Why You Should Start a Tax Preparation Business and How to Get Started

In today’s economy, self-employed people often have great job security. The reward for entrepreneurship is independence, financial freedom, and more. You can create your own secure source of income with so much potential! Within the environment of COVID-19, your business can even be set up from home, whether it be full-time or part-time! 

What are the Benefits of Starting a Tax Preparation Business?

There are many benefits to starting your own tax preparation business. The first and biggest advantage is that it is easy to do! Tax preparation businesses can be created quickly and without a lot of overhead. You do not need a big office or a giant IT network to get started. With a computer, some professional tax software, and a few fillings, you can get your business off the ground in no time! 

There are tax franchises you can buy into, but starting your own business is better due to the franchise fees, the enormous overhead, and the upfront money required. Due to these factors, you are better at starting off your tax preparation business from scratch. 

How to Get Started!

The first thing you will need is a solid foundation of tax knowledge. Whether it is through taking some courses to help get you up to scratch. 

Create an IRS e-services account – before you begin the application [process, you must apply and be approved for an e-services account with the IRS. This may take several days to verify and authorize your information, so it is important to plan accordingly. 

Next, you should submit your application. After you are approved, you will be able to log into your account to fill out the online application to become an IRS e-file provider. This can take up to 45 days, so it is better to do it in advance!

After submitting your application and any related documents, the IRS will conduct a suitability check on the firm and each person listed on your application as either a principal or responsible official. This may include a credit check, a tax compliance check, a criminal background check, and a check for prior non-compliance with IRS e-file requirements. Once approved, you will get an acceptance letter from the IRS with your Electronic Filing Identification Number (EFIN).

How to Get Your First Clients

Now that you are fully registered, what happens next? How do you get your first clients!  Most people start with offering their services to friends, family members, and neighbors. This is a good way to start as these people already know you and trust that you will do a good job! From there, you can ask for referrals which is a great way to increase your business.  

Another great way to increase business is to start networking. Get out and about and become known as the “”tax expert.” You can join a group like Business Network International (BNI). It will be important for you to continue your tax education to stay on top of the tax law changes and handle more complicated tax returns/issues.