Updated: October 25, 2017
When I talk to other mamas about starting their own business, the one thing they’re looking for is something that’s easily manageable.
Some mamas want to be able to balance a homebased business around their kids or another job.
There are plenty of homebased businesses that are a perfect match for you mama. Take for example running a tax preparation business.
It’s funny when a light bulb moment for a blog post can strike at any time.
This is the time of year when I start to gather all my receipts for the upcoming tax season. While I was sorting out the receipts I started wondering what it would take to start a homebased tax preparation business.
So I did some homework and in this post I’m going to share the resources I found to become a licensed tax preparer.
I’m also going to show you the best ways to market your homebased tax preparation business even on a low budget.
Plus the downside of running a homebased tax preparation business.
And I hope by the time you’re done reading this post, you’ll be able to decide if this is would make a good business for you.
Are you ready? Let’s go!
First things first, you have to get your certification 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 back in 2014 called the Annual Filing Season program to assist non-credentialed return who want to continue learning and take federal tax laws refresher courses.
Income Tax Preparers must also register for a Preparer Tax Identification Number or 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 and obtain an Electronic Filing Identification Number or EFIN from the IRS.I think if you're an entrepreneur, you've got to dream big and then dream bigger. Howard Schultz #quoteClick To Tweet
Develop a Business Plan
The next thing you want to do is develop a business plan. Will you be providing tax services all year or only during tax season?
Will your clientele be individuals, businesses or both?
These are some of the questions you should address in your business plan.
You also want to price your tax services. You can check what local tax preparers charge or you can use a tool like Intuit ProConnect Pay-Per-Return pricing software.
Tools and Software You’ll Need
You will need a computer with high speed internet and you’ll need software like Norton Security* to protect you from cybercriminals.
And you’ll need to pick out a tax software. Here’s a list I found online. I didn’t do any comparisons so be sure you review each one to pick out the one that’s best for your business.
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
- Have a website designed for your business
- Submit your website on online directories
- Promote offline by distributing flyers around your community
How Do Tax Preparers Make Money?
Ah yes, the million dollar question. The first thing that came to my mind and probably others was that tax preparers are only busy the first quarter of the year, so there would be 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.
The One Downside of A Homebased Tax Preparation Business
The only downside of a homebased 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 drawbacks 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 what do you think? Would make a good homebased business for you?
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
How would you overcome the downside of it? I’d love to know what you think.
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