If you’re good with numbers and attention to detail, starting a tax preparation business can allow you to be your own boss and work in a field that is always in demand. If you already work as a professional tax preparer, knowing how to grow your tax business will allow you to increase your profitability. This guide to starting and growing a successful tax business provides helpful tips for new and established entrepreneurs in the tax preparation business.
Tips for Tax Preparers Starting Their Own Business
To get your new business off the ground, follow these tips:
Become an Authorized e-file Provider Early
Today, people no longer want to mail in their tax paperwork. They like the convenience of paying online if they owe and getting their refund back more quickly if they don’t. You don’t have to be a certified public accountant to become an authorized e-file provider with the IRS. You can apply online through the IRS e-Services platform. As a part of the process, you will need to:
- Pass a credit check
- Undergo a tax compliance check
- Submit to a criminal background check that requires fingerprinting
Reviewing applications is time-consuming. You can expect to wait for at least 30 to 45 days before you receive your EFIN number, allowing you to e-file on behalf of your clients. Putting off this important step could mean missing out on your first tax season in business.
Develop an Off-Season Plan
While there may be some business year-round, most tax preparers are busiest from January until the tax filing date. That means you will likely need to earn most of your annual income during the first part of the year. If you plan to work only for your tax preparation business, put together a budget that will allow you to weather the slow periods. Also, make a plan for how you will spend your quiet time. You can use these months to market your business, refresh yourself on tax rules, and familiarize yourself with new changes to the tax code.
Be Smart About Space
Renting office space will likely be one of your most significant expenses as a new tax preparation business. The fact that most of your business takes place during a limited period every year gives you the flexibility to be creative about your office location. You could:
- Sublet space temporarily from a larger business.
- Take advantage of office-sharing services that allow you to pay monthly.
- Partner with a non-competitor and split the rent only during tax season. For example, you might use an empty office at a law firm, IT consulting firm, or CPA firm that specializes in areas other than tax preparation.
- Work from home and conduct meetings virtually or in public places like coffee shops. Keep in mind when making your software selection that you can use a professional software product that has integrated virtual tools.
Invest in Powerful Tax Preparation Software
While it may be tempting to forgo the expense of software, doing so could be a costly mistake. During the busy season, tax preparation automation software makes time management easier by performing many tasks and calculations for you. It also dramatically cuts down on the risk of errors that could mean fees, penalties, audits for your clients, and damage to your reputation.
How To Grow a Tax Preparation Business
If you’re an established tax preparation professional, the following tips can help you build your brand and grow your business:
Remember the Importance Of Building Relationships
Being able to build relationships with clients is crucial for success. Your clients have many options out there for their tax preparation needs, and at the end of the day, many of the services your competitors provide are likely to be the same as yours. What they don’t have is you. You are your business’s best asset. Get to know your clients. Build trust. Learn about what matters to them and what their goals are. Measure your success by their success and let them know that. Taking this type of approach will set you apart from other preparers.
Ask for the Business
When you have strong relationships, asking past clients for referrals is a cost-effective yet powerful scale method. After completing a client’s taxes:
- Hand them multiple business cards.
- Tell them to keep one to call you with any questions and to give the others to people they know who might benefit from your services.
- Let them know that referrals are how you grow. Your clients will be excited to share if you’ve delivered exceptional service.
How Software & Automation Can Help You Scale
Tax preparation software for professionals is essential to growing your business. With professional tax preparation software with bank products, you can offer additional services, such as the convenience of deducting your fees right from refunds or allowing your clients to receive cash advances on their refunds. Professional tax preparer software also allows you to process more tax forms in less time to manage your time while scaling your business.