Tax preparers prepare tax returns for individuals and small businesses – which is not easy task. The United States federal tax code has grown from 400 pages in 1913 to more than 72,000 pages today.
Luckily, there are approximately 1.2 million tax preparers in the U.S. ready to help out. If you are a tax preparer, you have a huge responsibility to your clients to prepare and submit their tax returns on time and ultimately help them avoid a dreaded IRS audit. If you don’t keep up with the ever-changing (and growing) tax code or you make a mistake, you can be sued and face financial devastation of your own.
Tax preparers often work at small firms, and many work out of their homes. Whether you rent or lease office space or you have a home office, you need certain business insurance policies to protect you from the risks you face, including the following:
Tax preparers should work closely with an independent insurance agent to assess their exposure and determine the types of business insurance that they need. Consider the following types of basic business insurance coverage:
You may also want to consider endorsements to your business owners policy or standalone policies that provide the following types of coverage:
If you work out of your home full-time or even just some of the time, you may be uninsured or underinsured if you think you have coverage under your homeowners insurance policy.
A typical homeowners insurance policy limits coverage for office equipment to around $2,500 – not nearly enough to replace a computer, printer, phones, desk, fax, scanner or other equipment you need for tax preparation. And your homeowners policy does not cover business liability, loss or damage of business records, and damage caused by business interruption.
If you have a home office, you have several options in order to make sure you have appropriate coverage:
The most important coverage you need as a tax preparer is professional liability insurance, or tax preparers errors and omissions (E&O) insurance. Thousands of lawsuits are filed against tax preparers every year. Your E&O policy protects you if you are sued for mistakes in your work. Consider these examples:
These types of claims are not typically covered under your general liability insurance. You may also be required to have this type of insurance by your clients or certain associations that you want to join.
Tax preparers E&O insurance provides coverage for costs related to your errors (e.g., IRS penalties and interest due to your mistakes) as well as costs related to your defense in a lawsuit (court costs, attorney fees, settlements and judgments) up to the limits of your policy.
Tax preparers professional liability insurance is generally affordable and is truly invaluable in protecting you from financial devastation. Your premium is based on several factors including but not limited to the following:
Remember to update your tax preparers professional liability policy as your business grows and expands over time and you assume greater liability exposures.
As a tax preparer, you know how important it is to have good advisers in your corner. In order to find great quotes on tax preparer business insurance, talk to an independent agent in the Trusted Choice® network. A local, independent insurance agent can work with multiple highly rated insurance companies in order to find the best combination of coverage and price for your small business. Your independent agent will get to know you and your business and will remain your trusted adviser for the long term. Contact an independent agent today.