How to Start a Home Tax Business

The desire to work from home has exploded in recent years, and with wages stagnating across the country, so has the desire to start your own business. Tax preparation is a great career that satisfies both, as you can work from home immediately and start your own business with relatively low start-up costs. Starting your own home tax business is easier than you think. It will give you freedom, flexibility and all the perks that come with small business ownership.

Learn to Earn

For those that don’t know anything about taxes, you first need a solid base of knowledge to ensure you know the tax law and can provide excellent (and accurate) tax services to your clients. Anyone can key in information to a tax software, but that doesn’t make them a good tax preparer and their clients will quickly catch on that they’re just going through the motions. People want an expert in the field to proactively teach them how to reduce their tax liability from year to year.

You’ll need to start with some basic tax courses so that you can learn to prepare taxes for the general public. You don’t have to learn it all before you start taking on clients, you just need the basics. Our Comprehensive Tax Course is a great place to start as it teaches anyone with zero tax knowledge how to handle most individual tax returns.

Upon completion of the Comprehensive Tax Course, you’ll be able to work your first tax season. That way, you can earn as much as you can before moving on to more advanced tax education and expanding your client base. In your first couple years in the industry, you’ll want to build on your tax knowledge each off-season so that the following year you can prepare more complicated returns and make more money.

Once you’ve got the knowledge, it’s time to get your business on its feet. First, you’ll need to apply for a business license through your local government. Next, you’ll need to register with the IRS and get your Preparer Tax Identification Number (PTIN).  You will also need to apply for your IRS Electronic Filing Identification Number (EFIN) so you can e-file tax returns.

Another item to consider is going through the IRS Annual Filing Season Program (AFSP). This will grant you a record of completion by the IRS, which shows your clients you’re up-to-date on the latest tax law changes. The IRS will also include your in their Public Directory of Federal Tax Return Preparers with Credentials. This directory is marketed to the public as a tool for choosing a “qualified” tax preparer. We recommend gaining this credential so that you can market yourself as a credentialed tax preparer.

Make a Plan

Ensure your success by doing the research and preparing a business and marketing plan. What’s the demographic makeup of your area? Who will you market to? At what point will you need an employee? How many clients do you need? Set yourself up for success by giving yourself a road map for growth. The Small Business Association has a great website that walks you through creating a business plan.

You may also consider gaining some insight from the pros. Surgent Income Tax School offers Tax Practice Management Manuals that include proven methods for growing a successful tax business. From marketing to day-to-day operations, these manuals will guide you through planning and running your business.

Set Up Your Business

Once you’ve got your licensing and planning out of the way, it’s time to “hang your shingle”. You’ll need to choose tax preparation software, create a website and set up your business on social media.

Get Clients

All that’s left is getting clients for your tax business! Start with family and friends and then get some networking in. Word-of-mouth is one of the best ways to grow your business so make sure that excellent service is your top priority.