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Self Employed Tax and Personal Tax Preparation In Abbotsford
It goes without saying that organizing and paying taxes can be a bit of a pain. This is the case especially if you aren't really knowledgeable about taxes. In this article, we'll be looking at two aspects of taxes; self-employed tax and personal tax preparation. With that being said, let's get right to it.
Self-Employment Tax – What Is It Anyway?
This refers to the fee which self-employed people are obliged to pay the government. This tax is a bit like the FICA taxes which employers in the US pay.
You need to note that not all businesses have to pay this tax. This payment is due only when a business owner has net earnings of 400 dollars or above from that business. Any individual who makes less than this isn't obliged to pay this fee.
In any type of business, the employer and employee have to pay a percentage as tax. However, self-employed people are considered to be both the employer and the employee. This means that they have to pay fees of both categories. The tax rate will vary depending on the government.
Tax Preparer – Who Is This?
This is someone who files an individual's task forms and organizes them. In addition to this, tax preparers also defend their clients when there are any disputes that involve taxation. For instance, tax court problems and audits. While preparers aim to protect their client's interest, they also have to ensure that they are in compliance with taxation laws and regulations.
You might say that they are serving two masters; the government and their client. Let's give you a practical example. A tax preparer will do his/her best to reduce the tax burdens of their clients. However, they also need to ensure at the same time that they aren't breaking any taxation codes. You can click here to learn more.
Tax Preparer – Prerequisites To Become A Successful One
It's not just anyone that can become a practitioner in this field. There are some necessary requirements that one must have first. Here are some of them:
Knowledge In The Field
This is especially important for new practitioners. You need to learn everything you can about this profession. If possible, try to get some form of certification. This knowledge you have acquired will play a big part in ensuring your success.
Get Licenses And Certification
We mentioned this in the previous section. By working hard to get certificates and licenses, you are expanding your knowledge. Aside from this, your clients will be at ease when they see your certification. Majority of people won't be very confident about an unlicensed practitioner.
This one is pretty obvious. You can't succeed as a tax preparer without clients. If you are a new practitioner, it is advised that you start with a few clients and work on less complex issues. As you improve and build a stronger client base, you can then move on to more advanced situations.
Use The Right Technology
Technology plays a big part in many professions today. This includes tax preparation. There are various types of software out there that can make your job as a preparer a lot easier and more efficient. Spend time researching on these tools in order to find the best one.
Must You Have A License?
We've already discussed the importance of a license. However, many of you are probably asking, “is this compulsory?” The answer to this is a bit complicated. It all depends on your region. In some places, a license isn't a mandatory requirement for practitioners. In other places, you can't do this job without holding a license. Be sure to check if this is the case in your region. Visit https://www.irs.gov/tax-professionals/understanding-tax-return-preparer-credentials-and-qualifications to learn more about tax preparer credentials.
How Long Will It Take To Become A Professional?
Experience and skill are obviously important parts of being successful in any profession. If you are just starting out in this field, you will probably need about 3 years to get a firm understanding of the whole profession.
In the first year, most beginners focus purely on data entry. By the time they get to the second year, they would have developed their individual values in the profession. Finally in the third year, they would have gathered all the necessary skills and information needed to be a fully-fledged practitioner.
Becoming a professional is only a matter of time. Similar to other jobs, you need to spend years working in order to become a professional in this field. When you give yourself 5 more years, you'll learn certain skills that come with being a veteran in the profession.
How Much Do Tax Preparers Earn?
The salary of a practitioner depends on whether he/she works with an accounting firm or on their own. In many cases, sole practitioners charge hourly rates. These rates vary depending on the individual. On the other hand, those who work with firms earn salaries. People of both categories earn anything between $30,000 and $60,000 per year. If you are working as an intern, there is a chance that you won't get paid at all.
Another thing that affects the income is willingness to work. How many clients are you willing to take, and how much work are you willing to do? The amount of money you can make is up to you.
Note: this applies mostly to sole practitioners.
Hiring The Right Practitioner
As we have repeatedly emphasized through the course of this article, not all practitioners are at the same level. Some people might find it a bit difficult to get the right one. It's important that you never pick one based on their price alone. This applies when buying anything at all.
Spend time researching that practitioner's credentials and licensing. If available, you can also read reviews left by previous clients. Also try asking people around. If you need help with tax preparation Abbotsford residents would be proud of, just ask successful business owners in the town and they should be able to recommend one or two practitioners. Try to get at least 3 options before choosing one.
The subject of tax management and payment is one that some individuals don't like. However, all tax-related matters can be made easy when you work with the right practitioner. Remember to take your time when choosing so that you can find one that will meet your requirements.