In this blog you will learn of some disaster stories that have happened to tax preparers.
If you are a tax preparer, or thinking about becoming a tax preparer, this blog is designed to warn you what to avoid and hopefully show you how not to fall victim to these disasters.
And hopefully you’ll also get a good laugh out of some of these stories…
4 Common Tax Preparer Disaster Stories
Now in the tax business we have found that it’s usually the same type of disasters that happen over and again, for example:
Not having a back up for your database
This is very serious and can cause any tax preparer to lose sleep at night. I mean seriously, if a ransomware or virus attaches to your client list and then you lose all your client records, you are just flat-out DONE.
You will need to exit the business and you could even face legal liability.
Always maintain a backup of your client records.
Hiring someone when you don’t have the business to support hiring someone
If you can’t pay employees, then don’t hire employees. You need to make sure you have enough business to support hiring employees. these seem like obvious statements but in the tax business, due to the fluctuations in seasonal business, it can sometimes seem like you have enough work where you can afford more employees but then things slow down and you don’t.
When you have employees who are stressed out about paying their bills because they’re not getting the hours that you promised, morale in the office can really suffer.
And when morale of your team is low, disasters can strike such as bad client service, careless mistakes, and even stealing.
You can get singled out by the IRS and investigated, and shut down
Believe it or not, a lot of the “most successful” tax professionals eventually end up running into problems with the IRS, and they get shut down.
We are not going to name names because that’s not our style, but if you Google search “tax preparer shut down by IRS” you will see that this has happened to many tax businesses that people thought were so “great.”
There are a lot of scams in the tax business and sometimes people think they are “above the law” because they have so much knowledge of how the IRS works that they think they can outsmart Uncle Sam. Yes well that may work for a while, until it doesn’t. Uncle Sam, when he’s upset, kicks like a mule and aims for the head.
Making partnerships or joint ventures and not having an exit plan
Smart tax professionals often form partnerships or joint ventures with other professionals. For instance you may have a tax person who links up with a mortgage broker, or an attorney. Again, these partnerships are great, until they aren’t great.
As a tax professional, you don’t want to end up being pulled under if your partner messes up, or worse yet commits a crime.
You need to keep close tabs on any joint venture partners because if you give an inch, some people will take a mile…and that can turn into a disaster.
Anyways, we hope that this blog post has alerted you to some of the dangers you need to be aware of as you get into the tax business, or if you’re already in it.
Certainly this is one business where survival is an accomplishment (really that is any business these days, but this one especially).
In fact I would say that is one thing we are proud of at Pronto, is that we have been around for more than 50 years, so we know how to survive and a big part of surviving is…avoiding disaster whenever you can!
About the writer:
Jamie Waggoner is a Communication Major at University of North Carolina-Wilmington (UNCW). Jamie’s favorite course at the moment is Integrated Marketing, which shows how smart companies use storytelling and word-of-mouth to develop authentic and compelling relationships with their customers and the general public. Jamie did not realize when she accepted an internship at Pronto Tax School that she would become a tax expert, but hey, life is full of surprises and that’s a good thing.