Tax consultancy is a rewarding business. You get to work with firms, businesses, offices, and individuals to show them how to apply any tax law. You are the go-to individual for questions about tax preparation and tax returns. You are key to the financial success of your clients. On top of that, the field of tax consultation is very lucrative.
It is no wonder that tax law consultancy has become a competitive business. If you are trying to get a college degree in accounting or a similar degree, think about what it involves. Also, if you want to make a career change in this field, you need to be familiar with
- Career options
- Education requirements
- Experience needed
- Salary projections
- And other requirements
This article will tell you everything about how to become a tax consultant.
What Is It That Tax Consultants Do?
Tax consultants are there to help individuals and small and large companies with their tax questions. They advise clients on how to handle their tax responsibilities and lower their tax obligations.
In the larger scheme of things, they can advise clients on how to set up a tax strategy and cover their tax liabilities. For the consultant that means studying federal and state tax laws, communicating, and applying them. The goal is to benefit the client and reduce unnecessary tax payments. Other responsibilities could include
- Preparing tax returns
- Payroll taxes
- Compliance with local and national tax laws
It is thus crucial that tax advisors stay up-to-date with the latest state and federal tax requirements. But how can you become a tax consultant? Tax professionals need to have an EA or CPA degree. It is the state’s Board of Accountancy that asks for them and determines the requirements for obtaining them. A CPA includes a four-part national exam and an accounting course consisting of 150 college hours.
Important soft skills include good spoken and written communication skills. As a tax advisor, you need to be able to explain concepts that are foreign to your clients.
Where do tax consultants work? Here are some examples:
- Financial consulting firms
- Large companies
- Law offices
- Public accounting firms
Tax Consultants’ Duties and Functions
A tax consultant is more than a tax preparer or a person who signs financial documents. Preparing and filing tax returns is the last part of a consultant’s duties. The description above shows that the work of these tax professionals is relevant throughout the fiscal year.
To elaborate on this, the following are some of the functions of a tax consultation professional:
- Investigate the impact of current financial activity on future tax returns
- Have all tax-related issues under control so that submitting tax return documents is a simple and fast process
- Help new businesses to get all their tax obligations sorted, even before starting
- Give clients the confidence that they are fulfilling their legal obligation without paying unnecessary taxes
- Provide tax planning when it comes to acquisitions, mergers, and sales
Important Tax Consultant Skills
We have discussed the most important functions of a tax advisor; besides that, building constructive relationships with clients is crucial.
A tax consultant needs to have a certain social awareness, understand what a client needs, and be able to communicate well. Knowing how to ask the right questions is a skill that many tend to overlook but is essential. Speaking and writing skills allow a consultant to put the knowledge of tax rules into practical use for clients and coworkers.
How do you become a tax consultant desired by many big companies? This involves many other skills. You can read about some of them in the section below.
To prepare tax returns you need good mathematical insight. Much of the work of a tax consultation professional involves making calculations. If you want to get into this field, you will need a certain aptitude for calculations, and preparing mathematical projections.
Time and Project Management
Most tax consultant professionals work with several clients at a time. That means managing many tasks at a time. Excellent project and time management skills are crucial for success.
Attention to Detail and Accuracy
Part of the work of a tax consultant is reviewing piles of documents. When you have to go through large numbers of documents you need to have a keen eye and the ability to focus on what is important. There could be small inconsistencies, and you need to be able to spot them. The goal is to plan and prepare taxes in the best way possible.
Creativity and Competence
The main goal of tax professionals is to ensure compliance and reduce tax liability. They need to consider state, regional, and federal tax laws. At the same time, they serve the interests of their clients. In the end, the client wants to pay as little in taxes as possible, so that requires detailed knowledge of the client’s particular situation and a creative approach.
Computers and computer software help in the work of a tax consulting expert. Some create their own customized spreadsheets to make their work faster and easier. A measure of tech-savviness is a prerequisite for successful tax consultants. Records need to be correct, clear, and consultable.
Most individuals and small business owners have little knowledge of complex financial accounting. They often leave decisions up to their tax professionals. But consultants need to be able to explain their conclusions and suggestions in a way that is understandable to their clients. They are somewhat like teachers. They need to explain concepts related to small business tax preparation checklist and terms that may be unfamiliar to those without a formal education in the matter.
The client’s needs are the priority, but there are times when you cannot give in to their desires. Putting your foot down is also vital when it comes to the matter of receiving payments for your work. Some consultants have had to defend their good name against baseless accusations.
What Formal Education Do You Need as a Certified Public Accountant
It may surprise you that requirements for tax professionals are rather flexible. There are different careers you can study to get your formal education. You can study accounting, business, or law.
It is not an absolute rule but most professional tax experts have a bachelor’s degree in finance or accounting. In addition,many have a bachelor’s degree with a specialized accreditation, CPA credential (Certified Public Accountant).
Some consultants have chosen to specialize in a specific field that requires specialized training or education, like international or corporate tax. These fields of tax law warrant their own tax expertise. Continuing education is necessary to keep up-to-date with the latest changes in tax laws.
How Long Does It Take?
The time it takes to become a tax advisor depends on the kind of training or career. Common steps on the road to becoming one are as follows.
Choosing the Industry and Career
There is much you can do to prepare yourself. Try to find as much information as you can. You can read books about tax law and see whether you find it interesting or not. On the internet, you can also find information about what it’s like to be a tax consultant. Other sources of information are workshops and webinars.
Earn a Bachelor’s Degree
After you decide to become a tax professional, you need to choose the right major. Most people that work in the field of tax consultancy have a bachelor’s degree or an associate degree. If you want to have more responsibility, consider working toward a master’s degree.
Get Your Credentials
As mentioned before, you will also need to earn EA or CPA credentials. A state’s Board of Accountancy is the responsible institution for these credentials. CPA involves a four-part national exam and 150-course hours in accounting or a similar field.
EA certificate programs involve an IRS registration. The IRS will have to do a background check, and you need to take a special exam to enroll. If you have previous experience in a tax-related position you may bypass some of the requirements. With that, you will be able to get a Preparer Tax identification number, which is important since you need that number when you prepare tax returns for someone else.
Gain Experience and Advance
Most employers consider someone with three years of working experience. Keep in mind, though, that quality is more important than the amount of work experience. This is especially true if you want to work at the cutting edge of innovation.
Previous work as an accountant or auditor for a company, NPO, or accounting firm counts as experience. Work for the state revenue department or IRS counts as well. With that kind of experience, you can start working as a tax advisor.
Enroll in Continuing Education Classes
After obtaining a CPA or EA accreditation you need continuing education credits to maintain them.
The exact requirements vary per state. New York, for example, requires a CPA-holder to have 24-40 contact hours per year, depending on the subjects studied. EA holders need to complete 72 education hours every three years.
Land an Entry-Level Job
There are different factors that determine how easy it is to land a job as a tax consultant. It depends on the number of available jobs, personal network, and qualifications. It could take a couple of months to land your first tax consulting job.
FAQs about becoming a tax consultant
1. What educational requirements are necessary to become a tax consultant?
Although a specific degree is not necessary to work as a tax consultant, most employers favor applicants who have a background in accounting, finance, or a similar profession. In order to obtain higher roles in the industry, a master’s degree in taxation or a similar topic may also be beneficial.
2. What skills are required to become a successful tax consultant?
Excellent analytical and critical thinking abilities, attention to detail, great communication skills, and the capacity to perform well under pressure are characteristics of successful tax consultants. Also, they must be able to use their in-depth understanding of tax laws, rules, and practices in their employment.
3. What are the typical job duties of a tax consultant?
Tax consultants help clients with a variety of tax-related problems, such as tax compliance, tax planning, and tax return preparation. They also offer guidance on the tax ramifications of financial decisions, mergers and acquisitions, and commercial transactions.
4. What is the earning potential for tax consultants?
Tax consultants’ earning potential varies greatly depending on criteria like experience, education, region, and type of company. As of May 2020, the median annual wage for tax preparers was $47,520, according to the Bureau of Labor Statistics.
5. How do I gain experience in tax consulting?
Working at an accounting firm or tax preparation service is often a prerequisite for gaining experience in tax consulting. College internships and part-time jobs can both help students gain expertise in tax planning and preparation.
6. Is it necessary to obtain a professional certification to become a tax consultant?
A professional qualification, such as that of a Certified Public Accountant (CPA) or Enrolled Agent (EA), can boost one’s credibility and lead to more employment options in tax consulting, while it is not necessarily necessary.
7. What kind of clients do tax consultants typically work with?
A wide range of clients, including individuals, small enterprises, corporations, non-profit organizations, and government agencies, may be served by tax consultants. Some people might specialize in serving a certain group of clients or industries.
8. What is the job outlook for tax consultants in the current market?
Tax-related advice and services will continue to be needed by firms and individuals, therefore the career prognosis for tax advisors is usually favorable. For tax preparers and accountants, the Bureau of Labor Statistics projects a 3% increase in employment until 2029.
9. Are there any legal or ethical considerations that I should be aware of as a tax consultant?
Tax consultants must conform to all applicable tax laws and regulations as well as the moral guidelines established by organizations like the American Institute of Certified Public Accountants (AICPA).
10. How do I market myself and build a client base as a tax consultant?
As a tax consultant, cultivating a clientele base often entails networking, forming connections with other professionals in the field, and creating a strong online presence on social media and business websites. Referrals from pleased customers can also be an effective marketing strategy.
Concluding Words on How to Become a Tax Consultant
Some important and practical tips were presented in this article.
You have learned that as a tax advisor you can work for a company or on a freelance basis. The internet has opened up many opportunities for professionals in this field. Through it you can reach a global audience.
Tax consulting has become a very competitive field though, so you need all the help you can get. You will probably want to invest in management software. Continuing education and earning certifications is a must if you want to be an attractive candid.
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