In the couple of months before taxes are due each year, it’s not horribly uncommon to have lines long enough to snake out the door of the local tax preparation business. When business is that booming, it probably looks pretty enticing, especially if you’ve already been thinking about starting your own tax preparation business. But, unfortunately for business, the tax season isn’t a year-round thing. So, what happens once tax day passes and that frantic need for an accountant peters out?
If you’ve been contemplating opening your own tax preparation business, this question is one of the most important. After all, while business may boom for a handful of months early in the year, unless you’re planning carefully for that income, it can be difficult to figure out how to earn sufficient income through the other three-quarters of a year. If you have been thinking about starting your own tax preparation business, here are a few options to consider in order to make money year-round.
Individual & Small Business Taxes
In the hubbub of weeks leading up to April 15th, it can be pretty easy to forget that there are other federal and state tax deadlines that happen throughout the year. Yes, the primary due date for individuals to file a tax return falls during that second week in April, but there are a lot of caveats there. Individuals can file for an extension for a wide number of reasons. When this happens, a lot of the causes are tax situations complex enough that they need more time—and likely also the assistance of a certified tax preparer. It’s a bit simplistic to say you won’t get business once the deadline to file federal income tax has passed; the number will decline, but there will still be a decent group of people looking for help.
In addition to individuals looking for help to file a tax return, don’t forget the business owners! While it’s true that tax filing due dates vary based on the type of business entity, the important piece of information here is that there are multiple due dates throughout the calendar year. One way many certified tax preparers generate income year-round is by marketing to local businesses to assist with their tax preparation on a quarterly basis, or however frequently they require assistance.
If the IRS decides to audit someone, this can be an arduous and complicated process. The level of qualification you have as a certified tax preparer determines how much representation you are allowed to offer a client. PTIN holders and Annual Filing Season Participants are only allowed to offer a limited amount of representation, which means that, if they didn’t prepare and sign the tax return in question, these two groups of tax preparers cannot offer representation assistance. On the other hand, attorneys and certified public accountants are licensed by either state courts or a state licensing board, so they are allowed to offer representation to anyone seeking help through the audit process. The good news is, you don’t have to become a certified public accountant or an attorney to offer representation; there’s a third option. With some additional education and an exam, any certified tax preparer can become an enrolled agent, which would allow them to provide representation for audits, payment or collections issues, and appeals.
Another common way to bolster business on a year-round basis is to offer additional financial assistance. More often than not, this means providing bookkeeping and/or payroll services to local businesses. Some of these services may require some additional education or licensing up front, but can offer a better source of regular income for your tax preparation business over the course of a year. Many businesses prefer to combine these services with whoever is handling their tax preparation, for a more simple and seamless process overall.
Starting Your Tax Preparation Business
When it comes to offering tax preparation services and starting your own business, there are plenty of ways to make it work throughout the year, not just during tax season. Learn about starting your own tax preparation business or becoming an independent agent with VTax. Contact the Umbrella Financial Services team today to learn more or get started!