Do you know what they say about taxes? ‘In this world, nothing is certain but death and taxes.’ That said, diving into the tax preparation business sounds like a good idea with a market size of $11 billion in the US. It is also interesting to note that many people find it very difficult to understand tax laws, and more than 50% end up using a professional to do their taxes. With that being said, what exactly does a tax preparer do? Let’s find out.
The WHAT of Tax Preparation Business
A tax preparation business helps clients file their tax returns by preparing and estimating their taxes for a year. A tax preparer knows the tax laws and appliable tax rates like the back of his hand. They use this information to calculate their clients’ tax liability for the year. Also, a tax preparation business helps clients organize their income and take advantage of tax deductions and tax credits to reduce their tax liability. Simply put, a tax preparation business can help its customers pay accurate taxes and file the return with the government.
You also need to know the difference between different tax preparators. There are certified tax preparers such as Certified Public Accountants, Tax Attorneys, and Enrolled Agents. However, some non-certified individuals only offer services during tax season and may belong to a different full-time profession.
Why Should You Start A Tax Preparation Business?
Now that you understand what a tax preparation business is, the million-dollar question is, why should you venture into this business? Several incentives make the tax preparation business an apple of the eye for many passionate folks. Let’s look at some of these below.
Earn The Big Bucks
The median salary of a tax preparer is around $47,000. It only goes up as you gain more experience and earn better professional qualifications. The pay also tends to rise in big cities where the living costs are higher. A pro tax preparer can earn up to $100 per hour! If you start as a business, you can expect to make way more depending on a few factors.
- Experience: In an industry such as tax preparation, your experience matters a lot.
- Client Retention: Given the recurrent nature of tax filing, you must be able to retain your client by offering superior value.
- Brand Image: Your business will only grow if you can attract clients, and you need to make a brand to expand your client base.
Skip The 9 To 5 Culture
You will also be able to work less and earn more in a tax preparatory business. Typically, you will have to put in a few extra hours in the months leading to tax filing (April), known as the busy season. However, apart from that, you are free to catch up with your family and travel to your favorite places. You can spend the rest of your time building your business brand or adding skills to your portfolio. Even better, you can venture into related business such as bookkeeping or payroll services to increase your revenue stream.
Starting Your Business Is A Breeze
Many intelligent people back off from their business ideas, thinking that they will require a considerable amount of money to start. Luckily, a tax preparatory business can be created with minimum costs and without any hassle. All you need is a laptop and internet connection, and you are good to go.
You can also avoid high franchise costs and royalty payments by starting your own business. The most significant benefit of starting your own business is the creative freedom you have. This can help you position your business whichever way you want. Tax calculators and professional tax software have made the life of tax preparers relatively easy.
High In Demand
The government continues to expand the tax net and make new laws to increase its revenue from the tax. What does this mean for you as a tax preparer? More and more people will be lining up in front of your business to get their taxes done. If you serve them well and provide excellent service, the dollars will flow in too!
Tax preparatory services are all the hype right now, and it makes sense for you to get a piece of the pie. As tax laws expand and tax awareness increases over time, there’s one service that every citizen requires. And that is of a tax preparer. If you like playing with numbers and solving people’s tax woes, this is a match made in heaven.
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