Start a Tax Business
Small, independent tax shops are burgeoning, fueled by layoffs in other areas of finance, lower technological barriers to entry and increasingly complex filing requirements for individuals, organizations and companies.
Roughly three-quarters of the country’s 44,000 accounting businesses are now one-person shops, according to the American Institute of Certified Public Accountants. And almost half of tax accountants work in companies with fewer than 10 employees.
People who start a business do so for many different reasons. They may be looking for freedom, new challenges or financial return. A tax preparation business can fulfill many of those goals as well as provide many new rewards.
Here are some reasons to start a tax preparation business:
Low Cost of Entry
Many people get started in the business part-time, preparing taxes from a home office. You don’t need a storefront. Your expenses will be limited to business cards, marketing materials, office supplies like paper, staples, and paper clips, and your computer and software. It doesn’t get much easier than this. As your business grows, you can consider moving into an office and hiring employees, but until then, it’s easy to keep the overhead low.
I don’t think there’s any confusion that starting a tax preparation business will make you filthy rich, but there is always the potential to earn more money working for yourself than working for someone else. Of course, there is plenty of risk, too. But as a tax business owner, you will determine the value of the services you provide and how much to charge your clients. When you work for someone else, even preparing taxes, you’ll have to split the profits. When you’re the boss, you get all the benefit (and assume all the risk).
Challenging and Satisfying Career
I find tax preparation to be a very satisfying career. I always try to remember that my first responsibility to my clients is to save them money and reduce their taxes. Not all clients will get a refund at the end of tax season, but even for those who owe taxes, if I am able to lower their tax liability and to save them money, I’ve done my job. Of course, I love it when a taxpayer gets a larger refund than they anticipated or I am able to handle a letter they get from the IRS with one phone call. The joy or relief I see makes it worth all the work and effort. If you enjoy to be challenged, this is a great business as well. Almost every day I see clients with questions that I have to think about and research. I find it very rewarding when I am able to overcome those challenges – especially when it benefits my clients.
There will always be a need for tax preparation services. In the last several years there’s been concern that computer software will cut into the market or that Congress will pass a tax simplification law. It’s true that computers make tax preparation easier, but a computer only guarantees the math to be accurate. When it comes to tax law, it’s only as accurate as the person who enters the information into the tax software. If you don’t know what numbers to enter or even that a particular tax benefit is available to you, the tax return will not be accurate. And since Congress has never been known to make things easier on taxpayers, there’s a huge doubt as to whether the tax code will ever be simple. (The last major “simplification” of the tax code was in 1986 and resulted in hundreds of thousands of new pages being added to the tax code.) There will always be a need for well-trained tax professionals who can offer solid advice and tax planning services. The key is to offer valuable services that go beyond simply entering data onto a tax form.
Tax preparation is a great business for people who are looking for flexibility. Although the peak business comes between January and April, many tax preparers choose to work all-year-long providing additional services to their clients. Some take the summer off and many more work only during tax season. If you are working for yourself, especially from a home office, you can work whenever you want. If you are most awake at three in the morning, do your clients tax returns then. Of course, you can’t completely become a vampire, because you’ll want to meet with your clients during the day, but you get the point. This kind of flexibility is great for stay-at-home moms, college students, and others looking for a part-time income.
Provide a Valuable Service
Most people are stressed out when it comes to dealing with their taxes. In truth, many people would just like to forget about it and sweep it under the rug. When they come to you to for advice or to have their taxes prepared, they are coming to you to help them solve an uncomfortable problem. They don’t want to be bothered by taxes or they don’t want to make a mistake that will have the IRS knocking on their door. As someone who can solve their problems, you are providing them with a valuable service – one they are willing to pay good money for you to deliver. You are in a position to use your knowledge and expertise to help them.
The big tax preparation firms specialize in moving clients through the system. You walk in with your paperwork and a half hour later you leave with a completed tax return. You don’t see your tax preparer for a whole year. While this is true of some tax preparers, most see themselves as their client’s financial partner. A true tax professional not only helps the client meet their tax obligations but looks for ways throughout the year to save their clients money and lower their tax liability. When this relationship starts to form, your clients will see you as a trusted financial advisor like their financial planner or lawyer. When you start your own tax practice, it’s not just a job. Instead, you will be entering a well-respected valuable profession offering.
Meet Many Different People
I appreciate that my client base is so diverse. I get to meet so many different people and I’m always interested in hearing about their life, their business, and their interests. As a tax preparer, you’ll get to interact with people from all walks of life. If you like meeting people, you’ll never be disappointed as a tax preparer.
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