How to Start a Tax Prep & Bookkeeping Business

As tax codes continue to get more complex and confusing, individuals and small businesses are often looking for help to reduce stress and maximize their returns at tax time. While tax specialists are busiest during the spring, by offering bookkeeping services along with tax preparation, you can have a business that is booming all year long.

Instructions

1. Get the right training. While you can take a tax preparation class through a community college or a tax service company such as H&R Block, if you want to add bookkeeping to your business, you should have courses in accounting as well. Community colleges offer such classes and even an AA (Associates Degree) in Accounting. You can get accounting degrees at 4-year colleges as well.

2. Determine who your clients will be. Many people need specialized help such as for small businesses or managing diverse investment portfolios. If you're an expert in one of those areas, you can focus on clients who need those services.

3. Establish your business. Obtain the necessary permits and licenses required to do business in your city or county. Create your business structure, such as a Limited Liability Company (LLC) and apply for an Employer Identification Number (EIN). To protect yourself in case you make an error on a tax return, research and obtain Error and Omissions Insurance. Set up your home office with needed equipment such as a computer, office supplies, bookkeeping and tax preparation software, phone service and Internet access (for electronic filing). Create a pricing list and set up your own system for bookkeeping as you'll need to pay taxes too.

4. Market your business. Identify the best ways to reach the tax and bookkeeping market. Take advantage of the end of the year push to maximize tax deductions, as well as the beginning of the new year tax time, to build your client base by offering special deals or a free financial review. Don't miss out on opportunities from May to November as many businesses need to pay estimated taxes and most will need a bookkeeper to help manage finances for tax time. Create marketing materials such as brochures, business cards and a website to let people know about your tax and bookkeeping services. Establish a regular campaign of promoting your business including advertising, writing articles with important tax information for newspapers, magazines or Internet sites and writing press releases related to new tax laws

5. Manage your business. Having a profitable tax and bookkeeping business requires a balance of providing quality services to existing clients while also making sure you have a steady flow of new customers through marketing efforts and referrals. Continue to implement your marketing plan and consider offering incentives to clients who refer new customers.

Tips & Warnings

• Be sure to stay on top of current tax regulations. It will help maximize your clients' returns but also protect them and you from errors due to changes in the tax code.

References

• Small Business Administration: Start Your Business
• Wall Street Journal: IRS Weighs New Rules on Tax Preparers
• Internal Revenue Service