the ability to manage and deliver on time is vital for your career.
#5. Organizational skills
It would be best to be organized with your tax filing. Your finding must be done accurately and organized. This will make you an exceptional tax preparer.
#6. Customer service skills
Most tax preparers are a member of an organizational team. Hence, you need customer service skills to communicate efficiently with customers.
5 Steps to Become a Homicide Detective in Canada
Become a Tax Preparer in Canada in 5 Steps
Becoming a tax preparer in Canada is a journey- a journey you need to prepare for. Hence, we’d be providing you with the necessary steps to make your journey easier and feasible. Keep reading!
Step one: Gain High School certification or GED
The first step to becoming a tax preparer in Canada is to enroll in high school and earn your high school diploma or GED. It would be best to focus on mathematics, business, and writing courses to be perfect for this job role.
Step two: Get the appropriate training
You can undoubtedly enroll in vocational and technical schools and a community college to take courses in Tax information. In addition, you can earn accreditation through the National Association of Tax Professionals or the Accreditation Council of Accountancy and Taxation.
During your program, you will likely take courses in Taxpayer filing status; Taxpayer interviews, State tax codes, Calculation of refunds; Annual filings; Tax forms.
Step three: Complete an Undergraduate degree
You can consider continuing an undergraduate degree to have more credibility. Although earning a bachelor’s degree in accounting is not strictly essential, it will give you a comfortable edge over other applicants applying for a job position.
Step four: Receive valid ID numbers through the IRS
To become a certified tax preparer in Canada, you need to have a preparer tax identification number through the IRS. To do this, you must fill out an application form that may include your personal information such as name, current address, date of birth, social security, etc.
Undoubtedly, you will earn the certification of an unenrolled preparer if your application is approved. This will allow you to file basic returns for individuals and businesses. Nevertheless, if you wish to work in your own tax preparation company, you must get an electronic filing identification number through the IRS.
Note that the IRS will carry out a criminal background check and additional credits as part of your validation process. So, upon approval, you can start filing tax returns for your clients.
Step five: Acquire a tax preparation license in your province
Depending on the province you are in, you may have to take some more steps to become a tax preparer. For example, you may need a license specific to the province or extra hours of continuing education every year.
Read also: How to become a 911 dispatch rider in Canada.
Frequently Asked Questions
Is it hard to become a tax preparer in Canada?
Becoming a tax preparer can be easy compared to the similar ventures of becoming an insurance agent or real estate agent.
How much does a tax preparer make in Canada?
Averagely, a tax preparer will earn about $38,000 in a year. However, a tax preparer will earn up to $33,000 a year at an entry-level position, while more experienced workers will earn over $44,000 in a year.
What is the difference between a certified public accountant and a tax preparer?
A certified public accountant is a professional with a license, having training and education in many areas of business and accounting. However, a tax preparer does not need an advanced degree to prepare taxes. But must be competent through IRS employment or formal exam.
Is becoming a tax preparer worth it?
Becoming a tax preparer is worth it because it is flexible, and you’ll earn above average. Especially if you are good in mathematics, attentive to details, exhibit organizational skills, and enjoy working with clients.
Do I need a license to become a tax preparer in Canada?
This solely depends on the individual employee level.
Tax preparers have been saving a lot of organizations from the hurdles of tax preparation. Hence, their service is needed. Here we have provided the steps to becoming a tax preparer in Canada and the skills required.
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