How to Operate a Successful Tax Preparation Service

A knack for self-promotion will help you grow your tax preparation business quickly.
A knack for self-promotion will help you grow your tax preparation business quickly. (Image:

You don't have to be an accountant or CPA to prepare taxes professionally, but you must be intimately familiar with federal and state tax laws. If you are not, consider taking a course through H&R Block to get you up to speed. Or spend a few hours or days at the IRS website, learning tax laws, credits and deductions. Starting in 2011, the IRS has announced plans to begin requiring all professional tax preparers to pass a competency exam, so hitting the books and staying up on the latest tax code changes will be crucial to your ability to business. Once the training's out of the way, however, it's time to focus on how to successfully operate your tax preparation service.

Things You'll Need

  • PTIN from the IRS
  • Office supplies
  • Computer
  • Tax preparation documents

Apply to the IRS for a Preparer Tax Identification Number, or PTIN. (Find a link in References.) All professional preparers are required to have one before they prepare a return, starting in 2011.

Organize your office. If you will be working from home, your home office, as well as any section of the house that clients will see, should look professional. Stock your office with supplies such as paper, toner, paper clips, staples, sticky flags, envelopes, labels, stamps, pens, pencils, a calculator, folders, tax preparation software (if necessary) and CDs. Print out easy IRS reference guides.

Determine your prices. You may charge as little as $40 for a basic 1040-EZ. Find out what H&R Block and other tax preparation services charge in your area.

Design professional and eye-catching fliers and business cards using Microsoft Word or (See Resources). Post these at your kid's school, your church, office buildings and bulletin boards at grocery stores and colleges. Consider setting up a website, which details your services, such as what you charge and how long you expect to take for each return. Advertise your service on and in local newspapers. Return phone inquiries promptly. Change your telephone message to reflect your status as a professional tax preparer, including the hours and days that you can be reached.

Complete tax returns in a timely manner. Stick to the time estimations given to your clients. This will ensure that clients return year after year.

Print out copies of the return for customer's to keep for their records. Print out receipt invoices. They should include what you charged, your client's name, your phone number, name and address. Make copies and keep one for your own records (or detail customer information in a spreadsheet). Invoices can be created quickly and easily in Microsoft Word (See Resources). Provide envelopes with the appropriate IRS address along with the completed tax return. Use sticky flags to show clients where to sign. Place all of the completed paperwork in a folder with the client's name on it. They will appreciate any steps you take to make their filing process that much more convenient.

Offer financial counseling and money management tips to those clients who want your advice.

Tips & Warnings

  • Contact your home insurance provider about purchasing business liability insurance.
  • Be sure to report your earnings to the IRS.

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