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How do I Start a Tax Preparation Business?

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  • Written By: Marco Sumayao
  • Edited By: Lauren Fritsky
  • Last Modified Date: 18 August 2017
  • Copyright Protected:
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    Conjecture Corporation
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For individuals adept at working with numbers, starting a tax preparation business can be a good way to generate income. To become a professional tax preparer, an interested entrepreneur will need training in accounting, which is offered by many institutions. Depending on what sort of business he intends to run—a seasonal home business or a full-fledged corporate tax preparation business—, the individual must obtain the necessary business licenses. Once the task is accomplished, it is all a matter of securing clients through marketing and accomplishing quality work.

Basic training for a tax preparation business is offered by a wide variety of financial institutions, including the Internal Revenue Service (IRS) in the US. If the individual desires to run a home business, which is ideal for those who simply want to earn extra income during tax season, the best classes to take are those on income tax preparation and tax return preparation. In addition, classes on basic bookkeeping might prove useful. Many of these classes are offered online, making basic training very convenient.

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For those interested in working in tax preparation as a full-time career, it is often recommended that they undergo Certified Public Accountant (CPA) training. This is especially important for a tax preparation business hoping to attract corporate clients. Becoming a CPA entails passing a government-sanctioned licensing exam. Although requirements for taking the exam differ according to different localities, it is often necessary to possess at least a bachelor's degree in accountancy.

Once necessary training is fulfilled, individuals must then file their tax preparation business with their corresponding government entities. In the US, for example, this requires a state business license. It is also recommended that certification from the IRS is obtained, both for credentials and for legal purposes.

After all the paperwork is done, a professional tax preparer may officially begin running his tax preparation business. For a seasonal home business, only basic marketing skills are needed to secure clients; a corporate tax preparation business will likely need a strong marketing department to succeed. Depending on the type of business being operated, marketing strategies can range from small online campaigns to full-fledged advertisements in the public domain.

A tax preparation business can further improve its chances of success by adopting certain work practices. For instance, clients prefer a business that comes prepared with tax forms printed out and ready for the client's use. Tax preparation software will also add to the perceived professionalism of the business. Most importantly, clients will stick with a tax preparation business if they receive quick, flawless results, making efficiency and quality of work the utmost priority of these businesses.

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