Many tax preparers find that their passion lies in helping others with tax related issues, and going above and beyond to guarantee the most favorable tax outcome possible for their clients. This drive often leads these individuals to pursue an independent tax business of their own, but the question of where to begin can be daunting.
More than 3 crore people file taxes in India every year, and this number sees an increment of 5% every year. Hence, starting a tax preparation business won't be a bad idea. If you are an experienced tax preparation specialist interested in starting your own business, the time is perfect.
This post will discuss about starting your very own tax preparation business. The points given below will give you certain milestones to follow in setting up your own tax preparation business.
Check With Your State
The first thing that you want to do if you want to start a tax preparation business is checking with your state to see if there's any exam or certificate necessary for you to take.
Obtain A Piece
The second point is to obtain a piece. It is a preparer identification number. If you are a tax preparer, you are required to have peon number. This number is provided by the IRS in case you are receiving money for your tax preparation business.
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Obtain An Ethan
Do as much as research as possible about Ethan. Of course, you can go to the IRS website or you can look up videos on how to do Ethan. But Ethan is something that you do want to have. If you don't, your tax preparation business will falter.
If you are a tax preparer, you need a marketing plan. Anybody can be a tax preparer. It takes three to five minutes to do a tax return. The competition is high when it comes to tax preparation business but it isn't meant to discourage you. It is of utmost priority to have a marketing plan. If you have become a tax preparer recently and are new to the business, you won't go too far without appropriate marketing tactics. People start off small by doing taxes and returns for a few individuals the first year and get disheartened. They get discouraged and lose their interest to continue tax preparation. The cause is the absence of a marketing plan, because you don't know what to do. Marketing helps increase those five or so customers the first year to higher numbers the next year.
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Figure Out Your Tax Office
Do you want your tax office at home, or want to set up an office workspace? You go into the tax industry, you want to be a tax preparer but where will you function from? Do you want to have a brick and mortar location, work from home, or function out of a co-working space. Figure this out while keeping your budget, liking, and other constraints in mind.
Create A Budget For Equipment
Create a budget for equipment, no matter whether you are working from home or have a dedicated office space. You need a computer, printer, paper, and other stationery. Think of everything else under the sun that you may require: high speed internet connectivity, virtual conferencing subscription, etc.
Bank product decides how much you get paid. In case you are going for e-file, decide what banks do you want to go with. If you are not going to e-file, you don't have to worry about bank products.
Congratulations, you have 20 clients in the first year. Now what? You need to retain them! Figure out how you will retain your clients because not everyone is going to be happy. If you are able to keep each client happy, kudos to you. After you complete the tax return for someone, he or she will get a letter. And it's very common for the client to call you for help. You can assist them with the verification process, "Send me a picture or come into the office and let see how I can help you."
CTEC Tax Preparer
So you want to be a tax preparer in California. Unless you are an attorney, CPA, or enrolled agent, you will have to register with California tax education counsel or CTEK for short. It's a state requirement.
What To Do?
You need to take 60 hours of qualifying education from federal and state laws from a CTEK approved provider. You can get a list at CTEK.org. Next, you need to get a $5000 tax preparer to assure bond. If you need help, ask an insurance agent. You will then have to register for an IRS preparer tax identification number, also known as p10. Visit irs.gov for more details.
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All Done? Not Yet.
You still need to register with CTEK. This is important. A lot of new tax preparers assume education providers register for them but they don't. It's up to you. Visit CTEK.org and click on the green box that says tax professionals. Then click on the tab says "register renew now". Enter the last six digits of your social security number and your last name. Some important information in bright red letters will appear. Please read it.
Fill in the blanks and pay 33 dollars registration fee. Congratulations, you are now a CTEK registered tax preparer, or CRTP for short. CTEK will give you a certificate and registration number that is valid for one year. You have to renew by October 31st every year. If you don't and keep charging fees to do tax returns, you could face penalty up to five thousand dollars from the franchise tax board.
Establishing yourself as an independent tax preparation professional is a great way to acquire financial independence, whether you're practicing full time or supplementing your income from another source. With the right tools, experience and an entrepreneurial drive, you can become one of the many tax return preparation businesses that help millions of people file taxes each year in India.