Tax preparation businesses require a significant amount of time, energy, and resources to be successful. As a tax preparer, it is important to protect yourself and your business from potential liabilities. One way to do that is by obtaining tax preparer insurance.
Tax preparer insurance is a type of professional liability insurance designed to protect tax preparers from potential claims and lawsuits arising from errors and omissions in their work. The insurance covers financial losses resulting from the negligence of tax preparers, such as incorrect tax calculations, incorrect filing of tax returns, or failure to include required information.
Tax preparer insurance is a crucial tool for tax preparers to protect their business and their personal finances. Without insurance, tax preparers can be held liable for any errors they make, which can lead to significant financial losses.
Who Needs Tax Preparer Insurance?
Tax preparer insurance is especially important for tax preparers who are self-employed or own their business. In addition to protecting the business from potential liabilities, tax preparer insurance can also provide tax preparers with peace of mind knowing that their business and personal finances are protected.
Types of Tax Preparer Insurance
Tax preparer insurance can provide a variety of coverage, including errors and omissions, professional indemnity, and general liability coverage.
- Errors and omissions coverage is designed to protect the tax preparer from any financial losses resulting from mistakes made in the course of their work.
- Professional indemnity insurance protects against claims arising from the professional advice given by the tax preparer.
- General liability policy covers claims arising from bodily injury or property damage.
Tax preparer insurance policies can also be tailored to meet the specific needs of the tax preparer. For example, some policies may cover the cost of defending the tax preparer in a lawsuit, while others may provide coverage for settling a claim.
How Much Does Tax Preparer Insurance Cost?
The cost of tax preparer insurance can vary depending on the type and amount of coverage desired. Generally, the cost of coverage is based on the annual gross receipts of the tax preparation business and the type of coverage being purchased. The cost of coverage can range from a few hundred dollars to several thousand dollars per year.
In addition to the cost of coverage, tax preparers should also factor in the cost of any deductible or co-payment that their policy may require. Deductibles and co-payments are typically based on a percentage of the total claim amount and can range from a few hundred dollars to several thousand dollars.
Tax Preparer Insurance Requirements
Before purchasing tax preparer insurance, tax preparers should ensure they meet state or federal requirements for obtaining coverage. For example, tax preparers may be required to obtain a professional license or pass an exam to be eligible for coverage. Tax preparers should also be aware of any other regulations or requirements related to their particular tax preparation business.
Commercial Insurance And Business Industry Classification
- SIC CODE: 7291 Tax Return Preparation Services, 8721 Accounting, Auditing, and Bookkeeping Services
- NAICS CODE: 541213 Tax Preparation Services
- Suggested Workers Compensation Code(s): 8810 Clerical Office Employees NOC, 8803 Auditor, Accountant, or Computer System Designer or Programmer – Traveling
Tax Preparer Insurance – The Bottom Line
If you are a tax preparer and you are looking for a way to protect your business and personal finances, then tax preparer insurance may be the right solution for you. With the right coverage, you can rest assured that your business and personal finances are protected.