Tax Consultant Definition: What It Means & How They Help
Clear, informative guide explaining tax consultants' roles, qualifications, benefits, and tips for choosing the best expert for your financial needs.
According to the latest data, the U.S. accounting and bookkeeping industry employs nearly 50,000 tax consultants who earn an average annual wage of $88,903. But what is a tax consultant, and what do they do in their day-to-day career life? Which skills and qualifications do they need to perform their roles effectively?
This article explores the meaning of tax consultant, their roles, educational background and the benefits of hiring one. Keep reading to learn how to choose the right tax consultant for individual and business returns.
For a deeper understanding of tax planning strategies, consider exploring our insights on Tax Planning: 6 Benefits for Your Business.
What Is a Tax Consultant?
A tax consultant is a financial expert knowledgeable in state and federal tax laws. The professional knows how to research and apply these laws to set up favorable tax strategies for minimizing liabilities at individual or business levels. Experts who often identify themselves as tax consultants include CPAs, specialized attorneys and qualified agents in private firms.
What Does a Tax Consultant Do?
Experts in the tax consultancy industry perform various roles, depending on a client’s prevailing needs and their area of specialty. Their prevalent responsibilities include:
Tax Planning and Advisory Services
Professionals in this industry research complex tax laws and the latest regulations to provide businesses and individuals with tax planning and advisory services. They can also conduct in-depth analysis of a client’s income and expenses to recommend strategies for minimizing tax liabilities using eligible credits and deductions.
Tax Return Preparation and Compliance
Taxation consultants can also assume the responsibility of a tax preparer to ensure their clients file accurate and timely returns while complying with state and federal regulations. In the event of an IRS audit, the professional can represent clients in meetings to guide the process and achieve favorable outcomes.Have Questions About Tax Planning?
Qualifications and Skills of a Tax Consultant
Now that you understand the standard tax consultant definition, which qualifications and skills does the expert have? For starters, a tax consultant has a specific educational background and certifications that enable them to help clients cover tax liabilities in a compliant and cost-effective way.
To be considered a go-to expert for taxation consultancy, an individual must complete an undergraduate or graduate degree in accounting, finance, tax or related courses such as business administration. At the same time, professionals in this field often hold various certifications, including Enrolled Agent (EA) and CPA, which includes over 150 hours of an accounting course and a four-part national exam.
For those interested in the educational pathways for tax professionals, our CPA Firm Services provide insights into the qualifications necessary for expertise in this field.
Tax consulting professionals should also demonstrate analytical skills to interpret complex financial laws and problem-solving abilities to tackle taxation challenges effectively. Other soft skills needed to excel in the industry include attention to detail and effective communication to build client trust.
Benefits of Hiring a Tax Consultant
Partnering with a consultant in the taxation industry can yield various benefits at both business and individual levels. For instance, these professionals can help you:
- Save time and energy when filing returns: By partnering with a tax consultant, you can save yourself from the arduous task of filing complex returns which can take days, if not endless hours, to complete.
- Maximize money-saving opportunities: While you need to cover upfront expenses when hiring a consultant, working with them can save you significant money in the long run. The professional will provide strategies for lowering your overall tax bill while highlighting deductions that can further reduce the liability. Discover how strategic tax planning can lead to substantial savings in our article on Tax Planning: 6 Benefits for Your Business.
- Engage with the IRS to resolve disputes: You can consult a taxation expert and count on them to represent you at the IRS in the event of disputes that may trigger a random audit. Besides attending meetings on your behalf, the professional will help reduce the amount you pay in penalties from back taxes.
- Meet tax obligations throughout the year: While consultants are often busy during the tax season, they can provide year-round planning and advisory services to keep your books in order. They can also help implement prudent financial strategies, such as retirement planning.
How to Choose the Right Tax Consultant
Choosing the right professional is the first step to ensuring that you can benefit from comprehensive, proactive tax consultancy and advisory services. For the uninitiated, you might want to consider whether the expert:
- Has proven qualifications and certifications to get the job done efficiently.
- Has an unparalleled reputation in compliance and is highly recognized for helping clients solve their tax challenges at local, state and federal levels.
- Charges a reasonable fee that matches your budget. Whether it’s an hourly, annual or one-time fee, the cost should give you value for your money.
- Has the resources and technical know-how to analyze vast financial documents to determine your total income, especially if you’re a high-net-worth individual.
- Leverages latest tools and technologies, such as accounting software, to enhance accuracy and optimize the process of filing returns. Our Outsourced CFO Solutions utilize cutting-edge technologies to streamline financial management and tax processes.
- Provides open communication lines via popular channels, such as email, SMS or voice calls, to address your tax issues promptly and minimize risks.
Conclusion
Leverage our guide to understand the tax consultant meaning from a layman’s perspective and learn how these professionals can play an instrumental role in achieving your financial goals. Use the tips we discussed to hire the right expert and unlock all the benefits of working with a professional to address your taxation needs.
For comprehensive tax advisory and preparation assistance, explore our Tax Advisory and Preparation Services.
