How to Start a Tax Business in 6 Steps


There’s nothing wrong with working as an accountant, CPA, or tax preparer for another company. But if you desire to help as many people as possible, and become more directly involved with producing favorable financial outcomes for other members of your community, you might consider taking a leap of faith and launching your own tax business.

But how and where do you start? In this article, we’ll explore the essential questions and attempt to provide clarity on how you can take smart and proactive steps toward this goal.

Why Start a Tax Business?

There’s never been a better time to own your own business. We’re in a pro-business environment, where self-starters are being rewarded for their entrepreneurial spirit.

In fact, you could say many self-employed business owners have greater job security and earning potential today than standard employees of large organizations. But for a tax firm, what would be the specific perks and advantages? Let’s explore a few of them.

  • Work on your terms.
  • When you own your business, nobody can tell you when you have to show up at the office or how long you have to stay. You can decide when you choose to work and when you don’t. If you only want to work three months out of the year and take off the rest, that’s your call!
  • Greater work-life balance.
  • When you’re able to set your hours and work on your terms, it’s easier to achieve work-life balance. You can have more time with the ones you love, doing the things you enjoy.
  • Higher earning potential.
  • When you break off on your own, you no longer have to deal with middlemen who chew up a portion of your earnings. This can give you higher earning potential as well as more financial freedom.
  • Increased flexibility.
  • Running a tax business enables you to choose which niche you want to work in, which clients you accept, and how you focus your time and energy.
  • Consistent demand.
  • Unlike other industries, the service you sell will always be in demand. Taxes aren’t going away, which means you’ll have bulletproof job security.
  • Minimal startup costs.
  • It doesn’t take much to get a tax business up and running. All you need is an office, some tax preparation software, and a few pieces of basic technology.

Six Steps to Start Your Tax Business

Let’s not sugarcoat it, though: Starting a tax business requires careful planning, sharp execution, and the discipline and diligence to see the idea through from start to finish. If you’re willing to give it a try, here’s how to get started.

  1. Get Certified (or Don’t)

If you’re serious about running your own tax business, it’s a good idea to get certified. Fortunately, you have several options from which to choose:

  • Enrolled agent.
  • comes directly from the IRS. It’s designed for tax specialists who focus on tax preparation and planning. This is a very general certification that allows optimal flexibility.
  • CPA.
  • The certified public accountant designation is one of the most highly respected in the industry. In order to qualify, you have to pass an exam and meet other mandatory requirements. Although you don’t have to specialize in tax preparation or planning, many CPAs do.
  • Tax attorney.
  • If you have a background in law, you may become a certified tax attorney. As such, you can offer your clients dual benefits: tax preparation services and legal defense in tax-related matters.

But guess what? Nothing requires you to get certified in order to prepare taxes. In fact, you don’t even need any tax experience.

All you need are the necessary skills. While one of the aforementioned certifications will help you refine the skills and show your trustworthiness to clients, it’s still your choice.

Regardless of whether you pursue particular certifications or not, you do need to get a Preparer Tax Identification Number (PTIN) from the IRS in order to provide tax prep services legally for clients.

  1. Become Legal

The next step is to set up a business. Incorporation laws differ from state to state, but the process is fairly standard.

You’ll begin by incorporating your business and applying for a business license. Next, you’ll register for a PTIN. Finally, you’ll apply for an IRS Electronic Filing Identification Number (EFIN) in order to legally file electronic tax returns.

If you want your business to be included in the IRS Public Directory of Federal Tax Return Preparers With Credentials, you’ll need to go through the IRS Annual Filing Season Program and gain your record of completion. The greatest benefit of completing this program is that it allows you to market yourself as a credentialed tax preparer.

  1. Choose Your Niche

You can run a generalized tax business, but most people prefer to specialize, or focus on a specific type of client. Take some time and choose your niche.

For the best results, select a specialty you enjoy, as well as one that preferably isn’t already targeted by your competitors.

  1. Set Up Your Business

Now that you have all of the technical stuff taken care of, you can focus on some of the more creative and rewarding facets of starting a tax business. These include such tasks as choosing office space, decorating your office, ordering signage, designing a logo, building a website, creating a social media presence, choosing tax preparation software, and so on.

  1. Generate Leads

Although the creative side of launching your operation can be fun, don’t get too carried away with this. There’s always time to refine your approach later.

For now, the most important step is generating leads, which produces revenue and confers legitimacy on your firm. Assuming you’re a seasoned tax preparer, generating leads remains the most challenging aspect of running a business.

Once you secure clients, it’s a simple matter of crunching numbers and filling out forms. There are dozens of strategies for lead generation. You’ll have to figure out which combination works best for your firm.

Most entrepreneurs tap their preexisting personal and professional networks, but also do a little localized digital marketing. If you’re in a close-knit community, try leveraging partnerships with other company owners and community influencers.

By teaming up with other established businesses, you can bring a sense of credibility to your youthful operation.

  1. Wow Your Clients

Clients are accustomed to taxes being painful and cumbersome. They’re used to headaches, delays, and challenges that so often characterize the tax preparation process.

This gives you an opportunity to stand out. To build a successful tax business, you don’t have to be the most talented accountant in town.

You simply need to be friendly, reliable, responsive, trustworthy, and hardworking. If you combine these with a basic understanding of tax preparation strategies, you’re likely to be successful.

When you wow clients, two things happen. First, you essentially guarantee repeat business in the future. Second, you benefit from organic referrals and word-of-mouth marketing… which doesn’t cost a dime!

Outsource Tax Returns With Taxfyle

As your tax business grows, demand for your tax preparation services will skyrocket. And when it does, Taxfyle is here to help.

With our real-time on-shoring platform, you can digitally transform your firm and free up both partner and staff time by tapping into our network of 1,300 U.S.-based CPAs and EAs. This empowers you to refocus your energy and efforts on your biggest and most important accounts. Request a demo today to see how it works!

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