If you understand and enjoy navigating the world of tax preparation and realize that you have the passion for helping others fix their tax concerns, then perhaps, starting a tax preparation business is the right one for you. Not all are gifted with this interest in the industry. So, if you want to take advantage of this fascination and decide to start a business after all, here are the steps you need to take to bring the idea to life.
How to Start Your Tax Preparation Business
Step 1: Prepare Your Requirements for Tax Preparation Business Registration
The first thing you need to do is prepare your state, local, and IRS requirements. Documents you need to submit for startup include:
- Your business name
- Information for your legal entity
- Other information, such as your contact details and social security number
If you have never opened a business before, you need to register your entity. That means you have to decide whether you want to do business as a corporation or a Limited Liability Company (LLC). You need to establish your business address, open a business bank account, and make sure that you have enough money to maintain your business before you start.
Step 2: Obtain Your Preparer Tax Identification Number (PTIN)
Next, you need to get a preparer tax identification number (PTIN) to begin your tax preparation business. You must have this identification before registering with the IRS and be allowed to prepare taxes and enjoy the tax preparation business.
The IRS allows all licensed attorneys, certified public accountants, enrolled agents, and tax practitioners to obtain this PTIN. You also need to gain a PTIN if you offer tax preparation services as an individual.
Also, if you’re planning to hire employees to work on your behalf, you need to make sure they have their own PTINs too. You can get a PTIN at the IRS website.
Step 3: Get an Electronic Filing Identification Number (EFIN)
If you are doing your business online and have already established your website, you need an electronic filing identification number (EFIN). It is an identification number that the IRS gives to individuals involved in e-filing. You can get an EFIN in several ways; you can fill out an online application and pay a $50 fee or call the IRS with your credit card details.
Make sure you have an EFIN when you register for a PTIN. The EFIN is also needed to file state and local tax returns electronically.
Step 4: Establish Your Business
The final step is to open your tax preparation business. You need to ensure that you are ready to greet your clients and respond to their tax preparation needs.
That will require you to have a location to operate from and an office that meets all the registration requirements. Your business location must be in an accessible site where clients can easily find it. Or you can also opt to work from home and start your business online.
More importantly, you need to advertise your business and make sure your clients know your services. That will help you build your reputation, which will, in turn, attract more clients.
Conclusion
Starting up a tax preparation business is not as hard as it seems. The most important thing is to ensure that you meet the requirements and enjoy the benefits of being a tax preparation business owner. As long as you work hard and are willing to learn, you can succeed in your new venture.
If you still need more help in starting your tax preparation business, like finding the best professional tax software to speed up your work, you can check out Keystone Tax Solutions. Our tax software is easy to use and can help you prepare taxes in just minutes. Try it today!
