Starting a professional Tax Preparation Service can seem a little complex. Before you even think of forming a portfolio and jumping straight into the business, you will have to deal with a few things. Among those are submitting requirements to the Internal Revenue Service (IRS) and complying with a couple of other things.
If you’re unsure of what you should be doing first, here’s a quick rundown on what you can do to bring your professional Tax Preparation Service practice to life.
#1 Register in Your State
Any business will have to be registered with your state for legal purposes. Going into taxes, you can opt to register with DBA or LLC. DBA stands for ‘Doing Business As’ and is often the option for small businesses that don’t have a conventional business structure. You get an extra period to decide what your business model will be.
On the other hand, if you’re looking to emulate a corporate structure, you can register as an LLC. Short for limited liability company, an LLC entails that the business owner isn’t personally liable for its debts and lawsuits. Check with your state government for the information and additional guidelines, especially in light of a law change.
#2 Coordinate With the IRS
Taking part in a professional tax practice means working with the IRS. And to work with the IRS, there are a few things you need to apply for. These are:
- Federal Employer Identification Number (EIN) – Specific cities and business types may lead to you needing an EIN application. An EIN allows you to report and file business taxes.
- Electronic Filing Identification Number (EFIN) – All tax firms have to file tax returns electronically, so you have to apply to be an authorized e-file provider and get an EFIN.
- Preparer Tax Identification Number (PTIN) – Tax preparers who are paid to assist and defend federal tax returns and documents need a PTIN. PTINs only last for a year.
#3 Understand Your Business Model
After going through registration and applications, it’s time to conclude the concept of your business. Determine what your firm will specialize in and what services you should be offering. Understanding your business model will allow you to anticipate what kind of clients you will be appealing to.
Some startups tend to offer tax services to small businesses and self-employed clients. This will depend on your social network and how reputable your company will be. Your location can also be a factor in an individual or entity deciding to work with you, so choose wisely.
#4 Explore Tax Preparation Service Tools
Tax Preparation Service tools can help your firm streamline your work. It will also allow team members and clients to work with each other. If you are going through remote work, the tools will allow you to have a smoother work process.
There’s a lot of tax operating systems on the market. Each software is designed for various tax services. When starting out, try to find tax software that will provide an easy-to-use interface and support line in case you’ll need any help.
Conclusion
Now that you have most things set, your Tax Preparation Service is ready to help clients! Generate revenue from assisting others in managing their own. Grow your credentials and earn additional responsibilities to assist more people.
Keystone Tax Solutions provides award-winning software for tax preparers through different partnership packages. Try a free demo today!
