Creating A Tax Preparation Business For Little or No Money

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become a tax preparer

Flying Solo Means More Freedom and More Flexibility

No one likes to talk about taxes, so why would anybody want to make a living as a tax preparer?

The flexibility, for starters. Tax preparers earn the bulk of their annual income during the first quarter of the year, between January 1 and April 30. And like teachers, many tax preparers are able to a significant amount take time off during the summer and fall, sometimes as much as three months.

Look for gigs on Craigslist, Elance, and LinkedIn. They are free, and better, there is a ton of work there.

What’s more, unlike certified public accountants, tax preparers aren’t required to pass rigorous accreditation exams. That means a motivated solopreneur with no post-secondary education can be trained as a freelance tax preparer in about a month for as little as $100.

Tax preparers earn a median income of  $30,000, but preparers in the top ten percentile earn twice that amount working an average of 22 hours per week, according to the Bureau of Labor Statistics.

So, who should consider a career as a freelance tax preparer? Individuals with strong math skills, a keen eye for details, and a desire to work one-on-one with clients. To launch a tax preparation business, you will need a basic education, proper training, access to tax filing software, and—last but not least—customers.

Here’s a quick and easy step-by-step guide to getting started on the cheap.

1. Education and Training

In order to become a professional tax preparer, you will need to finish your secondary education or obtain a GED. Many tax preparers go on to pursue post-secondary education at some point during their career, but you will only need a high school diploma to qualify for professional training.

Tax preparation training seminars are typically offered during the late summer and early fall. Courses are available through community colleges and online tax preparation academies.

After you have completed your training, you can go on to take additional courses through the Internal Revenue Service's website. The IRS offers free basic, intermediary, and advanced online courses for tax preparers.

Because of the seasonal nature of tax preparation work, many tax preparers choose to pursue further education during the “off season.” At the undergraduate level, an associate’s or bachelor’s can increase your value (and thus your salary) as a tax preparer. A degree in business management can allow you transition from personal tax preparation to business financial planning.

2. Essential Software for Your Freelance Business

Of course we are biased here, but that said, one thing we here at TSE know is that the best place to get tax, 1099, W-2, and other similar forms and software is from our pals at Greatland – the tax experts. You my also find some of the software you need from LegalZoom.

And be sure to stay up-to-date: federal and state tax laws are consistently amended, so it is imperative that professional tax preparers update their software as often as possible.

Clients who are filing electronically will expect their tax preparer to provided rapid refund services and direct deposit. In order to become an authorized e-filer, you must register with the federal government by filing a Form 8633. Additionally, you may be asked to submit to a background check and credit check in order to qualify for direct deposit services.

3. Your First Customer and Beyond

After you’ve finished your tax preparation course and applied for the requisite certificates, it’s time to register as a business. Contact your Secretary of State’s office to find out if you need a business license, or liability insurance in order to legally collect income from clients.

When you’re building a business on the cheap or with little or no money, you need to utilize every available resource to attract the attention of potential customers. Promote yourself on social media and distribute fliers and business cards to friends and family.

Look for gigs on Craigslist, Elance, and LinkedIn. They are free, and better, there is a ton of work there.

For the self-employed, word-of-mouth is invaluable. If you’re initially willing to offer your services at a reduced rate, then you might be able to build a reputation for reliable service. Once your business has momentum, customers will seek you out.

So what are you waiting for? For tax preparers, April is always just around the corner!