Chapter 8

Ultimate Guide for New Tax Preparers

How to Start a Tax Business

Chapter 1

How to Start a Tax Business

The Fundamentals for Tax Preparers

Chapter 2

The Fundamentals for Tax Preparers

How to Setup Your Office

Chapter 3

How to Setup Your Office

Getting Your Office Tools

Chapter 4

Getting Your Office Tools

Outsourced Suppliers

Chapter 5

Outsourced Suppliers

Investing In Your Own Office Space

Chapter 6

Investing In Your Own Office Space

Acquiring Your Clients

Chapter 7

Acquiring Your Clients

Tips for New Tax Preparers

Chapter 8

Tips for New Tax Preparers

Chapter 8: Tips for New Tax Preparers

New Tax Preparers: Employment vs. Business

People choose the tax preparation business for multiple reasons. Many go into it as a natural extension of their current profession or trade. Lawyers and Certified Public Accountants (CPAs) often obtain their Tax Preparation registration and offer tax preparation as an additional service to their business.

High school graduates go into the tax preparation business because it offers a stable and fruitful career. Anyone who wants to change professions to work in the finance industry can start with tax preparation. It’s also an excellent way to build networking connections with professionals in the insurance, real estate, and banking industries.

Chapter 8: Tips for New Tax Preparers

For those who’ve never had any tax preparation experience, the question is always whether to seek employment first or establish your own tax preparation business. Once you’ve earned your Enrolled Agent status and register with the IRS, you can already start acquiring clients and provide tax preparation services. However, you can also choose to be employed as a tax preparer under H&R Block, Liberty Tax Services, or Jackson Hewitt. So, which is the best move?

Well, it all depends on your professional goals. Do you want to specialize in the preparation of income taxes? Do you want to handle tax cases for small and big businesses? Specialization in tax cases requires more knowledge and practice. In addition, many tax cases require tax preparers to have the proper licenses to work on them.

Starting a tax preparation business is generally quite easy. It’s no trouble to obtain necessary documents like PTIN, EFIN, and State registrations. The business only requires minimal start-up capital, and you can work from home, at least initially. But a tax preparation business involves more than simply setting up your office. There is a business side and a technical side to it.

The technical side involves getting the necessary paperwork, learning how to do tax preparation, establishing processes, and managing your finances. The business side involves marketing and sales, as well as expanding the business to keep it afloat. If you’re ready to take on all of these responsibilities, you can begin to consider establishing your tax prep business.

Should you require more training in handling the business or technical aspects, you should consider gaining employment. Working as a tax preparer for a company exposes you to different types of clients, tax cases, and opportunities. Serving in established firms can help you get on-the-job training for developing various technical skills. Apart from that, you can better understand the business while being part of the company.

Understanding the Tax Codes is #1 priority.

To be a tax preparer, you need to understand the tax codes. It’s the fundamental knowledge required for working in the industry. That doesn’t mean you have to know it all. You can’t honestly expect that. Various tax codes apply in many different industries. One person can’t keep track of them all. This is where specialization comes in.

One of the biggest challenges a tax preparer faces is learning where to find the specific information they need. You’ll have a leg up if you’re receiving regular news updates straight from the IRS. Use the IRS Tax Code, Regulations, and Official Guidance page as references to the tax codes and laws you need to be familiar with. Make sure to follow Publication 17, the official IRS publication regarding tax preparation on individual tax returns.

Understanding the Tax Codes is #1 priority
Publication 1345

The IRS also provides regular updates through Publication 1345. Yet another reference to keep up with: IRS Circulars. Review Circular 230, which is required by all professional tax preparers. Following a new update from the IRS, you may want to cement your understanding by taking continuing education courses.

If you want to continue enriching your tax code expertise, check out the IRS classes under the Voluntary Annual Filing Season Program (AFSP). The program is designed to incentivize non-credentialed tax preparers. They offer Continuing Education (CE) that helps deepen your understanding of the tax code. If you opt to participate, you’ll need to complete 18 units of CE every year. For your convenience, you can finish your CE credits online. Work on your units at your own pace, anytime, and anywhere.

Once you complete the 18 units and pass the test, you will receive a completion certificate from the IRS. You will also be included in the tax preparer public directory. Being part of the IRS public directory proves that you have the skills to offer quality tax prep services to clients.

Beyond the AFSP, continue learning about the tax industry by attending conferences and events. Interact with other tax professionals. Listen to other tax pros discuss their case studies. Understand their methods and analyze how you can incorporate them into your own processes.

Remember, as a tax preparer, it is your responsibility to know and be up-to-date with the tax codes. Your clients will depend on your expertise to solve their tax filing issues.

Tax Preparer Public Directory

Tax preparation software is a tool, not the
overall solution.

Some people consider tax preparation to be an easy career. People focus on perks such as working only from January to April or working from home. There’s also a misconception that with tax preparation software, tax preparers only need to enter their client’s data and that’s all there is to it.

That is not the case. Tax preparation software gives you a powerful tool, but it won’t offer the solution to every one of your clients’ tax cases. A tax preparer should not be too reliant or dependent on software. You use tax software to help you streamline procedures and get the job done more efficiently. You don’t use it to answer all possible tax questions.

A tax case is like a puzzle that a tax preparer must solve through analysis of your client’s data and understanding of the tax codes. Each tax case is different. It may have a lot of things in common with other cases, but that doesn’t mean you can apply the same solution. This work requires skilled interpretation and implementation. It’s not limited to inputting data on tax preparation software.

Clients Look for The Best Tax Preparers.

The tax preparation business is very personal in nature. Clients entrust tax preparers with their personal information and financial data. When clients look for a tax professional, they look for someone whom they can trust.

As a tax preparer, you have to build relationships to create that trust. You also have to work on establishing a fine reputation. Here are the attributes to aim for if you are to succeed in marketing yourself as a tax preparer:

Most tax forms are available to download on the IRS website. The IRS has detailed instructions for each one for easy reference. You can fill up forms using the Adobe Acrobat PDF Editor. Once ready, file the forms via the e-File application.

You may find that not all clients want to file their returns using the IRS e-File system. Clients who opt for paper filing their tax returns include those with concerns about the security of their financial data. Some clients may not be eligible for an e-filing option. In 2018, IRS still received 13,628,000 paper tax returns.

To handle paper filing,order available tax forms from the IRS for a limited quantity. Expect the forms to be mailed after ten business days. If you have regular clients who prefer paper filing, make sure to order forms as soon as you can. Tax forms for the calendar year filing are available for ordering as early as December 1 of the previous year. Paper filing is not as common as it used to be. You’ll want to allot additional time for preparing and mailing paper forms.

If you’ve exceeded the limit for ordering tax forms from the IRS, you may purchase IRS tax forms from Amazon and Staples.

TIP: Order red ink forms from the IRS, instead of printing these on your own. Red ink forms such as Form W-2 or 1099s are specialized. If your self-printed red ink form is rejected by the IRS scanner, you will be penalized.

Printing your own tax forms means that you are applying for substitute forms. The IRS must pre-approve how you print these forms. Printing mistakes could damage the IRS’s scanning machine and could cause delays. To get approval, you must submit an application for review via email.

Steps to applying for substitute forms approval:

Credibility and Expertise

You want to have a reputation for expertise and credibility. A client needs someone who can help them navigate their tax requirements. Gain confidence through learning the ins and outs of the tax industry, especially the tax codes.

Honesty and Reliability

A tax office hardly needs flash or exuberance. Paying taxes is a reality that everyone needs to face. Clients are not looking for tax preparers who wish to impress them with bells and whistles. They are looking for someone honest and reliable.

The tax season runs from January to April, a scant few months. But clients sometimes need help with taxes during the off-season. A good tax preparer can be relied upon for consultation even during those times.

Clients also need honest tax preparers. If there’s a problem with their taxes, clients would want to know if you can tell them straightforwardly. If there’s an issue. In such cases, it is better to face it head-on, in a prompt manner, because penalties could be involved. Clients seek the type of professional who is not afraid to inform them of issues and arrive prepared with solutions.

Relatability and Good Customer Service

Clients also look for tax preparers that they can relate to. Apart from sharing their financial documents, clients need to personally discuss their financials with you. This means sharing information that is sensitive and confidential. New clients may have a hard time talking about these things with a stranger. A tax preparer must know how to establish good rapport and build relationships with clients.

Of course, clients also look for excellent customer service. Tax cases do get complicated. Clients are likely to ask a lot of questions. These aren’t limited to questions about filing taxes. Many clients will want to know their next steps afterward. If a client receives any letters from the IRS, they would need someone who can help them handle it.

Excellent customer service does not end with tax-related issues. You’ll also want to help them acquire your services, schedule appointments, and pay your invoices. Make these things easy and painless for them. If problems arise, you should be able to provide solutions.

Get the best tools that’ll help you grow your tax business.

You’ve successfully started your tax business… now what? You now have to think about how it can grow. When you invest your money into buying equipment, services, or tools, you’d do well to get those that not only fit your budget, but offer top-of-the-line quality. The key is determining what would be a good return for your money.

This is especially important when deciding which tax software product to purchase. You need reliable, accurate, and easy-to-use tax software that provides the best value for your investment. Remember, you are not just purchasing a program for your office. You are purchasing the core tool with which you will build your entire business.

There are many factors to consider when selecting professional tax software. Look into the program’s price, accuracy, ease of use, and features. Apart from the program itself, you also have to find one that comes with excellent customer support.

UltimateTax has great features at the most affordable price. You can choose between several versions: UtimateTax 1040 Online, UltimateTax 1040 Desktop, and UltimateTax 1040 Desktop + Corporate, and UltimateTax PPR. You can review each products’ features to find one that fits your business the best. All of them come with Smart Diagnostics, State Modules, Context-Sensitive Help, Interview Mode Entry Forms, Easy-to-use interface with its own User LaunchPad, and Year-round Support.

Another advantage of getting UltimateTax: its bank products. You can earn more and offer more solutions to your clients through bank products from trusted banks like Santa Barbara TPG and EPS. You can even cut costs and get your UltimateTax software free for the next year’s tax season, if you can sell 30 or more bank products in one year (using UltimateTax and Santa Barbara TPG).

If you need to know more about how UltimateTax can help your business grow, check how UltimateTax fares when compared with other available tax software. You’ll see how much value this professional tax software can provide to your new business.

Learn more about UltimateTax by getting the
first-hand experience.

Click on the links below for your free demo: