What to Expect When You Go from Tax Preparer to Tax Business Owner

Even if you’ve worked for years as an employed tax preparer, running your own practice will be a whole new adventure. 

From landing your first client to running multiple offices, these are some of the changes you’ll deal with as you grow from an employee to a business owner

In the Early Stages

Getting Your Own EFIN

Now that you’re on your own, you won’t be able to use your previous employer’s Electronic Filing Identification Number (EFIN). Make sure to apply for one well before tax season as approval can take over a month.

Finding Your First Clients

At your previous firm, you may have had no role in finding clients. Now, it’s all on you.

Learning about small-business marketing will be just as critical to your success as your tax knowledge. Carefully planned customer acquisition strategies and consistent lead nurturing will help you gain traction and see growth quickly.

Two steps you’ll want to take immediately are

  • Creating a web presence with social media accounts and local SEO strategies.
  • Leveraging your network and asking for referrals. Just be sure not to violate any non-compete clauses you may have signed with your previous employer.

Running an Office

Even if you forgo a traditional office for a home office or co-working space, you’ll still have plenty of logistics to work out. You’ll need a business address and phone number, equipment like printers and computers, and a professional space for client meetings. Check off the Pre-Season Tax Office Checklist to make sure you’re ready to go.

As Your Business Grows

Once you’ve  adjusted to life as a business owner, you’ll find new challenges as you shift focus to business growth. 

Managing Employees

As you shift from solo practitioner to employer, you’ll be responsible for creating a productive and positive work culture at your business. Whether you’re bringing on a full-time secretary or a seasonal tax preparer, devote time to learning about management strategies and leadership styles. 

You can start by choosing a few books from Forbes’ list of Best Management Books for Entrepreneurs and Best Leadership Books.

Adding New Locations

If your firm is thriving, expanding your business with new locations can be a logical growth step. Ask yourself these questions before you move forward with a new location:

  • Will a new location simply cannibalize business from my current location?
  • Will word of mouth extend to this area, or will I need to start marketing efforts from scratch?
  • Do I have an employee(s) I can trust to run this location in my absence?

Reevaluating Your Business Tools

Some tools that worked fine for your practice in the early days may not serve you as well anymore. By periodically evaluating the current needs of your business, you can avoid drains on productivity and continue scaling your business. 

For example, if your bargain printer is disrupting your office’s workflows, it may be time to invest in a commercial printer. Or if you’re now operating from multiple locations, switching to a cloud-based tax software can help keep you collaborate easily and work more efficiently. 

Expanding Services

You can grow and diversify your income by offering additional services like bookkeeping, financial planning, or payroll. Even if you want to focus purely on tax preparation, you can still expand your services by partnering with refund settlement banks or gaining additional credentials like Enrolled Agent status. 

Want more information on growing your tax business? We have a whole library of posts dedicated to just that.