Business At A Glance
Startup Costs: $2,000 – $10,000
Online Operation? No
Tax preparation can be time-consuming, detail-oriented, confusing, and,for most people, frightening. Tax laws change frequently, the IRS has atyrannical reputation, and most of us balk at arithmetic anyway. But ifyou’ve got a head for figures, you like solving puzzles of thefinancial kind, and you can keep up with changing tax laws, this couldbe the business for you.
You can work with individuals to fill outtheir yearly tax forms, specialize in small-business tax preparation,or represent clients who’ve fallen under the IRS’ beady eye and arebeing targeted for hefty liens or penalties. The advantages to thisbusiness are that you can work at home, you get to learn an awful lotabout everybody’s personal and company business (although morally,ethically and legally, you must keep it to yourself), it’srecession-proof because people will always need to pay their taxes, andit can be very profitable. As a tax preparation expert, you should havea solid working knowledge of tax laws for your targetmarket–individuals, estates, partnerships, or other types of small orlarge businesses. (Our tax system is too broad for you to knoweverything.) You’ll need a good eye for math and the people skills tohelp your clients make the best of a usually nerve-draining situation.You should also have the experience and instincts to judge whether theinformation your clients give you is A-OK or doesn’t quite ring true.
Your clients can be individuals or businesses. Get yourself thebusiness by placing ads in your local Yellow Pages and newspapers,networking with professional and small-business organizations in yourarea, and with CPAs and attorneys who can refer their clients to you.Direct-mail your brochures to local businesses or to individuals whohave just moved to your area.
You don’t have to have any sort of license or certification, but youmay want to get certified as an EA (enrolled agent) by the IRS. Thisinvolves training followed by a rigorous two-day exam, the completionof which is a bonus as far as your credentials are concerned.
It alsoallows you to go before the IRS in place of your client during anaudit. (Only enrolled agents, CPAs and attorneys are granted thisprivilege, which means you can charge more than an uncertified taxpreparer.) Whether or not you go for the EA designation, you’ll need acomputer with a laser printer, a fax machine, a copier, the usualoffice software, as well as tax preparation software like Intuit’sProSeries. You’ll also need reference materials, including the U.S.Master Tax Guide (available on Amazon), and regular updates to all thisstuff. You can get a CD containing IRS forms for $22, plus lots offreebies, all for the asking. Be sure to check with your insuranceagent about errors-and-omissions insurance as well.