Category: New Tax Preparers
Top 5 Mistakes New Tax Preparers Make and How to Avoid Them
The tax and accounting industry is suffering from attrition. This is nothing new. More seasoned tax preparers and accounting professionals are leaving the industry faster than new tax professionals are entering the space to take over. Commonly, tax professionals will sell their book of business to another professional or another company when they decide to retire, but these days, we are seeing tax offices simply shut down. An Industry suffering from this level of attrition presents all sorts of opportunities for new tax preparers who are hungry for success. With opportunity comes risk, so let's talk about 5 of the top mistakes that new tax preparers make and how to avoid them.
Poor Working-Knowledge of Tax Software
Tax software is here to make your business more efficient. By reducing the amount of time it takes to prepare a tax return, you can fit more clients into your schedule. Not being able to use your tax software proficiently is one of the biggest time wasters when it comes to the actual prep work. If you have all of the appropriate paperwork and information required to prepare the return, the return itself should be fairly straight-forward to prepare, respective to its level of complexity, of course. In addition to time wasted, not knowing how to use your tax software leaves you open to the risk of calculation errors and missing forms. Avoid this mistake by getting to know your tax software platform, and by doing all of the software training that is available. Purchasing software packages with on-demand support services is one way to avoid having to be a software super-user to get the most out of your program.
No Marketing
Another big mistake that new tax preparers make is doing little to no marketing after going through the all the educational requirements, various required registrations and enrollment work to get into the tax world. You finished the Annual Filing Season Program (AFSP) and you did all the tax software training available, so when January 15th rolls around, you expect to see clients. However, January is not the time to start your tax marketing. Established tax and accounting offices will advertise year-round to some degree with the biggest portion of the budget focusing on early tax season. Whether you do online marketing, digital marketing, or even just referral marketing with business cards that you are handing out to everyone you meet, there should be some plan of how to attract and keep new clientele. Avoid this mistake by crafting a solid tax marketing plan around your personal business circumstances and talk to a marketing professional if you need assistance. Some platforms offer in-house assistance to their advertisers, such as Google Ads, Bing Ads, and Facebook.
Overpromising
One way that some new tax preparers will attract new clientele is by promising larger-than-legally-permissible refunds or lower-than-legally-permissible tax balances. Avoid this mistake by withholding the refund figures until the tax return is completely finished. Estimates are fine when given with that disclosure, but speaking confidently to and educating your client about how tax credits work will prevent you from feeling pressured into making assurances that can not be kept without unethical actions.
Underdelivering
When you engage with a tax client, you are nurturing a relationship. You aren't just in the tax business, you are in the relationship business. When trust erodes in this business, you lose your clients. Underdelivering on quality service is one way your clients could lose faith in you and your abilities. Specific examples of underdelivering could be failure to follow up with a client about additional paperwork required to complete the tax return or failure to realize that the tax return was rejected. Another manner of underdelivering would be failing to add relevant and applicable tax credits to the tax return. Avoid underdelivering on quality service by taking your role seriously and respecting your tax clients enough to do your best for them and by them, including appropriate communication leading with respect and integrity.
Undercharging
I always encourage people to charge what they are worth and charge for the level of service that you are providing. Find out what other professionals in your area are charging (to the extent that you can). You do not want to end up competing on price; It's always a losing game. There are a few ways that a tax pro may be undercharging and not even realize it. One way to undercharge is by offering a flat rate before you've seen the paperwork. Then you wind up with more work than you anticipated but your client may balk if you try to increase your invoice. Or perhaps you're answering long emails answering tax client questions without billing them for that time. Perhaps you have clients who text and call for repeated refund updates and you are not billing for that time communicating with them or checking the refund status. Avoid undercharging by setting a rate schedule, including it in your letter of engagement and invoicing accordingly. You can still discount as you see fit, but have the confidence to charge what you are worth and increase your rates as necessary.
Author Tina HarveyPosted on Categories Ethics, New Tax Preparers