If you’re just beginning to look into a career as a tax professional, you may only be familiar with part of what tax preparers do – filing returns for individuals in tax season – leaving you with questions about how tax professionals make a living the rest of the year. Do tax preparers work year round? How do tax preparers earn money in the off-season?
The answers will vary with each individual tax preparer, but rest assured tax preparers can and do make a living year round. Most do perform some kind of work outside of tax season, and many diversify their income by offering other services in addition to tax preparation. Whether you’re just starting out or you’re a veteran tax professional, here are eight ways tax preparers can make money year round.
Prepare taxes for businesses
One of the simplest paths to year-round income as a tax professional is to offer tax preparation services to small businesses. Unlike individual tax filers, businesses need year round tax services. Many of your current clients may own small businesses themselves, so reach out to let them know about your new services.
If you want more training on preparing taxes for businesses, some IRS-approved CE providers like the Latino Tax Professionals Association (LTPA) offer courses on small business taxes.
Offer payroll management
If you already serve small businesses, you know that many need more than just tax help. Payroll is a task many small business owners are looking to outsource. Auxiliary services like this are a win-win for building your business: your small business clients are likely to hire you if they need payroll help and vice versa.
Perform bookkeeping services
Like payroll services, bookkeeping services are in high demand among small businesses. Despite what you may have heard, you don’t need an accounting degree or accounting experience to be an excellent bookkeeper. While the two services have similarities, bookkeeping is different from accounting and has a much shorter learning curve.
The LTPA also offers courses in bookkeeping and payroll for small businesses, making it easy to confidently offer these services to your business clients.
Become a tax service bureau
As a tax service bureau, you’ll help other tax professionals find the ideal tax software for their practice, and no – you don’t need to be a tech guru and develop your own tax software. Service bureaus resell trusted tax software under their own company logo, boosting the credibility of their brand and diversifying their income sources. Find out how to become a tax service bureau with TaxSlayer Pro.
Represent clients before the IRS
For many taxpayers, filing their tax return isn’t the end of the story. Whether it’s due to errors in the return or willful misstatements, proper representation before the IRS is needed year-round.
To have unlimited representation rights before the IRS, you’ll need to be a certified public accountant (CPA), enrolled agent (EA), or attorney. For most tax professionals, pursuing the EA credential makes the most sense. Unlike becoming a CPA or attorney, becoming an EA doesn’t require additional college credits, and all required training is relevant to tax preparation.
You can also gain limited representation rights by participating in the IRS Annual Filing Season Program.
Educate other tax preparers
Properly-credentialed tax education is always in demand by EAs, CPAs, and Annual Filing Season program participants. If you’re an experienced tax professional, offering tax education and becoming an IRS-approved CE provider is one way to diversify your income. No matter how experienced you are, you’ll likely want to partner with other experienced tax preparers as you begin creating and marketing your own educational courses. While it might be time-consuming at first, tax education can be a profitable and meaningful way to increase your income.
Offer refund transfers
Refund transfers, also known as bank products, make it easier to get paid during tax season, giving you more time to focus on other paid work. Tax bank products deduct your fee from clients’ refunds and distribute it directly to your bank account. Because you can offer your services at no upfront cost, you’ll be able to attract more customers and save time on invoicing and bookkeeping. For more information, our guide to Bank Products for Tax Preparers can help you choose the right bank products for your business and clients.
Become a financial planner
Just as business clients often need professional help with payroll or bookkeeping, individual taxpayers often need financial planning services. Becoming a certified financial planner (CFP) or chartered financial analyst (CFA) involves a significant investment of time and money. However, if you have a passion for helping people grow and manage their money, financial planning can be an ideal complementary career to professional tax preparation.
Looking for more ways to grow your tax business? Check out our lead-nurturing strategies and creative tax preparation marketing ideas to grow your client list!
The information in this article is up to date for tax year 2020 (taxes filed in 2021).
