Technically, a degree in accounting is not mandatory to become a tax preparer to tax consultant in Canada. If you know all the rules, guidelines, and restrictions of becoming a tax preparer, it is not hard to be a preparer in Canada.
This article will give you a quick overview of the process, you need to understand to become a tax prepare in Canada.
Read on to find out!
Learn about taxes in Canada
Before you become a tax preparer in Canada, it is important to become aware of the Canadian tax system.
If you have no formal education in accounting and taxes, you should try to have one. If getting a degree is hard, enroll yourself in income tax training with a school registered with an approved program in your province. A tax training is not enough to start a career as a tax preparer, as there are so many other important areas you need to learn.
Once you have formal academic credentials or at least a vocational program, you at least now know about the theory.
Canada Revenue Agency (CRA) data for 2022 says EFile system tax filings amounted to 59.0% of total tax filings in Canada, and paper filings were only 7.9%.
Setup your business
You can set up your business. It does not have to be in a corporate form, you can also prepare taxes as a self-employed individual. The decision whether to use a corporation or not is personal to you and your circumstances.
If you decide to not incorporate, you can get a business name from the province and a business number from the Canada Revenue Agency.
Apply for EFILE number from CRA
Getting an Efile number is easy from the Canada Revenue Agency, but the process may take a little bit of time. So earlier the better!
You can also go through this separate post explaining how to get an EFILE Number from CRA.
Get training to become a tax preparer
To become a tax preparer or consultant in Canada, you need to be properly trained to handle the work. Many institutes in Canada offer formal training to help you become a tax preparer.
Practical and good training can bridge the gap between theory and practice. It can also familiarize you with real-life examples and walk you through the whole process of tax preparation. If the program is good enough, it may provide additional mentorship and valuable tips to succeed as a tax preparer in Canada.
You can check out our starter income tax training programs if you are just starting up.
Get a Liability Insurance
You must get professional liability insurance besides general insurance for your business. A good errors and omissions policy will protect you from personal liability if the taxpayer decides to sue you. Ensure, that you do not start preparing tax returns for others unless the cover is active.
Familiarize yourself with preparer penalties, and gross negligence penalties.
Choose the right software
A good tax preparation software goes a long way in making or breaking your business in the first year.
Oftentimes, newbies get stuck with the software they were trained on in the beginning. If many tax preparers are using software, it does not mean that it’s the best one!
Do your own due diligence and get the one that suits your needs. Some companies price their software high and then try to lock you down for multiple years of contracts. Take test drives of their software, read online reviews, discuss with other accountants and then make a decision.
Cloud-based software is good, however, you must check its availability. There have been instances in the past where cloud-based software became unavailable at the busiest time of the year due to hacks. At times, the online or cloud-based software was not available for hours on the very last date of the tax filing deadline. Make sure to ask the question of whether the company guarantees the system availability or not. If not, stay away no matter how great the software is it’s worthless if you are not able to file your client’s tax return on time.
Look for the solutions that are reliable, and under your own control.
You do not have to be a CPA to be a tax preparer
No, you do not need to be a CPA to be a tax preparer in Canada. You can function as an independent tax consultant under a corporation or as a sole proprietor. But to be recognized as a public accounting service provider, you will need registration with CPA Canada and the provincial CPA body.
Being a CPA is definitely an edge over others due to the regulatory environment CPAs work in. You should consider the same if you have time and resources.
Build the right business model
Build the right business model.
Among other things, put up a proper marketing plan. Your business might be slow to force you to charge lower prices in the first year, however, things improve over time. Always adhere to ethical practices and do not bend rules. Try to learn to say no sometimes. Do not offer people guarantees for max refunds, work on maximum optimizations.
A good reputation will go long way!
4 thoughts on “How to become a tax preparer?”
I’m interested to get this course and to become tax preparer
Hello Fatima,
I am writing to express my interest in pursuing an in-depth course/training to become a tax preparer capable of working with both individuals and corporations. I wanted to inquire if your organization provides virtual classes for this particular program. If so, I would appreciate any information regarding the registration process and the commencement of the course.
Thank you in advance for your assistance. I eagerly await your kind response.
Best regards,
Hi,
I am outside Canada and want to have a comprehensive training covering all aspects of taxation in Canada. Please guide me in this regard.
Thanks & regards
Juned Khan
Hi Juned
This is in-person training. We do not have online delivery model.