How to Start a Home Based Tax Business

By Chuck | July 28, 2016

Have you thought about what it would be like to be your own boss? There’s a lot of freedom that comes Start-Home-Based-Tax-Businesswith entrepreneurship but for some, the challenge is finding a lucrative field in which to pursue business ownership. As long as there are taxes, there will be a need for tax preparers. The tax business is an excellent field to get into with plenty of opportunity for building a sustainable business.

You don’t have to be a “numbers person” to become a tax preparer, you just need to have basic math skills and a passion for customer service. Tax preparation is more of a peoples business than anything else. You provide a service to your clients and make something most people don’t enjoy doing (filing and paying taxes), as painless as possible.

You don’t have to have a fancy degree or a brick and mortar location either! Here’s all you need to know  to start your own home based tax business. 

Learn to Earn

Anyone can “hang a shingle” and become a tax preparer so long as they register with the IRS – but that won’t make you a good tax preparer. 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.

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. You can build on your tax knowledge while you run your business so that in the future, you can prepare more complicated returns and make more money.

Our Comprehensive Tax Course is a great place to start. It can be completed in as little as 10 weeks.

Get Legal

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) to gain your record of completion and be included in the IRS 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. Who will you market to? What’s the demographic make-up of your area? 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. The 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, order business cards, create a website, and set your business up 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. For more ideas, check out our blog post: Top Ways to Grow Your Home Tax Business.

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.

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