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.

Tina HarveyJuly 23, 2025Ethics, New Tax Preparersavoid new tax pro mistakes, new tax preparers

Essential Resources Every New Tax Preparer Should Have

Tax preparation can be a very challenging role. Whether you are the owner of a tax preparation business, a partner in the business, or a new tax preparer in the industry, having these tools and resources in your arsenal will make you a better tax professional.

Tax Education and Tax Reference Resources

Becoming a professional tax preparer takes time and personal financial investment. While some firms may train you once you are hired, it will be easier to get your foot in the proverbial door if you are bringing with you tax knowledge and credentials. There are currently no federal competency requirements for tax preparers but there is a voluntary tax preparer education program all the Annual Filing Season Program (AFSP). This program will help you set yourself apart from other tax pros who do not take the extra step to obtain the AFSP Record of Completion.

Tax laws change often, and it is the responsibility of the tax preparer to stay on top of those changes (or face the consequences of not doing so which can include fines and penalties). For this reason, the AFSP is done yearly. For seasoned tax preparers who wish to continue growing their knowledge and ability to assist their clients, there is the Enrolled Agent program. An Enrolled Agent is a federally licensed tax practitioner who has completed all three special enrollment exams. Enrolled Agents have yearly minimum continuing education requirements, and renew their license to practice every 4 years.

Aside from the formalized IRS approved continuing education courses for tax pros, new tax preparers should also look for any specific state competency requirements for tax professionals. Other useful training resources would be tax software tutorials, practice tax return modules, and access to training on other tools used in the tax office.

Reliable Tax Software

The single most important tool you will need is user-friendly tax software. Without a computerized tax program, tax preparers would be preparing client tax returns on paper, by hand, and while some tax preparers continue to do so, all paid preparers are required to e-file their tax returns if they prepare 10 or more returns a year for compensation so it makes sense that even paper-filed returns are primarily prepared in a professional tax program and then printed for mailing.

Tax software can be divided into two main categories: interview-based and professional. Interview-based tax software is just that: tax software that takes the answers from an in-program “Interview” and then compiles the tax return, formatting the tax return and placing all of the relevant figures in the appropriate places. Some interview software platforms give access to forms, while others do not. Interview-based tax software is a very efficient tool for low to medium difficulty level tax returns.

For more complicated tax returns, professional tax software will be more effective at ensuring accuracy and completeness of the tax returns. Professional tax software enables a tax preparer to access every tax form available for a given tax year. Using professional tax software is the best way to complete complicated tax returns because it allows the tax pro to get hands-on with the forms, allows linking of various forms for information flow-through, and it can run diagnostics on the tax return that look for errors and omissions. Professional tax software allows users to run productivity reports and offers an integrated mobile app for tax clients’ convenience.

Year-Round Support

Whole-office tax support & technical support is an often limited or overlooked need for new tax preparers. Look for tax software platforms offer tax support for tax-related issues such as applying tax credits, fixing a tax return, or e-filing issues. Tax publications, such as The Tax Book, are excellent for quick tax reference. Technical support needs will vary based on personal ability and office computer and software particulars. For example, cloud-based software itself may not require technical support, but the computer on which you are accessing the platform could need support. Formal technical support would ensure that that the tax office is operating smoothly and safely (under a sound technical security plan).

Security Plan & Secure Messaging Tools

The preparation of tax returns requires the use of sensitive information which could be used in the commission of financial crimes. Tax Preparers come into contact with the private information of hundreds, sometimes thousands, of taxpayers in a given tax season. Normal day-to-day business operations for tax professionals includes electronically sending and receiving sensitive digital documents, requesting electronic signatures on sensitive documents, and requesting scanned copies of sensitive paper documents. Tax offices have a requirement to maintain the paperwork used in the preparation of tax returns which makes tax offices are rich targets for cyber security attacks. In the past, tax pros have not had any substantial liability related to the security of taxpayer information aside from the requirement to have it stored securely for as long as the law requires. When applying for a Preparer Tax Identification Number (PTIN), the IRS now alerts the tax pro to new data security requirements regarding the protection of taxpayer data. The IRS and relevant state departments of revenue all suggest that tax offices develop what is called a “Written Information Security Plan” (WISP) which details how sensitive data is used and stored. The IRS has a WISP template available for all interested parties.

Tina HarveyMay 27, 2025May 27, 2025IRS AFTR COURSEnew tax preparers, professional tax software, Tax Professional