A career as a professional tax preparer is likely well within your reach — even if you don’t have a college degree, a ton of spare time, or a huge savings account. Here’s why starting your own tax business is actually easier than you think.
Low start up costs
Your expenses to get started are relatively minimal, especially compared to startup costs in other industries.
Fortunately, obtaining your Preparer Tax Identification Number (PTIN) and Electronic Filing Number (EFIN) from the IRS is free. This means your only necessary business expenses starting out will be:
Business registration fees
You may want to create an LLC (Limited Liability Corporation) or file a DBA (Doing Business As) before you start accepting clients; depending on your state, this may be a requirement.
How you choose to structure your business is up to you, but many tax preparers find that an LLC meets their needs. LLC filing fees vary by state and range from as little as $40 to as much as $500, but most states charge around $100 to $150.
Technology and software
If you already have a computer, you’re more than halfway there. You’ll just need to choose a quality tax preparation software, which tends to average around $1,000 to $2,000 for unlimited use.
That’s it! While you’ll likely spend more on marketing, continuing education, and office costs overtime, your initial investment to begin making money as a tax preparer is quite small.
Work from anywhere
With advances in tax preparation software, you no longer need a brick-and-mortar office to succeed as a tax preparer. In fact, many clients prefer to work remotely even if you do have a physical location. Apps like TaxesToGo have simplified document sharing for both taxpayers and tax preparers, cutting out the need for scanning, emailing, and faxing.
Seasonality and flexibility
You can make tax preparation your full-time career or a part-time side job. As your own boss, you’ll determine your working hours and how many clients you want to take on.
Don’t want to be busy running a business year round? The seasonality of tax preparation enables you to make extra money during tax season without dramatically impacting your schedule for the majority of the year.
No formal education or certifications required
It’s a common misconception that professional tax preparers need a CPA or a degree in accounting. In reality, many successful tax preparers are completely self-taught. A host of IRS-approved continuing education providers offer reputable, low-cost options to help you learn the field.
Gain credentials as you go
While you won’t need a degree or specific certification starting out, there are several credentials and education paths you can pursue as you grow your business. The IRS Annual Filing Season Program (AFSP), for example, sets apart non-credentialed tax preparers who participate in voluntary tax education each year. You can also become an IRS Enrolled Agent, the highest status the IRS awards to tax preparers.
Fortunately, neither of these programs will require years of coursework or thousands in tuition. The AFSP requires just 18 hours of continuing education credits per year. Enrolled Agents must pass a three-part exam and a background check and complete continuing education hours each year.
Thinking about diving in? Our How to Become a Tax Preparer article will give you easy, practical steps to take right now. The Tax Pro’s Guide to Writing a Professional Tax Business Plan and Ultimate Guide to Starting a Tax Preparation Business will help you delve into the details and make well-informed decisions as you move forward with your business.
For everything else, our team is just a phone call (1-888-420-1040) or email ([email protected]) away and more than happy to answer your questions about becoming a tax professional!