Considering Starting a Tax Preparation Business – Looking for Advice
Hi everyone! I was recently laid off as a probationary employee at the IRS, and I’m contemplating starting my own venture instead of diving into a traditional 9-to-5 job.
A bit of background: I earned my Master’s in Accounting in May 2023 and am a licensed CPA. During my time at the IRS, I audited tax returns primarily for small businesses and self-employed individuals, with a focus on Schedule Cs and Schedule As. I also have some experience in tax preparation and audits through public Accounting, although my main focus has been auditing.
If I launch my own Accounting practice, I plan to start solo. My primary services would be Bookkeeping for small businesses, but I’d also like to offer tax preparation starting next season. Initially, I’d limit my clients to individual returns and sole proprietorships until I gain more experience with partnership and corporate tax returns.
How realistic is this plan? What should I take into account? I’d appreciate any insights or advice you might have!
One response
Starting your own Accounting practice can be a fulfilling and lucrative venture, especially with your background and credentials. Here are some considerations and advice to help you along the way:
Market Research: Assess the local market for Accounting and tax preparation services. Identify potential clients, their needs, and the competition. This will help you tailor your services effectively.
Licensing and Regulations: Ensure you are aware of the licensing requirements in your state for tax preparation and Bookkeeping. As a CPA, you may already have many of these requirements, but it’s good to double-check.
Business Structure: Decide on the legal structure of your business (e.g., sole proprietorship, LLC). Each has its own implications for liability and taxes.
Insurance: Consider obtaining professional liability insurance (also known as errors and omissions insurance) to protect yourself against potential mistakes.
Pricing Strategy: Research what similar businesses charge for their services. Consider your target market and what they would be willing to pay.
Marketing: Create a marketing plan to reach potential clients. This could include building a website, utilizing social media, networking with local businesses, and joining local Chamber of Commerce events.
Software and Tools: Invest in Accounting and tax software that can streamline your processes. Tools like QuickBooks for Bookkeeping and tax software like TurboTax or Drake can be very helpful.
Client Procedures: Develop a clear process for onboarding clients, preparing their taxes, and maintaining communication. This will ensure a smoother workflow and a better client experience.
Networking: Leverage your connections, both from your time at the IRS and in public accounting. Networking with other professionals can lead to referrals and partnerships.
Continued Education: Stay updated on tax law changes and accounting practices. Continuing education is crucial in the accounting field, especially with tax regulations changing frequently.
Start Small: As you mentioned, starting with individual returns and sole proprietorships is a smart move until you feel more confident in handling more complex returns.
Work-Life Balance: Running your own business can be demanding, especially during tax season. Make sure to set boundaries to maintain your well-being.
Starting your own practice will come with its challenges, but with your education and experience, you’re in a strong position to succeed. Best of luck with your new venture!