There are two inevitable things in life and one of them is taxes. A home based tax preparation business can be a rewarding enterprise for you. Tax preparers are always in demand because tax laws are constantly changing and the forms can be intimidating to the average person. If you enjoy working with numbers and have a knack for finding deductions, this one's for you.
Overview of This Business
As a tax preparer, your job is to accurately complete all required tax forms, including deductions, credits and adjustments according to Federal and State tax laws to minimize taxes owed by your client. On average, a person spends 33 hours on a tax return. No wonder that 50% of all tax returns are prepared by a professional. (GAO)
Today, planning ahead for a major life change is crucial to financial success. Tax planning is becoming more common and can help you stay occupied year round. "Most clients think of their tax preparers as someone to consult just once a year, but they should be using their preparer as a resource the entire year," stated Nick Popolo of Birch Tax Service in Staten Island, NY and member of the National Association of Tax Professionals (NATP), "Clients should consult a tax preparer when they are obtaining a mortgage, considering an investment or starting a business."
Pros of this Home Business
Tax preparation lends itself well to being home based and full or part time. You won't need a lot of equipment, initial investment or inventory to begin. During the busy season from February through April, you can earn some serious money. You may make as little as $20.00 to complete a 1040 short form, but a more complex return can bring in well over $500. Once you build your clientele, they often return each year.
Cons of this Home Business
This is a profession that requires attention to detail, accuracy, integrity and yearly continuing education to stay current. Some states require certification, so check your state guidelines. While there are estimated quarterly taxes and business forms due all year; the busy season is where most of your income is made. Your time during tax season is limited and it may take years to build your reputation.
What You Need to Get Started
Accounting experience helps, but education from a respected tax preparation school like Jackson Hewitt or H & R Block is a less expensive option. The IRS offers free classes in exchange for volunteering on the help line. Your community college may also have classes. Experience in the field will teach you speed, accuracy, interview techniques and business skills. To gain credibility, membership in the NATP, a non-profit educational group whose 19,000 members adhere to a professional ethics code, or other certification is recommended.
Before you hang out your shingle, complete a business plan to help guide your decisions. Most home based tax preparers start with friends and family and build by word of mouth. Ask yourself these questions before you begin. What is the standard rate in your area? How long does it take you to prepare a return? How will you advertise? Will you meet clients at your home or theirs? List any and all expenses and determine your break even point. You will need a computer with internet access, dedicated workspace, taxation software such as Turbo Tax or Tax Cut and plenty of office supplies.
Sources:
National Association of Tax Professionals www.natptax.com
What to Consider When Starting a Tax Preparation Business, By Hortensa Dewalt, http://ezinearticles.com
How to find the right tax professional, www.dailycourt.com
General Accounting Office, http://www.gao.gov/newitems/d03610t.pdf