No, But Here’s How to Get Started
Starting a tax business is one of the quickest ways to earn money, and getting into the industry is not very difficult either. Your success as a tax preparer, however, depends on the kind of effort you put in.
Since it does seem quite appealing, a lot of people consider entering into the industry. There aren’t many barriers to entry, so that’s a huge plus point. A concern most have, though, is, do you need good credit to get started? The answer is ‘NO’. Here’s why:
Low Startup Costs
The startup costs of a tax business are relatively minimal. It depends on whether you choose to work from home or an office. However, the option to work virtually makes it easier to set foot in the industry with less money and risks involved.
For someone working virtually, overhead costs are already at a minimum. All you need to invest in is:
- A comprehensive tax course
- Obtain a Preparer Tax Identification Number (PTIN) to register yourself as a tax preparer with the IRS. The process can also sometimes be free of cost.
- Tax preparation software
- Limited Liability Corporation (LLC) filing fee
If, however, you decide to work physically from an office, you do have to pay for the additional overhead costs. That may include office rent, utility expenses, and any other indirect expenses. However, a point to consider is that people prefer the digital alternative in today’s day and age. Therefore, starting a virtual tax business may be a better and easier fit.
With that said, good credit is not a prerequisite for entering the tax industry. And given how it helps you generate good profit rather quickly, you can build up credit after instead.
How To Get Started?
There are a few fundamental steps that you need to cross off your checklist in order to get started with a tax business. And having good credit is not one of them. To begin, here are a few:
The first requirement is for you to register your business with your respected state. This process is relatively easy. All it takes is for you to file with the state a “Doing Business As” name wherever your practice will be located. However, if you want to create a limited liability company (LLC), the process of registering with the state will be skipped; it is already included.
Preparer Tax Identification Number (PTIN)
To ensure that you can charge a fee for the services you are offering, you are required to obtain a PTIN. All you need to acquire this is to register and apply online. In the case that you have other employees, each individual must obtain their PTIN. The Preparer Tax identification number must be renewed each year, but as you can see, it’s an easy process.
Electronic Filing Identification Number (EFIN)
As determined by the IRS, filing 11 or more tax returns must be done electronically. And in order to do that, you need to obtain your Electronic Filing Identification Number (EFIN). Only then will you become an authorized e-File Provider. This process is not only easy but also free of cost.
The steps mentioned above were the most crucial to start. When asked how long it takes to start a tax business, the answer is: “depends on how long it takes you to obtain your PTIN and EFIN”.
Establishing the Business
Once you have filed the necessary applications, you must move on to setting up your business. The first task must be to decide which tax preparation software you want to use. It will depend on the type of tax returns you plan on preparing and what you can afford.
Given how the industry is competitive, you need to get your name out there in order to survive. Gaining the attention of potential clients is your number one goal. So, building a website to create awareness about your services is an excellent first step. Make sure to be genuine and try your best to attract as many clients as possible.
Starting your business is never going to be a simple process; it takes time and effort. However, there’s plenty of help available in the form of guides to direct the new entrants. You don’t even need good credit to get started in this industry, but ensuring success can never be a guarantee. Always remember, even a little effort goes a long way.
Ready to get into the Tax Game? I’m giving you everything you need to know on October 5th 2021. This is a billion dollar industry with more than enough room for up and comers, you just need to know what to do and most importantly what NOT TO DO.
Go here and register, spaces are limited so register ASAP.