For those of you who have launched your own tax preparation businesses, how did you get started? As an IRS agent, I’m feeling overwhelmed by the current political climate. In my area, there’s a high demand for tax preparation services, with firms frequently turning clients away. It’s been my dream to start this venture when I retire, but my current mental health situation is pushing me to explore it sooner.
I’d love to hear about the software you use, the costs associated with running your business, and the number of clients you typically serve. I already handle about 30 tax returns pro bono each year since I’m unable to accept payments, so it would be nice to finally earn some income from this work! I understand it won’t be easy or profitable right away, but I’d appreciate any insights to help me gauge what I might be stepping into. Thank you!
One response
Starting your own tax prep business can be a rewarding venture, especially given your background as an IRS agent. Here’s a roadmap to help you get started:
Research and Training: Even with your experience, consider taking a tax prep course to stay updated on any changes in tax laws and regulations. This can also help you gain credibility with clients.
Business Structure: Decide on the structure of your business (LLC, sole proprietorship, etc.). This will affect your taxes, liability, and how you run your business. You may want to consult with a lawyer or accountant on this.
Licensing and Certification: Check if your state requires any additional licenses or certifications. You might want to consider obtaining the Enrolled Agent (EA) designation, which could give you an edge.
Software: Popular tax preparation software includes Intuit ProConnect, Drake Tax, and Thomson Reuters UltraTax. These platforms typically offer a range of features, so you’ll want to choose one that fits your needs and budget. Many offer free trials, so you can test them out before committing.
Costs: Your initial costs may include software subscriptions, professional liability insurance, office supplies, and possibly marketing expenses. Additionally, consider any necessary training or certification fees. Running a part-time office might be an option to start with reduced overhead.
Client Acquisition: Since you already do pro bono work, consider reaching out to those clients for referrals. Networking within your community, especially as tax season approaches, can help you find clients. Social media and local advertising can also be effective.
Client Load: Initially, it’s realistic to start with a handful of clients and gradually increase from there. Since you already have experience doing 30 pro bono returns, transitioning to paid clients could be an easy step.
Feedback and Improvement: After you start, gather feedback to constantly improve your service. Good customer service can lead to repeat clients and referrals, which are vital in this industry.
It’s great that you already have experience with tax preparation, and your passion for helping others will certainly shine through. Take it one step at a time, and don’t hesitate to reach out for support from existing tax professionals or business owners. Good luck!