Do You Have What It Takes To Become A Tax Preparer?

Above anything else, a tax preparer is someone who loves to help others. They thrive on challenges, but they love bringing a smile to someone’s face and making life easier for another person. You don’t necessarily have to be good with numbers to be successful, although you should have decent mathematical capabilities or develop them as you become a tax preparer. But what’s far more important than the skills is the actual mindset.

An Attitude Of Service

You should always be looking for ways to help others. The entire idea of tax preparation is that you can do a really good job for someone and take away the need for them to focus on a task that they may not like. Few people really enjoy the process of preparing their tax forms. That’s why they turn to companies like Liberty Tax Services: we make it easier for them, taking the burden off of them and getting it all done in a much shorter period of time.

Basic Knowledge

In order to prepare returns, you’ll need to know what you’re doing. But you can learn that in a number of different ways. For example, Liberty Tax offers free courses for anyone who wants more tax information. These serve as a good primer for someone who’s interested in starting prep work, or just interested in learning whether or not it might be a good fit for them.

The Liberty Tax Atmosphere

All of our tax preparers are a part of creating the Liberty Tax atmosphere. We are a unique company because we believe that taxes can and should be fun for everyone. This attitude starts with every single one of our employees, not just our actual preparers. But it’s their responsibility to really spread the Liberty Tax Services culture of fun. Of course, this isn’t a requirement everywhere that you might want to work as a tax preparer. It’s something unique to Liberty, but it’s something that our clients and our staff really value.

E-file And You

E-file is an IRS program that makes it easy to file your tax return electronically, eliminating the need for paper forms and bypassing the mail service entirely. The system is widely available at every Liberty Tax franchise and the locations of most other major tax services companies. But what is it? How does it work? And most importantly for many of our customers, how does it keep information safe?

Secure Channels, Fast Transmission

When your information is sent to the government, Liberty Tax isn’t emailing it. Email usually travels through unsecured channels, unencrypted, leading to a host of potential problems. Information on the internet becomes much safer when it is subjected to a fair amount of encryption. All IRS data communications are encrypted in this way, which means they are all considered generally safe. Your information will be protected from interception en route to its final destination.

Get Your Refund Faster

The biggest advantage of choosing to e-file is the ability to get your refund a lot faster. When you have a Liberty Tax franchise mail your return, you’re not likely to get any money you are owed sooner than about two weeks. Often that time frame is even longer. The reason for this is simple: you have to wait for the mail service to process and deliver it, and then from there you’ll need to wait for the IRS to clear it and then for the check to be mailed back to you.

The combination of e-file and direct deposit is a powerful one. E-file allows Liberty Tax to send in your return immediately, where it will be processed in a matter of days. You can expect your return in just a few days more – much faster than the several weeks previously required for the process.

Most importantly, everything stays safe throughout. The risk of a data breach is very rare. Provided you follow the proper internet safety plans and protocols on your end, you’re almost guaranteed not to experience any major issues.

Liberty Tax Franchise Ownership: The First Year

For new franchisees, the first year is usually the most confusing and tumultuous. If you chose a Liberty Tax franchise, you’ll receive the kind of support and education that you need to make your venture as successful as possible. Here are a few of the tips we have for first-time owners going through your first year.

Make Sure You Understand The Business Cycle

Tax preparation is a seasonal business. You’re going to end up with most of your business in the first three or four months of the year. There will be distinctive peaks and dropoff points within this time as well. To some extent, the exact peaks and drop-offs will depend on your location too. Learning about them in advance is crucial to budgeting appropriately. They will help you plan your staff and generally give your customers the best service at the time they need it most.

Work Closely With Your Central Company

You chose a franchise for a reason! At Liberty Tax, we emphasize supporting all our zees, especially during the first year. If you have questions or aren’t sure about something, we’re here to help you. We’ll connect you with local resources that can help, including others who will be able to directly relate to whatever issue you’re currently facing.

Keep On Top Of Your Financials

It can be easy to lose track of important details during your first busy season. But your Liberty Tax franchise profit depends on keeping track of all of this so you know exactly how you’re doing on a daily basis.

Your first year will usually be the hardest. It can be a little bit of a bumpy transition to go from working for someone else to running your own Liberty Tax franchise. Profit is likely to be slimmer than it will be in future years. But remember, with proper preparation and a bit of hard work, you’ll be able to get through your first year and establish your business so that it will be self-sustaining in years to come.

What Independent Contractors Need To Know About Taxes

California has a large number of independent contractors, many of whom don’t even know their work falls into the category until they receive a surprise 1099-MISC form at the end of their first year of employment. Knowing if you are one ahead of time, and what to do if so, will put you in a better position when you file.

Who Is An Independent Contractor?

Independent contractors are defined by their freedom. Your employer gives you tasks to perform, but doesn’t provide substantial training or specific instruction detailing how they must be completed. There are other qualifications as well, but these are the most basic. If you’re uncertain, just ask your employer: they’ll be able to tell you how you’re being considered so you can act accordingly.

Being able to classify you as an independent contractor is a benefit for the employer. It reduces their administrative costs because the burden for most of the tax-related issues falls to you rather than to them. They simply provide you with one form at the end of the year that lists how much they paid you. You are responsible for everything else.

You Have To File Quarterly Estimates

As an independent contractor, you’re considered self-employed. That means you’re responsible for filing quarterly estimated taxes. Many people forget that taxes are actually paid throughout the year; the balance between what you paid and what you owe is simply reconciled every April. If you don’t have a company doing the withholding for you – and as an independent contractor, you don’t – you’ll need to take care of it on your own. Liberty Tax can help you organize and submit the payments. Your Liberty Tax franchise is open year round so you’ll never be on your own.

You Need To Keep Good Records

As a self-employed individual, you’re also a business owner, which means you’re eligible for special deductions and credits. But in order to claim them, you need to make sure you have the records to support them. If you’re not sure what to keep track of, err on the side of caution and note down everything. You can also stop by your local Liberty Tax franchise and talk about the kind of credits and deductions you might receive. We at Liberty Tax recommend keeping track of the traditional financials necessary for any business along with any travel expenses and vehicle use.

Becoming A Tax Preparer In California

California is one of relatively few states in the US that have their own requirements for education and qualification to become a tax preparer. The process isn’t difficult, but if you don’t know it and don’t know to follow it, you can end up in legal trouble.

Start With A Qualifying Education Course

The process begins with a 60 hour qualifying education course. The provider must be approved by the California Tax Education Council (CTEC), which helps the agency gauge the quality of the education you received. A course taken within the past 18 months is eligible to meet this requirement. It is fairly common for a tax preparation business to offer classes that meet this requirement in California, but check to be sure before enrolling.

Meet The Bond And PTIN Requirements

Before applying to the CTEC, make sure that you have a Preparer Tax Identification Number from the IRS. This helps identify you both at the state and federal level, and also ensures that you are in compliance with new federal regulations that apply to everyone becoming a tax preparer. Finally, you’re required to hold a $5,000 tax preparer bond.

Submit Your Application

Once you meet all of the criteria above, you’re eligible to submit your application. Most people who work at a tax preparation business and directly prepare returns (rather than supporting with data entry, etc) are required to register. Attorneys, CPAs, and IRS enrolled agents are exempt from these requirements because they’re already registered.

Once you’ve successfully registered, it’s important to remember that you have to renew annually. There is a small fee for doing so, and you’ll have to do things like continue your education during the year and maintain your PTIN, but otherwise it requires little effort.

The goal of this entire process is to certify for the public that prep workers know exactly what they’re doing. The regulations also encourage continuing education and positive steps to always improve service. They may seem tedious, but once you’re used to them they are just another way to ensure that you’re giving your best to every client.

A Guide To Your Tax Return

If you earn income in America, you’re probably required to give a bit of it to the government. If you’ve been working for years, you’ve got a lot of experience with this. Your parents probably introduced you to taxes the first year you were working, or maybe you heard them talking about it even long before that. But even after years of paying, you might not know what exactly you’re sending.

The Return Itself

The total of all the paperwork that you file with the government is what’s referred to as your tax return. It’s every form you’re required to submit, every piece of paper that is necessary for the government to understand where you stand. These documents show them what you’ve paid, what you owe, and what they might owe you.

Credits Vs. Deductions

Both of these reduce the amount that you owe the government, but in different ways. A credit is a direct reduction in how much you need to pay. It’s like receiving a deposit into your checking account: it immediately counts in full against any kind of balance.

Deductions are a different issue. They reduce the amount of income that you can be taxed on, and thus only indirectly lower your liability. For example, if you’re electing to itemize your deductions and you have $10,000 in eligible donations to charity and other deductions, then you’ll be taxed on your total income minus $10,000. Deductions are commonly less favorable for the taxpayer’s ultimate amount owed or refund received because only a portion of their total value is reflected in the final amount. You don’t get to take $10,000 off your taxes; you save the difference between what you would have paid on your full income and what you’re paying on your income minus $10,000.

Different Forms For Different Situations

The main reason that people need assistance from professional tax preparers at companies like Liberty Tax is because not every American will file the same forms. There are several different ways individuals can make money, and each one requires a different form. In addition, various deductions and credits all have their own individual forms. If you don’t know which is which, you could easily end up submitting the wrong thing without knowing it.

You can avoid these issues by seeking out your local Liberty Tax franchise. We have trained preparers standing by, ready to assist our customers no matter what their tax situation. In addition, each Liberty Tax franchise has preparation professionals available to answer tax questions even if you’re not a client. Our goal is to help everyone learn more about those mysterious forms, so stop in today and get clarification on your questions from a friendly face in your neighborhood!