Are you thinking of starting your own tax business? A career in tax preparation is a great idea – it’s smart, stable, and your services are always in-demand.
And when you run the show, you have the chance to build a profitable career on your own terms. You call the shots and set your own schedule. Want to work around your kids’ school hours? Take Fridays off? It’s all up to you!
Sounds amazing, right? But for your new business to be successful, there are a few things to keep in mind. Unfortunately, it’s not as simple as finding a few clients, filing some returns, and enjoying endless perks and profits (if only!). You’ll need the right systems and strategies in place to grow your business and stay compliant with the law.
Not sure where to begin? Don’t worry! We’ve put together this practical guide to walk you through everything you need to know about launching your tax business the right way.
1. Become a certified tax preparer
You’ll need to meet some basic Internal Revenue Service (IRS) requirements before starting a tax preparation business. First, you’ll need to register for a Preparer Tax Identification Number (PTIN) – this is your official authorization to prepare tax returns for clients.
If you plan to file returns electronically (which most tax pros do), you’ll also need to apply for an Electronic Filing Identification Number (EFIN) to meet IRS e-file requirements. This lets your business submit federal tax returns securely online. To apply for your EFIN and manage electronic filing tasks, you’ll also need to create an IRS e-Services account.
But wait – there’s more! To build trust and stand out from other tax prep pros, you can complete the IRS Annual Filing Season Program (AFSP). White not a legal requirement to work as a tax preparer, this program gives you extra training and a certificate of completion. And it’s a simple way of showing clients you’re committed to staying up-to-date with tax laws.
Becoming an Enrolled Agent (EA) is another smart move for continuing education. It’s a respected IRS credential that shows you’re an expert in tax matters. It gives you the confidence you need to handle super tough tax situations – and even authorizes you to represent clients before the IRS!
2. Set up your tax business
Next, figure out what kind of business setup makes sense for you – sole proprietorship, LLC, or corporation. Now’s the time to register your business name and open a dedicated business bank account, too. A professional setup keeps you compliant with laws and regulations while showing clients you’re serious about what you do.
3. Find your ideal clients
The truth is, not every client is worth your time – especially when you’re trying to get a new business up and running.
So, before you start saying “yes” to everyone, ask yourself: is this the kind of person I want to work with? For example, if your ideal clients are small business owners, then handling individual taxes for dozens of one-off W-2 returns rather than business clients might not be the best fit.
The best part? When you know who your ideal clients are, everything becomes easier – your messaging, setting your average prices, your processes, and more!
And don’t forget to carry out credit checks and criminal background checks to protect your business.
4. Market your tax business
If you want people to use your services, they first need to know you exist. That means marketing yourself – whether it’s through social media, local networking events, creating helpful content like blogs or videos, or optimizing your Google Business Profile.
Yes, word of mouth helps, but having a more detailed plan to get your name out there is what builds a steady stream of clients over time.
5. Choose the right professional tax software
Gone are the days of running a tax business with paper forms, email threads, and sticky notes. It might’ve worked at one time, but today, it’ll slow you down and create way more stress than it’s worth.
Implementing modern tools and tax preparation software that streamline everything is the way to stay competitive (and sane!). These systems help centralize your client work, reduce admin tasks, and ensure every tax compliance check is accurate.
Automated practice management tools – like TaxDome – are especially helpful because they put it all in one place – secure messaging, e-signatures, automated reminders, tax forms, and way more.
6. Meet (and exceed!) your clients’ expectations
Maybe the very best way to keep your business profitable is to deliver exactly what you promise – and then some. When you go above and beyond for your clients, it really shows.
So, how do you go the extra mile? Sometimes it’s just about getting back to clients quickly when they have questions and breaking things down in a way that makes sense. Many clients will also appreciate you sending reminders in the lead-up to deadlines so they don’t feel rushed.
Plus, you could share some helpful tax tips that actually fit their situation or check in after tax season to see if they need anything else. Even little things like a handwritten thank-you note or being flexible with appointment times can really stand out.
That extra effort pays off – existing clients stick around year after year and recommend you to their friends and family.
Closing thoughts!
Starting your own tax prep business is a fantastic opportunity to launch a profitable career that gives you flexibility and control over your future. With careful planning – including getting certified, finding your ideal clients, and working with the right software provider – you can hit the ground running and build a strong foundation for a business that lasts.
Grow your tax business with expert support and smart automation
Need help building your very own business? We work with professional tax preparers, Certified Public Accountants, and bookkeepers to help them grow and make more money.
With the right tools and support, you can save time and enjoy the success and freedom you’ve been working for.
We’re proud to be the go-to experts in TaxDome automation and tax practice management. To work with us, simply:
- Get our proven TaxDome Template. Sign up for TaxDome’s accounting practice management software to access ready-made signature templates – including onboarding templates – to streamline your automation and work smarter.
- Transform your practice with our W4TP program. Join our 12-month program, led by top experts, to learn how to build an end-to-end automated system that helps tax professionals like you achieve business growth using TaxDome.
Sign up for your free 2-week trial of TaxDome with our Partner Link, and you will get 3 FREE months of TaxDome when you sign up for your first annual subscription.
Affiliate Disclaimer: We are proud Affiliate Partners of TaxDome. If you do invest in TaxDome for your practice in the future, we may receive a commission but at no cost to you. We only recommend tools that we use ourselves. Yep! Jessica is a proud user of TaxDome in her practice for three years now.
