Around January, and sometimes even earlier than that, we start to get inundated with advertisements from tax preparation firms. These companies are in full-time operation for about four months out of a year, and some manage to make the same if not more money than other types of businesses that are in operation all year long. If you like to crunch numbers and understand the basics of tax law, you may want to consider opening an income tax preparation business.
Items you will need
Tax preparation software
Tax preparer identification number
Take a tax preparation class. Tax preparation classes are available that cover all tax topics from the mundane (tax tables and credits) to the very complex (such as depreciation and Section 179 expense deductions). You can study online as well. It is helpful to have a background in accounting if you are going to open an income tax preparation business.
Apply for any business licenses that are required by your state for tax preparation services. Register with your state as a business in case you have to pay sales tax.
Apply for a tax preparer identification number from the Internal Revenue Service. This is the number you will put at the end of tax returns to identify yourself as the tax preparer.
Rent a small office in your community to attract new customers. Have a professional sign made to hang over your door. Have someone design and print advertising materials for your new tax preparation store. Some tax preparers also operate from a home office or pay local businesses in their area to set up a temporary table at places such as check cashing businesses and retail stores.
Purchase a computer and printer for business use and professional tax preparation software that will allow you to e-file tax returns.
Decide on a fee schedule. How much will you charge for individual and business returns? What will you charge for simple returns that only require a 1040EZ form?
Hire employees to help you prepare income taxes during busy periods in case you get overwhelmed with clients.
Advertise your new income tax preparation business in the local newspaper and on the radio. Hire young people to hand out flyers in your area to potential customers. Offer special discounted rates for new customers.
Most tax preparation businesses operate only during the high point of the tax season (January through April). You might want to rent a location only for that tax period and keep a toll-free phone line open for tax customers to contact you in the off season.
Major tax preparation companies like H&R Block and Jackson Hewitt allow you to open your own franchise. You need to be approved by the parent company and make an initial investment. This is a great option if you want to start your income tax preparation business on a larger scale.
Since you are handling very private customer information, be sure to lock up all customer files and paperwork.