Why you should start a tax business and how to get started
In today’s economy, self-employed people often have the greatest job security. The reward of entrepreneurship is independence, financial freedom and more. Imagine creating your own secure source of income–with unlimited potential! You can establish a great new home-based business that can be part-time or full-time… and even grow into a brick and mortar business. The choice is yours, and always will be when you’re a business owner.
Benefits of starting a tax business
- Earn $100/hour or more as an experienced pro
- Reduce your own tax liability
- Your skills will make you more marketable
- Work 3 months of the year and make a great income
- Have your summers and holidays free
- Be more secure – you control your own destiny
- Start at home with minimal expenses
It’s easier and less expensive than you think!
- Minimal start-up costs
- Get your tax business started quickly
- No franchise fees or royalties
- No accounting background or degree required
- We teach you everything you need to know and do it faster than you think!
- No need to reinvent the wheel – we offer tax manuals on policies and procedures, tax preparation marketing, personnel and expansion
Huge growth potential
Millions of Americans pay a tax professional to prepare and file their tax return every year and Congress continues to make more changes to the tax code. These changes make taxpayers even more confused and frustrated and they are seeking out the help of Tax Professionals more than ever. As the number of taxpayers continues to grow, so does the need for qualified Tax Professionals. And now, with the recent changes to the U.S. economy, it’s more important than ever for taxpayers to claim all of the credits and deductions due them and pay no more than the exact amount of taxes they owe. Starting your own tax business will enable you to meet this growing demand and also give you the flexibility and security you deserve.
How to Start a Professional Tax Practice
Starting your own professional tax practice is a unique and intricate process, with Internal Revenue Service (IRS) requirements and ever-changing laws adding to the complexity. Whether you are planning on becoming a solo practitioner or starting a larger practice, this page provides a detailed explanation of the steps you can take to start your own professional tax practice to help ease the process for you.
- Register your business with your state
- Obtain an Electronic Filing Identification Number (EFIN) from the IRS
- Obtain a Preparer Tax Identification Number (PTIN) from IRS
Define your tax practice
- Determine your business model
- Understand tax certification options
Get tools to streamline tax preparation
- Consider which professional tax software is right for your business
- Consider other tools to help you streamline your workflow
- Ensure you stay up to date with continuing education
Grow your tax business
- Market yourself
- Expand your practice to serve small and medium-sized businesses (SMBs)
The 7 Best Tax Software Programs of 2020
The average cost of hiring a professional to prepare a basic tax return was about $188 in 2018-2019, according to a survey performed by the National Society of Accountants, and you can rest assured that inflation has tweaked that upward at least a little bit since then. This fee was for the simplest of returns, and it could go up or down depending on your area of the country. You can save yourself some money if you identify your tax-time priorities in advance and find the best tax software to address them for you.
Some programs are pricier than others, but they’re still generally cheaper than hiring a professional, and you’ll spare yourself having to cram all those tax documents into your briefcase or a box and carting everything off to your accountant’s office.
These software options have you covered. Some of them are actually free—yes, free, at least for filers with simple returns.
The 7 Best Tax Software Programs of 2020
- TurboTax: Best Overall
- H&R Block: Runner-Up, Best Overall
- TaxAct Premium: Best Bargain
- Credit Karma: Best Free Software
- Jackson Hewitt Premium: Best Wizard
- TaxSlayer: Best Simple Data Entry Option
- Liberty Tax: Best for Savvy Tax Filers
5 Easy Ways to Establish Clientele as a New Preparer
“Where am I going to get clients?”
It’s a question lots of tax professionals ask as they ponder starting their own tax business.
Going it on your own may seem scary but being your own boss and setting your own schedule… Not so scary!
Building your practice is going to take a bit of time but if you know where to start it shouldn’t be that hard. Here are five easy ways to start building your client list as a new preparer.
- Start with friends and family.
What better way to spread the word about your new business than announcing your new venture to family and friends? This circle of people will likely be your biggest group of supporters and cheerleaders so start there and ask for referrals.
- Join networking groups.
There are so many networking groups out there so join a few that are affordable and start networking. Be sure to pick a group that doesn’t already have a tax professional in it so that you have the opportunity to gain clients from within the membership and then gain referrals from there. BNI’s are generally great networking groups to join. There is also PRO, your local chamber or small local groups you may want to join.
- Develop a referral program.
Developing a refer-a-friend program is a great way to grow your client base. A referral program will incentivize the clients you have to refer their friends, thus easily growing your client list through your current client’s network.
- Reach out to your professional network.
Are you on LinkedIn? You should be! Announce the big news to your network and ask for referrals there. LinkedIn is a powerful online networking tool that will help you gain more exposure and stay in touch with the professionals in your network. You could also reach out to your professional network via email to announce that you have opened your own practice and are taking clients. You might even consider holding an open house before tax season (if you have a brick and mortar location).
- Offer up free tax planning or other seminars.
A great way to get new clients in the door is to hold a free seminar on year-end tax planning or the new Affordable Care Act rules. It’s a great way to get people in your door who will likely become clients. You can promote your seminar on local news sites, through friends and family, on your social media sites and also through your networking groups.
If you don’t have a place to host a seminar, consider offering to speak at another group’s event.
How Much Money Does It Cost To Start A Tax Preparation Business?
Becoming a Tax Preparer
It doesn’t cost much at all to become a tax preparer. Our federal income tax course is free. There are no formal federal educational requirements for tax preparers. Only four (4) states require licensing. The IRS charges $50 for a Preparer Tax Identification Number (PTIN). The IRS does not charge for an Electronic Filing Identification Number (EFIN). After completing the aforementioned, you are a tax preparer.
Starting a Home-Based Tax Preparation Business
Starting a home-based tax preparation business can also be done with minimal start-up costs. With little overhead, you can charge less than the competition and still make a great profit. It’s easy to run a tax preparation business out of your home and charge less than the well known tax preparation franchises.
The primary things that you will need to start a home-based tax preparation business, some of which you probably already have, are:
- A computer, printer and a copier
- A high-speed internet connection
- A phone
- Professional tax preparation software
- Basic office supplies
- Business cards
If you are like most people, you already have a computer, multi-function printer, an internet connection, and a phone. If so, your initial out-of-pocket expenses should run $300 – $500. $500 – $1,000 total should be sufficient to cover all of your start-up expenses the first year. Some of the expenses, such as part of the cost on the tax preparation software, can be deferred and paid for with the money that you make “in season” preparing the tax returns.
What About Advertising Expenses?
You should start by talking about your new tax preparation business to people that you already know in your community, such as family, friends, and co-workers, before advertising or marketing to the general public. Talk to your family, friends, and co-workers and pass out your business cards. This is a low-stress way to get started while you fine-tune your tax preparation business. And don’t forget, when you deliver a client’s tax return and they are happy with your service ALWAYS ASK FOR REFERRALS. Word-of-mouth is the number one way that independent home-based tax preparers get their business.
If you are good at attracting and retaining clients, you can make excellent money by starting your own tax preparation business. But don’t forget, it can take a long time to become an overnight success!