Tax Preparer; As A Home-based Business Opportunity

Given the current economic times, people are looking for extra ways to earn income and earn financial freedom. One of the lucrative home based business opportunities you can venture into is tax return preparation. According to the Bureau of Labor Statics (BLS), tax preparers earn a mean annual salary of $43, 350 or an average of $20.84 per hour. This is not bad considering that the work of a tax preparer is typically seasonal spanning four months every year.

Individuals with strong interpersonal skills, math skills and a keen eye for details are the best candidates for this business. To start a tax preparation business, you require basic education, proper training on tax matters, access to basic equipment and a tax filing software.

Here is a quick and easy guide on starting a tax preparer business from your home.

1. Education and training

A high school diploma is the minimum education requirement to qualify for professional tax preparer training. Most tax preparers pursue post-secondary education at some time in their career, but the high school diploma is the primary requirement for professional training in tax preparation.

Professional training sessions and seminars are usually offered from late summer to early fall. You can study for these courses online or through community colleges.

After finishing training on tax matters, you will take additional courses offered by the Internal Revenue Service through its website (http://www.irs.gov/). The IRS courses help you progress from basic, intermediate to an advanced tax preparer.

After training, you are ready to apply to the IRS for registration as a tax preparer. You should also remember to check with the certification requirements at your state. This is because some states have their own requirements for tax preparers, irrespective of whether the tax preparer deals with federal or both state and federal taxes. Failure to register with your state can therefore lead to fines.

For example, all tax preparers in California must take a 60-hour Qualifying Education course before they can practice. New York on the other hand requires tax return preparers to register with the state authorities and pay $100 fee if they will deal with over 10 commercial tax returns in a year.

Because tax preparation is a seasonal activity, most tax preparers decide to go for further studies during the “off season.” The further education increases one’s value and salary as a tax preparation professional. Graduating with a degree in business management can allow one to start offering financial planning services as well.

2. Starting your tax preparation business

Once you have completed your tax preparation training and applied for the necessary certificates, it is time to register your business. A business license and liability insurance are normally needed to legally receive income from your clients. The registration requirements may vary from one state to another.

But the IRS registration fee of $64.25 is mandatory to receive the Preparer Taxpayer Identification Number (PTIN). IRS also gives you an Electronic Filers Identification Number (EFIN) at no cost. You should as well consider finishing the Voluntary IRS Annual Filing Season Program at a cost of about $100 in order to get the Annual Federal Tax Refresher Record of Completion.

Once you obtain the required certification, the next thing is to purchase basic equipment and professional tax preparation software.

The main equipment you will need include a computer, a printer, a scanner, a copier and a fax machine. You will also need internet service, business cards and office supplies.

3. Your First Customer and Beyond

Once you become a registered tax preparation professional, and put in place the necessary equipment and software, your focus turns to growing your home based business. The first thing is to market your service to potential clients. Promote your new business on the social media and distribute business cards, fliers and other promotional materials to family and friends. Your first customer will usually come from the individuals in your immediate social circle. You should also think about putting up a website to showcase your services and consider local search engine optimization. You can also look for gigs in sites such as Elance, Craigslist and LinkedIn.

As you start, be willing to offer services at reduced rates. This is a great strategy because you are building your portfolio. Once you establish yourself in the industry as a reliable person, your business will gain momentum and customers will look for you. In a service business like this one, positive customer feedback will market your service through word of mouth far and wide.

4. Income potential

Your income potential depends upon you business sector and your ability to attract and retain customers. With a tax preparation home based business, you have negligible overhead, and you can charge lesser than your competitors. Some experienced tax preparers earn as much as $100 per hour, making up to $60,000 in the three month tax returns season!

It is most likely that you will not make the above figures during your first season since you will be learning and enlisting new clients. However, by promoting yourself properly and providing unmatched services to clients you can thrive through referrals and high customer retention. With time, you can quickly reach the high income levels in the industry and continue to expand your business.

The best part is that as your home based business grows through referrals and new clients, your future profit potential will be excellent. Moreover you can fully enjoy your summer season and holidays because your business was able to hit its peak from January to April. Providing other services to your clients during the “off peak season” will see you earning throughout the year.

The End Result

With the ever changing economic times, individuals are in search of new revenue streams to maintain their life styles. A home based tax preparation business can add to your income, pay your bills, help you save for the future, and much more.

Your tax preparation business can operate as a distinct entity or as a complimentary business to the other businesses you are already running such as, bookkeeping, accounting budgetary administrations or protection. Your clients will definitely appreciate your inclusive abilities.

A tax preparation business can also be a great if you work in another seasonal industry-but at a separate time of the year for example lawn care, retail and travelling etc. In short tax preparation can be a steady source of income throughout the year.

REFERENCES

Tax preparation – Wikipedia, the free encyclopedia

Tax preparation is the process of preparing tax returns, often income tax returns, often for a person other than the taxpayer, and generally for compensation.

TurboTax® Tax Preparation Software, FREE Tax Filing, Efile Taxes …

TurboTax is the #1 best-selling tax software. Free Edition includes free IRS efile. Easily prepare your tax return and file income taxes online.

Tax Preparers – Bureau of Labor Statistics

Prepare tax returns for individuals or small businesses. … Accounting, Tax Preparation, Bookkeeping, and Payroll Services, 65,440, 7.41, $20.78, $43,220.

TaxACT | Free Tax Preparation Software, File Taxes Online, Free E …

TaxACT prepares, prints and e-files your income taxes for FREE. Free Federal Edition handles simple and complex returns, includes free-efiling.

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