What exactly would it take to open up an Income Tax preparer business?

Question

Does anyone know, besides being certified and hiring experienced tax preparers? Please answer if you have any experience in this field. Thanks.

I'm a graduate, I couldn't go back to college/university, I have a career and already own a finance company, I am doing some research on this only, I'm looking for a specific answer & not interested in becoming a CPA.

Answer 1

#1 = a team
#2 = a good idea, for example a license, a franchise, a special location, a CPA designation
#3 = start up capital, ie a loan, savings

You'll need these three to find the most important thing = CUSTOMERS!!!

You can succeed with a great team and so so idea, but with a great idea and marginal team, you might end up as one of 99 out of 100 business that fail by year 10...

Answer 2

Bless your cotton socks, but you're still a bit wet behind the ears.

Firstly, certification is probably going to be the way of the future. The simplest certification is the proposed Enrolled Preparer, which isn't yet available (as the law hasn't yet passed). If the law passes, you will HAVE to be certified in order to represent clients. As it's likely to eventually pass, you're going to need to think about this issue.

Certification at the level of Enrolled Agent (NOT the same thing as an Enrolled Preparer), CPA, or lawyer is required in order to do anything other than tax preparation for your clients. For example, if they get a CP2000 letter (that's a sort of computerised audit) and you want to resolve the case for them, you can't do so unless you are an EA, CPA, or lawyer. Period. Every case you can't resolve on behalf of your clients will result in them leaving you for a preparer who can.

Next, when you are self-employed, you are legally liable for your screw-ups. One hinky client situation could destroy all your hard-earned money. I would recommend you test the waters by working for H&R, Liberty, Jackson Hewitt, or any other large national chain for *three* years before you start your own company.

* The first year, you'll practice tax returns and get a feel for whether or not you'd like to keep doing this for a living. All your work is reviewed by people who've been doing this sort of thing for years. You'll discover loads of mistakes you didn't realize you were making, all neatly caught before the client ever sees them.

* The second year, you'll get a free course in tax law changes. As you see clients this year, you'll start seeing some of the letters the IRS sends that cover the mistakes the reviewers missed. You'll discover just how many you did wrong the first year and a chill will go down your spine as you contemplate how much trouble you could have been in if you didn't have the safety net they provided.

* The third year, you'll be the old hand that the others turn to with questions. As they ask these questions, you'll realize there's yet more for you to learn. You'll have some very angry clients this year whom you saw the first two years who come back to ask you "why such and such wasn't done, and what are you going to do to fix it?" You'll also have some very loyal clients who will follow you to the ends of the earth. Alas, your employee agreement will preclude you from taking them with you; but many people do find a way around these agreements. This is the year you can focus on studying what aspects of the back office operations you can improve when you start your own company.

Once you've been around the H&R Block, go ahead and open your own practice. If you want to set up your own franchise operation as opposed to a complete office, this may be cheaper. A benefit of this would be that you could take your loyal clients with you (provided it was the same company). Franchises have all back office support and educational materials to keep you up-to-date. It will also be easier for you to get your certification (once the law passes). If you start your own office without the aide of a franchise operation, the three years experience working for others will aide you in creating the ultimate back office support system.

Whatever you do, do not skimp on your E&O (Errors & Omissions) insurance. Penalties on forms I prepare typically start at $10,000 and go up from there. You do not want to go bankrupt for the lack of adequate insurance coverage.

Answer 3

take the H and R block tax course and work for them a season and see if you like it , if so get a small office, even at home if its allowed in your area, and hang out a shingle and do it. you will need a book of forms to xerox to fill out for the gov, and a good calculator, and you usually need to take a refresher course every year to be up on any tax changes, if you want to do more and make more money go to college and become a certified public accountant , then you can do taxes for businesses as well as their bookkeeping all year long since businesses have to pay monthly or quarterly.

Answer 4

Guts, money and liability insurance.