Do you have excellent accounting skills? Do you understand how tax works? Are you interested in starting a tax preparation business from home? Do you need a sample tax preparation business plan template? If you answered YES to any of the questions above, then I advice you read on.
A tax preparation business involves helping people to prepare and file their tax returns professionally. While many people prepare their taxes without professional help, there are still a lot of people who lack the expertise, time and energy to handle their tax filings by themselves. As a tax professional, you also act as a consultant to individuals and business owners and show them how to reduce their tax liability.
Tax preparation business is a very good business that involves low start-up costs and little running expenses however, it is not suitable as a full-time business because you would be idle for better part of the year due to the seasonal nature of the business.
A tax preparation business only booms in the beginning of the year when people pay their taxes; January-April. After this period, there is really nothing left to do if you are solely into Tax preparation business. The business is suitable for people seeking for part-time jobs that would allow them to spend sufficient time with their family and take vacations during the year.
This is also a very good business for stay-at-home parents. As a tax consultant, you could earn between $100- $200 monthly depending on your level of expertise. To start a tax preparation business, you do not need too much capital and you can even start with just $500 or less. Are you willing to start a tax preparation business? These few tips would put you through-:
Starting a Tax Preparation Business – Sample Business Plan Template
1. Get the Basic Training
Training is very important in this business. You can’t stand out as a tax consultant without getting trained. A lot of people handle their own tax preparation by themselves without engaging the services of a professional so if you want to succeed, its better you get some training so that you can acquire sufficient knowledge and expert skills that would help you stand out.
A degree in Accounting or Financial Management is an added advantage but if you don’t have a degree in those fields, you can sign up for a training course in tax preparation either online or at a community college close to you.
2. Gather enough experience
Yes, it’s possible to start your own tax preparation business within a few days without special training or experience but it is more advisable to acquire some experience in the field before you start taking up professional jobs.
You can start with helping your family and friends file their tax returns and gradually, as you become more confident, you can start taking up professional jobs and helping people prepare and file their taxes while you pay them for it.
3. Obtain a Business License
Some states would require that you register your business and obtain a license before you can start practicing as a tax consultant.
4. Get a business liability Insurance
There are chances that you may make a very costly mistake that would cost your clients a lot of losses. In the event that you are sued and asked to pay for damages, your liability insurance would take care of your legal fees as well as the cost of damages.
5. Choose Tax Preparation Software
You don’t necessarily need tax preparation software but to save you a lot of time and reduce errors and also make your work look professional to your clients, it is better to purchase tax preparation software. You must however ensure that the software conforms to the generally accepted taxation principles and the rules governing taxation in your state or country.
6. Conduct your business electronically
In some countries, you can file taxes electronically. For example in The United States, you can register for E-filing under the IRS. If this feature is available in the place where you want to be practicing your tax preparation business, then you should sign up for it.
With all of the above mentioned in place, you are ready to start your tax preparation business. Here is a list of some of the equipment needed to start:
List of Equipment You Need for a Tax Preparation Business
- A computer( Laptop or Desktop)
- Internet Service
- Fax machine
- Tax preparation software
- Professional business cards
- Tax filing forms
- A business website
- Social media and E-mail accounts
These items are not necessarily needed to start. You can purchase them gradually as your business grows. After the tax season when you find yourself idle, here are a few things you can add to your tax preparation business to keep you busy throughout the year.
3 Additional Ways You Can Make Money Offering Tax Preparation Services
Quarterly Tax filing-: Many businesses are required to file their taxes on a quarterly basis. If you are lucky enough to get such business clients, you will find yourself busy and smiling to the bank all year round.
Tax Consultancy services-: You can act as a tax consultant to individuals and corporations interested in reducing their tax liability.
Prepare Taxes for Freelancers-: Freelancers do not receive salary and do not pay taxes from their salary and are however required to make tax returns on all their income on a quarterly basis. You can keep yourself busy with filing tax returns for freelancers.
As a tax professional, you can also make money from organizing seminars and webinars with topics revolving around ways to help people reduce their tax liability.