It seems like more and more people are trying to find ways to make a living at home. There are over 15 million home-based businesses in the United States, with more entrepreneurs taking the plunge every year. Many would-be work-from-home business owners want to have a business that requires not much more than a laptop.
Becoming a professional tax preparer is just such a business. There are many people out there who don’t have time, aren’t good at, or simply don’t like doing taxes. They need help from professionals who know what they’re doing and are knowledgeable about the tax system. You can provide that service. However, there is more to it than putting out a Facebook ad and getting customers. You will need to prepare yourself and your business properly to have a strong launch and build a reputable and successful business for years to come. Here's how you can.
Get Comfortable With Your Tax Laws
You should not be claiming to provide a professional service if you don’t know the regulations and laws surrounding that service. Preparing tax returns means knowing how to fill them out, how to apply a specific client’s circumstances, and how taxes are applied in your jurisdictions. You will have federal laws as well as state laws to deal with.
On top of that, you will be bound by confidentiality laws since you will be handling the private information of your clients. You will have to make sure that your business adheres to privacy laws and laws surrounding data storage. Otherwise, you could face fines or even closure. Plus, if you don't know the law, then you may make mistakes that are damaging to your clients.
Decide on a Niche
There are many ways that you could be a tax preparer. You may decide that you only want to work with small businesses, or conversely, you could only want to work with families and individuals. You could choose to work with certain types of businesses that might have complicated tax situations and become an expert in that part of the field. Whatever you choose, that niche will guide how you market your business and who you will target as clients.
Obtain a PTIN
If you want to prepare tax forms for third parties, you will need a preparer tax identification number from the IRS. This is so that the IRS can identify who fills out any tax forms not submitted directly by the taxpayer.
Getting a PTIN is not difficult. There is a form to fill out, which takes about fifteen minutes. Once you have completed it, you can submit it to the IRS. You will get a response within four weeks. There is no test or anything to prove your knowledge of tax preparation. You will have to learn that on your own and use it to provide excellent service for your customers. A PTIN expires at the end of the year, so you must apply every twelve months before tax season.
Get Insured
Just like any other business, you need insurance. As a tax preparer, you face a specific set of risks compared to other industries. For example, there is the chance you make a mistake, and it causes a financial loss for a client. Or, you could be the target of a cyberattack that exposes your clients’ information. Where you operate can also affect how much risk you are exposed to. The cost of accounting insurance will depend on several factors, but it is a very worthwhile investment. A single mistake you could make, from filling out a form incorrectly to leaving a tripping hazard on your office floor, can lead to disaster for your business. With the right coverage, you will be protected from financial fallout.
Get a Bank Account and Credit Card For Your Business
Never use the same account for your business that you do for your personal affairs. This can cause confusion and complications for your taxes and your everyday finances. It’s always best to have a separate account for each. With a credit card, you build your company’s credit without it affecting your personal score. Plus, if someone sues your business, you do not want your personal funds to be in peril because you share an account. Separating everything will make your life and your business much simpler.
Create a Brand
You should always have a brand for a business, including one for tax preparation. Your brand can be professional and serious, or it could be fun and dynamic, even if the type of work you do is traditionally considered boring. Your brand should be geared towards the clients that you are looking to attract to your business.
Make sure that your name and logo evoke what kind of business you want to be. You don’t have to have a form of “tax preparation” in your name, but there should be little doubt about what kind of services you offer. Make sure that you register your business name, as this will claim the name as your own, and it will ensure that nobody else already has it. Once you have your brand figured out, you can start marketing.
Market Your Business
Often the most cost-effective way of marketing is with social media. You can target your ads to certain users who might be predisposed to using your services. You can also use some more traditional methods like posters on bulletin boards and flyers in mailboxes. Potential clients might not be actively seeking tax help, but if they see your flier, it might trigger that it would be very handy to have it.
Once you have customers, do whatever you can to keep them for the next year. It’s much easier on your budget and your time to have repeat customers you can count on. Provide excellent service and send them a reminder throughout the year to thank them and to let them know that you are available for help for the next tax season.
Working from the comfort of your home is definitely an achievable goal. Being a tax preparer means that you can work for a variety of people and help them solve problems. If you follow these steps, you can make your tax prep business a success.
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