How to Start Your Own Tax Preparation Business

                                How to Start Your Own Tax Preparation Business

Many tax preparers find their passion in helping others. Sometimes, this drive leads them to pursue an independent tax business of their own, but the question of where to begin can be daunting.

If you are an individual interested in starting a tax preparation business, or you are an experienced tax preparation specialist, TAX ABLE can help guide you through the process from beginning to end.

To begin, here is a checklist of the fundamental steps to establishing yourself as an independent tax preparation professional.

• Register your tax practice
• Obtain your PTIN
• Apply for your EFIN
• Establish Your Business
• Get Your name Out There
• Protect Your New Business
• Helpful Resources

Register Your Tax Practice

Registering your business can be done relatively easily; simply file a “Doing Business As” name with the county in which your practice will reside. Also verify with the city if they require a business license. TAX ABLE can also provide you with invaluable resources to assist you.

Preparer Tax Identification Number (PTIN)

Individuals who charge a fee for tax return preparation services are required to obtain a PTIN. To get your PTIN, simply register and apply online. It is important to note, your PTIN is unique to you as an individual, and if you hire anyone else to prepare returns as part of your business, each employee must also obtain a valid PTIN. Your PTIN must be renewed each year, but doing so is a quick and simple process.

Electronic Filing Identification Number (EFIN)

If you've worked as part of a tax preparation franchise or private practice before, you are probably aware of this particular requirement. If you plan to file 11 or more tax returns, you must do so electronically as determined by the IRS.

To do this, you must first successfully obtain an EFIN and become an Authorized e-File Provider. Fortunately, this process is straightforward and free of cost. Simply submit your application and follow the provided steps to complete any necessary suitability checks. 

This process may include a:

• Tax compliance check
• Criminal background check 
• Credit check
• A check for prior IRS e-File non-compliance

While this step in founding your tax preparation business does require a substantial amount of your time, the reward of establishing your own successful practice is well worth the initial commitment. Upon approval of your application, you will receive your EFIN and an acceptance letter from the IRS.

It is also advised you confirm whether your state requires separate applications for e-File practices preparing returns for businesses or individuals. Again, state government agencies are an often untapped resource for answers to questions you may have during this step.

Depending on the size and type of your business, the IRS may require you to obtain an Employer Identification Number (EIN) as well. Fortunately, TAX ABLE can guide you every step of the process.

Establishing Your Business

Selecting the right tax preparation software is another important step in the process of beginning your own business. TAX ABLE makes it easy to find exactly what you need based on a variety of factors, including the number of clients you expect to serve, which forms you'll be using, how many states in which you'll file, and more.

Whether you've just recently made the decision to pursue your own business as a tax preparer or this career has been a longtime professional goal, you'll find TAX ABLE offers everything you need to get your practice off the ground. From guidance surrounding continuing education and certifications to invaluable tools and time-saving resources at your fingertips, TAX ABLE has you covered throughout the lifetime of your business.

Get Your Name Out There

If you're like many individuals who have recently left a tax preparation franchise, you already know a lot about how to serve your clients' needs. However, if you’re not marketing yourself in an impactful way, you may find it difficult to gain traction in an already competitive industry.

The first step to attaining the awareness of potential clients is building a website. Nearly everyone searches for tax preparation services online, and it is vital your name is visible to those in need of the services you offer.

Be genuine and straightforward in your explanation of your business model and your personal connection with your clients. People seek out and choose a tax preparer not solely based on experience and licensure, but also on trustworthiness and an approachable, personable nature.

Protect Your New Business

Just as in any other field serving the public, tax preparation professionals must ensure they'll be protected in the case of any unexpected liability. Regardless of your skill, dedication, or experience, there is always a margin of potential error to be considered, and it is invariably wiser to protect yourself in such a case.

Malpractice insurance serves as an invaluable safety net in situations involving claims of error, omission or alleged negligence performed during the preparation of a client's return. And, whether you are working from a home office or choose to own or rent an office, it is advised you purchase an insurance policy to cover the contents of that space as well. Obtaining a Tax Preparer Bond is often also required by your state tax board.

Helpful Resources

Starting your own business is a complex process, but TAX ABLE is here to guide and assist you. Remember to reach out to us when questions arise, and visit themarsogroup.com for useful tips and resources.

Learn more about how TAX ABLE helps individual tax professionals like yourself earn a living doing what they love every day.