There are three kinds of insurance a tax preparer needs
General Liability Insurance
Professional Liability Insurance
Tax preparation mistakes create enormous risks to clients
As a tax preparer, you help clients navigate one of the most complex systems in Canada — the tax code. Whether claiming the correct credits or understanding what clients can expense, mistakes can lead to reassessments or missed tax reduction opportunities. Clients may see these situations as negligence on your part. APOLLO offers customized small business insurance to fit your tax preparation practice’s needs.
No matter how well you understand the tax code, even minor calculation errors can lead to significant issues and the possibility of lawsuits. If you accidentally add an extra 0, your client’s tax return could get audited and reassessed. Remedying this situation requires significant time and money. Remember, mistakes can happen on bad days or late nights. A professional liability insurance policy can absorb costs related to a lawsuit for negligence or unsatisfactory services.
Lawsuits aren’t limited to negligent service. If a client visits your office and slips on your newly waxed floor, this could also result in a lawsuit. You may become liable for any expenses related to bodily injury or property damage.
Insurance is a no-brainer because it provides peace of mind. If a client sues you, you won’t be financially liable. Your insurer would instead pay for any legal costs. This keeps your business financially secure. Otherwise, a lawsuit could mean emptying your business’ retained earnings or taking out a loan.
Why do tax preparers need insurance?
Tax preparers hold sensitive information about a client’s personal and business finances. They use this to file tax returns, which, if done incorrectly, could result in penalties from the Canada Revenue Agency. This type of liability requires professional liability insurance, which mitigates the financial risks of your errors and omissions.
For example, if you incorrectly calculated a client’s HST remission and they’re reassessed, your client won’t be happy and will look to you for financial compensation. Insurance provides peace of mind here because you won’t be financially responsible for legal costs or payments to your client. You can rest easy knowing that a minor mistake will no longer mean your business’ demise.
Companies looking for your services may be wary about potential tax preparation mistakes. That’s why some sophisticated and larger businesses only work with insured service providers. So, if you’re looking to take on more clients, insurance is a must.
Get insurance in three easy steps
Find and select the coverage you need.
Choose the payment plan that suits you best.
Get your policy documents in an email instantly.
What types of risks does my tax preparation business face?
Tax preparers provide technical services and advice. Even an alleged error or omission can result in a lawsuit. If a client gets audited and thinks it’s because of your poor work, your client may sue you even if you did nothing wrong. A Canada Revenue Agency reassessment can result in hefty penalties, and clients will want to pass these costs onto you through a lawsuit. The right insurance plan can ensure you don’t pay these costs out of your own pocket.
Your business also holds important sensitive information about clients. From SIN and phone numbers to account passwords and more, if this information is misplaced or your company is hacked in a security breach, you may be found negligent. Insurance can help defend against lawsuits when you lose or misplace client data by paying for legal fees and possible settlement or damage awards.
Maintaining an office is expensive. If a fire breaks out or your office is robbed, you don’t want to replace everything with your own money. This could be a significant and unplanned expense. Content insurance can provide compensation for lost or destroyed business property on a replacement-value basis. It can further cover costs incurred for relocating due to a fire or other peril at your office.