Every year there are countless clients looking for help with their taxes. Starting a tax prep business is a great idea for some seasonal income. However, navigating how to start a tax prep business is harder than starting a regular retail business, for example.
This guide has outlined the steps needed to start a tax prep business. After going through it, you will understand what goes into starting your tax prep business. If you feel like it’s too overwhelming, you’ll find that there are services that help people start tax businesses from the ground up. You can use their services instead of going at it alone, whether you’re a newbie or a seasoned professional.
1. Training and Registrations
To be able to help people prepare their taxes or file their taxes, you must go through the proper training. This training can be obtained at home online or by enrolling in a training course on campus. When choosing where to get training, make sure the course provider is an approved IRS continuing education provider and recognized in your state. For example, California’s Tax Education Council (CTEC) should approve it.
After training, you must register to file taxes for that year. You can ask the training course personnel to help guide you through the registration process in your particular state.
2. Software
You’ll need software to streamline your company’s tax filing process. Depending on your clientele, you’ll need software that can handle individual tax returns, complex corporate returns, or both. It’s still possible for accountants to file your taxes without software, but you will need to pay them more instead of just training your staff to use the software.
When looking for the perfect software, think about the features it has, how scalable it is, and if it’s easy to use. Some software have free trials so you can try them out without spending any money. If you are happy with it, then you can decide to pay for the subscription.
3. Marketing
Like any business, a tax preparation business needs to be marketed to your prospective clients. To get inside your client’s head, you must understand your client. Are you working in a large city or a small rural town? Are you trying to reach younger people, or are there more older people in your vicinity? Knowing your client will help you market your business accordingly.
When it comes to advertising strategies, there are many expensive and inexpensive ways to reach people, like TV commercials, billboards, radio ads, social media marketing, or Google ads. If you’re targeting older clients, they are more likely to see an ad on television than on Facebook, while the opposite is true for younger clients.
4. Setting Up an Office
Tax season lasts one quarter of the whole year. Your clients may prefer to meet you in an office to discuss their taxes instead of online meetings. That doesn’t mean you need to rent an office all year round, but if you only use the office for that period, then it must be set up and ready quickly.
You don’t want to waste any time during tax season taking too long to find an office and design its interior. So start early while setting up the office and ensure you get registered in time to help people do their taxes as soon as possible. Picking a good central location that gets a lot of foot traffic or cars passing by gives you the opportunity to advertise with your storefront signs.
5. Consider a Tax Business Service
Setting up a tax business alone is complicated. Nowadays, there are companies that can help you set up your business from scratch. They can help you by:
- Providing tax preparation training to you and your employees
- Facilitating you with tax software
- Setting up your office
- Marketing to your clients
With the right guidance, starting your tax preparation business will become much easier. Instead of stumbling in the dark yourself, the service can be your guiding candle, leading your way. That way, you will avoid making any common mistakes in the beginning and focus on fulfilling your client’s needs and raking in those profits.