It’s funny when a light bulb moment for a blog post can strike at any time. I was gathering all my receipts the other day to get my paperwork ready for Adela, who prepares my taxes, when I started to wonder whether this would make an awesome home-based business.
In this post I’m going to share some resources to become a licensed tax preparer, other requirements you need to get started, how much an tax preparer can earn, the best ways to market your home-based tax preparation business on a low budget and share the downside and stressors about running a home-based tax preparation business.
Are you ready? Let’s go!
How Do Tax Preparers Make Money?
Ah yes, the million dollar question. The first thing that came to mind was the fact that the tax preparers are only busy the first quarter of the year, so there is a lapse in income. But this was a misconception on my part. There are others ways tax preparers can make money.
Yes, it’s true that a tax preparer is busiest the first four months of the year, however there are some folks who need to file tax extensions, people and companies big and small, need assistance with audits, and other tax documents the IRS may request during the year.
There are also businesses who file quarterly returns so there is a great possibility of making money throughout the year.
According to the BLS Occupational Employment Statistics, a tax preparer earns an average $21.50 an hour or $44,730 per year.
You must be a certified tax preparer in order to take on clients and prepare taxes. Here are some certification resources to obtain your tax preparation license. You can take a basic tax course with these well-known tax preparation companies.
Courses normally run about 10 weeks and cost will depend on the kind of course you take as well as by the state in which you live.
You can add to your credentials by getting certified through the Accreditation Council for Accountancy and Taxation (ACAT) by taking the ACAT exam.
The IRS also launched a program in June 2014 called the Annual Filing Season program to assist non-credentialed return preparers through higher learning.
Income Tax Preparers must also register for a Preparer Tax Identification Number (PTIN). You can get more information about this on the IRS website.
You will also have to register with your business within the state you live.I think if you're an entrepreneur, you've got to dream big and then dream bigger. Howard Schultz #quoteClick To Tweet
Marketing Your Income Tax Business
When you’re ready for to take on clients, it’s time to start marketing your income tax business. Here are some ways to promote your business without needing a big budget to do it.
- Start promoting to family and friends
- Promote online by making a website and include a blog about tax tips.
- Create social media profiles
- Submit your website on online directories
- Promote offline by distributing flyers around your community
The One Downside of A Home-based Tax Preparation Business
The only downside of a home-based tax preparation business is that clients would go to your home. I know…I wouldn’t want that either. The way around that would be to meet your clients at a Starbucks or local coffee shop.
Of course, this could also work in your favor because you could charge a little extra for your services to cover the cost of mileage and fuel plus you can report these expenses when filing your own income tax.
There are other stressors such as:
- No health benefits
- Stress over fear of making a mistake on a client’s tax return
- Depending on your skill level, making money during four-month tax season
What’s The Verdict?
So do I think this would make a good home-based business? Yes, I do. The good thing about it is, as your business expands you can always rent out some office space. And although you won’t be working from home, you are still your own boss and can set your own hours.
Over To You
Do you think running a tax preparation business from home is a good idea? How would you overcome the downside of it? I’d love to know what you think.
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