Interested in Starting Your Own Tax Business?

Jul 19, 2022

Many tax preparers discover that their passion is assisting others with tax-related issues and going above and beyond to ensure their customers have the best possible tax outcome. Creating tax returns is also very financially rewarding--according to thecollegeinvestor.com, about 23% of Americans with investment income pay over $300 to file their federal tax return. That said, while starting an independent tax firm is attractive, determining where to begin can be difficult. If you're in such a situation, the following tips can help you start your tax business.



Get Educated About Tax Filing

If you have never worked in the tax industry, you will need knowledge and expertise to prepare taxes. Begin by enrolling in a business tax training program, which will teach you how to prepare returns and solve tax problems for most taxpayers. A business tax training program will familiarize you with tax forms such as Form 1040 for individuals and non-business taxpayers and the fundamentals of Schedule C/self-employed tax returns.



Secure PTIN and ETIN


Once you've mastered the fundamentals and are certain about your tax preparation abilities, you can launch your tax business by accepting Form 1040 clients. To get started, you'll need to meet the IRS's criteria for a Preparer Tax Identification Number (PTIN) and an Electronic Filing Identification Number (EFIN) (EFIN). Every tax professional must get a Preparer Tax Identification Number (PTIN). It is a nine-digit number that allows the IRS to identify the professional preparer that assisted a taxpayer in preparing and filing their income tax return. PTINs are issued for free by the IRS. You'll also need a business license and other necessary products such as tax software.



Decide on Business Name


Consider what you want to call your company. Then, check whether the name has already been used by another firm in your state that offers the same or comparable services. The CorpNet website offers a free corporate name lookup. You can reserve a business name if it is available, but you are not quite ready to begin your firm. Most states will keep the name for 30 to 90 days.



Purchase Business Insurance


By establishing an LLC or incorporating their business, business owners can minimize their culpability for their company's obligations. Another strategy to reduce liability risks is to get insurance plans that protect both company and personal assets.



Market Your Firm


No company should adopt the "build it and they will come" approach to client acquisition. This also applies to tax preparation firms, too. Marketing and advertising strategies such as creating a company website, promoting it on social media, creating a GoogleMyBusiness page, and supplying a business card will help increase visibility and client numbers.



Following the steps above can help you successfully establish a tax business. Ensure you perform adequate research and consult with business tax training program experts, so you have proper guidance. Do you need help starting a tax business? Contact us today!

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