How Tax Preparers Can Make Money Year-Round

A tax professional looks at a computer screen

The answers will vary with each individual tax preparer– but rest assured tax preparers can and do make a living year-round. By offering a variety of services, tax preparers generate income outside of tax season and work year-round.  

One of the most common ways you can expand your services and increase revenue throughout the year is through tax advisory. Here are some of the basics to consider if you have an interest in providing tax advisory services or expanding your services year-round. 

Identify which clients could use tax advisory services 

Clients who know they will benefit from tax savings are more likely to appreciate the value of your advisory services. Small businesses owners, sole proprietors, high-income taxpayers, and taxpayers who itemize deductions are all potential clients who could benefit from year-round advice to minimize their tax liability. 

Separate tax advisory from tax prep 

There’s a good chance your tax business is already performing some advisory services as you prepare taxes. But all too often, clients aren’t aware that they are receiving these services or how much they’re saving as a result of your services.  

Consider what you do for your current clients and which services could fall under the “advisory” umbrella. Here are some examples of advisory services you may already be providing without charging an extra fee: 

  • Tailoring a client’s return to minimize tax liability 
  • Helping a client strategize for next year 
  • Advising your client to make business decisions that would help them qualify for certain deductions, credits, and exemptions 

In many cases, your clients may not know that you’ve gone the extra mile to save them money. But when you document the savings on paper and compare it to the lower cost of your new advisory package fees, clients are more likely to understand the value of tax advisory services.  

Start with advisory services relevant to your existing client base 

If you try to start offering advisory services to all of your clients, you’ll likely find yourself overwhelmed. Instead, start your venture into advisory by focusing on a couple of relevant niches to your existing client base. Some common areas of focus include tax advisory for retirement, estates and trusts, real estate investors, and high-income families with complex tax factors like itemized deductions. 

Tax advisory for small businesses 

Small business owners are most likely to pay for tax advisory. They know their tax situations are complex, and see advisory fees as a necessary business expense that could save them money in the long run. In addition to simple tax compliance and tax estimates, you can help your business clients with the following: 

  • Depreciation strategies for different assets 
  • Employee benefits and retirement 
  • Income shifting/splitting (a tax strategy that moves income from higher tax bracket taxpayers to lower tax bracket taxpayers) 
  • Business financing options 
  • Relevant business credits such as the R&D credit 
  • Choosing the most beneficial business structure 

Of course, this list is far from exhaustive, and you can expect to invest significant time into learning the nuances of tax advisory. 

Start small and learn from successful advisory firms 

 You’re venturing into tax advisory doesn’t happen overnight. You’re developing a new skill set and you’ll need time to learn more advanced tax strategies, like communicating value to clients, pricing, and bundling your services.  

Be okay with the idea of starting out with just one or two advisory clients using relatively simple advisory strategies. Eventually, these strategies may become a part of your “lower tier” of advisory packages. As you gain experience and expertise, you can begin to offer more advanced packages as well. 

If you’re considering adding tax advisory to your offerings, you don’t have to start alone. The American Institute of Certified Public Accountants (AICPA) advises interstate tax firms to expand into advisory programs and to help them get started. The AICPA’s A’s self-study Client Accounting Advisory Services Certificate and Client Advisory Roadmap Workshop are excellent places to start. 

If you need more immediate ways to build your business and diversify your income in the meantime, you might consider other avenues tax preparers do to work year round.  

8 ways tax preparers work year-round 

Whether you’re just starting out or a veteran tax professional, here are eight ways you can make money year-round. 

1. 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.  

2. Offer payroll management 

If you already serve small businesses, you know that they may 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. 

3. Perform bookkeeping services 

Like payroll services, bookkeeping services are in high demand among small businesses. Despite popular belief, you don’t need 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. 

4. Become a tax service bureau 

As a tax service bureau, you’ll help other tax professionals find the ideal tax software for their practice. 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

5. 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

6. 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. 

7. 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.  

Bank products allow you to offer your services at no upfront cost,  so 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.  

8. 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!