Is a Tax Preparation Service Right for Me?

For some budding entrepreneurs, starting a tax preparation service is ideal – for others, not so much.  To determine if it is the right thing for you, let’s consider the pros and cons of your own tax preparation service and you can be the judge.

There are several good reasons to start your own tax preparation service:

1)      It can be done easily from your home.  All you need is a table to spread documents out on, a computer with tax preparation software, and a printer.  Everything can be done from the comfort of your own home. As you’ll soon find out, if you don’t know already, you may be able to deduct part of the cost of your home.

2)      Most tax returns are simple and can be completed in less than an hour by an experienced preparer.  The average charge for a single return is $150 to $450 depending on the complexity of the return.

3)      There is always a demand for tax professionals.   It is estimated that 155 million returns were filed, and 60% were prepared by one of 1.2 million professional preparers.  That calculates to an average of 80 returns per tax professional.

4)      The first clients will likely be from among your friends and family.  Many people appreciate and expect more personal attention from someone they know.  Advertising may start with an email to those you care about.  In future years, word-of-mouth advertising seems to take over allowing your practice to grow annually.

5)      The busy season will be January through April.  For most people, that’s the winter months when not much is going on.  In fact, many professional preparers earn enough during the busy season to take the rest of the year off.

6)      Each year the earnings will increase.  As the preparer becomes more proficient, it takes less time to generate a return thereby earning more income per hour when charging on a return, not an hourly basis.

Of course, it’s not all roses.  There are some things you should also consider:

1)      Tax preparation software is pricey.  The minimum cost is over $1,500 per year, with some brands nearing $3,000.  Although all professional software will get you to the same place for most returns, the higher-priced software will do the more complex and difficult business returns and often are more intuitive to use.

2)      Plan on long hours during the busy season.  As you build your practice, you will want to make “hay while the sun shines.”  Don’t plan any vacations until after Tax Day.

3)      Continuing tax education will be imperative.  The tax law changes each year and sometimes the changes can be complicated.  Several organizations, including the IRS, hold annual conferences to keep preparers up to date.

4)      A PTIN and local business license will cost money and may be restrictive.  A Professional Tax Identification Number runs under $40, and a local business license may cost from $50 to hundreds of dollars.

An income tax practice can be a great source of income for an entrepreneur that wants to work out of the home.

If this is the next step for your career, consider being in business for yourself but not by yourself with Universal Accounting Center as a certified Professional Tax Preparer.

Do I Qualify to Start an Income Tax Preparation Service?

The IRS is not restrictive in who may start an income tax preparation service, other than they require a person to get a Preparer Tax Identification Number (PTIN). To get your PTIN, go to the IRS.gov website, and it will direct you to the online application. It costs under $40 and takes about 15 minutes to complete the application and receive the number. Generally, those having a felony conviction for tax fraud and other forms of financial crimes are not eligible.

A few states such as California have additional qualifications. If you want to prepare taxes in these states, you may have to take a test and register with the state licensing department. If you want to determine if your State is one of these, call the state department over licensing, or check it out online. They can tell you of any special requirements for tax preparation services.

Most municipalities require you to have a business license. This fee could range from $50 to hundreds of dollars. To research what it will cost you, search on “business license cost for (your city)”. In most cases, you can also complete the application online.

Contrary to a common misconception, a person need not have an accounting degree or be a CPA to prepare taxes. In fact, no specific education is necessary although it is a good idea to understand the basic definitions in the tax law before you hang out your shingle.

Though the income tax software does the hard work, a tax preparer should understand how to determine income tax status, who qualifies as a dependent, the process for calculating itemized deductions, and how to read the tax tables. With this simple knowledge and the help of software, a person can prepare more than half the returns they may be asked to prepare.

Nonetheless, the more income tax knowledge a person has, the more confident they will feel and the more returns they will be able to complete. Furthermore, the more complex a return, the higher fees, and the more income per hour a person will generate. For instance, a simple return may only generate a $75 fee. Yet, a more sophisticated return could earn hundreds of dollars and take less than one additional hour to complete.

The upfront investment, though not a qualifier, is among the lowest of any new startup. Other than the PTIN and business license fees mentioned above, the tax preparer needs a computer, printer, and tax preparation software. TurboTax and H&R Block, to name a couple, are not good software for the tax preparation business. With these individual packages, you will be limited in the number of returns, and your ability to complete all returns.

Instead, you will want a more robust package designed for professional tax preparers such as Intuit ProSeries, TaxWise, and Drake costing well over $1,500. These software packages are designed to be efficient, accurate, and for unlimited number and sophistication of returns. Take time to make the right choice, because you will likely want to use the same software for at least five years.

In summary, most people with basic knowledge of tax law and the help of a software package can thrive in a tax preparation business.

When is an Accounting Firm needed?

The label “Accounting Firm” applies to three different service companies: 1) CPA Firm, 2) Tax Preparation Firm, and 3) Bookkeeping Firm. Each is important in the right conditions, and in some cases legally required. For instance, publicly traded companies must seek the services of a CPA accounting firm for financial audits.

Let’s look at each type of accounting firm separately and understand when they are most critical.

CPA Firm

As noted above, publicly traded companies are required to have annual audits by a CPA accounting firm. For the largest CPA firms, audits are their bread-and-butter income. In some companies and organizations, licensed auditors might spend thousands of billable hours sampling and testing the company’s accounting system to ensure proper controls are in place and that their financial records represent the company fairly. The CPA firm turns out an audit report at the end of the process that is
then included in the company’s annual report.

There are relatively few large CPA firms. Most CPA Accounting firms are smaller one-office firms led by one to three CPA’s that provide services to smaller companies. These services might include audits of small publicly traded companies, management consulting, and business tax preparation services.

Typically, they will not do bookkeeping and tax preparation, except for their business clients. In those cases where they do offer tax preparation for individuals, they charge a premium in my experience.

Tax Preparation Firm

Although tax preparation is often thought of as a CPA skill, most Certified Public Accountants do not prepare taxes, other than their own, perhaps. Likewise, very few tax preparers are CPA’s. Instead, most tax preparers start by doing their own taxes, enjoying it, then doing taxes for friends and family. Eventually, they decided to start offering it for a fee and either join up with a tax preparation firm or hang out their own shingle.

There are several large tax preparation firms, the largest being H&R Block. These firms hire seasonal workers and will provide some training at the beginning of the year. Nevertheless, most tax prep firms are small single practitioner accounting firms that specialize in income tax preparation for individuals. Most tax professionals work during tax season. If they are successful and watch their spending, they may earn enough during those few short months (January to April) to enjoy vacationing the rest of the year. Some tax preparers will offer bookkeeping during their slow seasons.

Bookkeeping Firm

These are typically small, privately owned accounting firms that provide bookkeeping and payroll services to small businesses (less than 50 employees). Often, they operate from the accountant’s home, and they may serve up to a dozen clients. They will pick up transaction detail from the client monthly or quarterly and provide financial statements on the same schedule. Nearly every bookkeeping firm will also provide full payroll servicing.

A full-service bookkeeping firm will also provide management consulting including helping the owner interpret the financial statements and provide suggestions for improving financial wealth and profitability. If trained in business tax forms, these professionals will offer tax preparation services in addition to their writeup services.

Learn more about what you can do to have your own successful accounting firm and the opportunities available in your area HERE.

If you also listen to podcasts, consider “Building the Premier Accounting Firm”!

Print and Digital Marketing

Advertisement is at the core of our society, whether we look at marketing campaigns targeted at customers (B2C) or companies (B2B). Knowing how to market your services or provide your clients with marketing tips is crucial, even if your primary concern lies in accounting.

According to published reports, 69% of businesses have a fully documented marketing strategy in place, with 76% using organic traffic, or SEO, to measure success. Blog posts, which are the most popular means of marketing a website, also take far longer to write now than only a few years ago. Readers’ expectations have skyrocketed over the years, and writing, editing, formatting, and publishing marketing content is an industry in itself.

Given that we live in a cloud-based, post-COVID world, digital marketing takes precedent over printed campaigns at the moment. Despite that, taking both into account, no pun intended, can help your brand stand out and attract more clients. Let’s discuss marketing know-how for accounting professionals and how you can jump-start your content marketing efforts in 2021.

Printed and Digital Marketing – Using Both to your Advantage

When you decide to market your services as an accountant, you can go about it in two distinct ways – through printed or digital media. As their names might suggest, both rely on drastically different mediums for distribution. Some marketing content formats you can consider using for your purposes include:

Printed media

  • Business cards – traditional cards used for networking with clients
  • Brochures – fold-up paper sheets with your accounting business’ services
  • Posters – one-way printed papers which can be glued or stapled on walls
  • Printed ads – ads that you can order from newspapers for the sake of marketing
  • Office miscellanea – pens, pins, lighters, mugs, and other office items with your logo/info

Digital media

  • Blog posts – online articles discussing industry topics, how-to guides, and accounting trends
  • Social media posts – images, status updates, polls, live Q&A, and other content specific to social media
  • Podcasts – discussions with accounting professionals and influential guests about various topics
  • Videos – tutorials, discussions, news reports, and other types of videos you can personally host
  • Freebies – PDFs, eBooks, presentations, and other free materials on accounting topics you can share

It may seem overwhelming to choose which marketing content would best suit your accounting business. You can also refer to TrustMyPaper to assist you in writing and editing your marketing plan once you start creating your content. You don’t have to commit to anything upfront, and you can pick and choose different content types to create a unique set of options.

Marketing Content Tools to Consider Using

When it comes to marketing tools, most of them fall into the “creation” part of marketing, and there are plenty of options to choose from. As we’ve mentioned, printed and digital marketing vary in terms of format, so different tools will be more or less suited for each medium. Some tools available to you online include:

Google Docs – all-in-one general document platform suitable for digital marketing content management.

Evernote – a platform dedicated to written content creation, marketing planning, and cloud storage.

Grammarly – editing platform which used to clean up your writing and grammar before publishing.

SEM Rush – a platform that will help you find the right keywords to use for better search engine ranking.

Pexels – stock photo platform with a vast library of professionally curated free-to-use images.

Canva – visual content platform suitable for presentations, infographics, and social media content.

Gimp – photo editing and content creation tool which you can use for both printed and digital marketing.

Mail Chimp – centralized marketing platform which can help you publish content and analyze its performance.

While these are only a select few tools that you can find online, their combined features will allow you to start on the right foot. If you find yourself busy with accounting obligations, referring to Supreme Dissertations and outsourcing some of your content writing or editing is a smart move. Use the available online resources to your advantage, most of which are free and highly user-friendly, and you will slowly build up your marketing strategy.

Marketing Strategies to Implement

Now that we’ve talked about the mediums and the tools you can use, let’s combine the two and talk about specific tips and strategies. Given that you are an accounting professional, you already know who your audience is and what exactly you can do for them. This makes coming up with marketing content much easier, as you don’t have to research your audience – focus on how you can help them instead.

  • Use Accounting-Specific Keywords in your Marketing

As an accountant, your clients will expect you to be familiar with niche terminology and keywords specific to accounting. Using those words will enable your marketing materials to show up much more frequently in search engines such as Google, Bing, and Yahoo. In turn, more people will click on your content and visit your website.

  • Create a Schedule and Stick to It

Publishing marketing content under your brand’s banner should never be sporadic and unorganized. Instead, use a digital calendar or a notepad and start planning your content ahead of time. For example, you can write a blog post and publish it each Tuesday, while you answer accounting questions live on social media on Fridays. There are no rules to creating a content calendar, but prepare your own nonetheless and try sticking to it.

  • Never Copy Content – Be Original

Copying marketing content from popular websites and brands will always backfire. Search engines are designed to detect copied content and treat it as spam. Your clients will be equally displeased and think twice whether to visit your website or reach out to you with such a practice in place. Use the tools available to you to create something unique and your own – your brand’s followers will appreciate the effort.

  • Make Good Use of Social Proof

Social proof represents marketing content generated by your clients and brand advocates. Satisfied clients and accounting professionals familiar with your work can write quotes and reviews for you to use for marketing. This is an effective way for accounting professionals to build trust and brand image, given how trust-reliant their profession is. Reach out to your clients and ask for quotes or reviews – make it a practice to ask for them going forward as well.

Wrapping Up and Starting Off

Marketing is a vast pool of possibilities, and the best way to learn about it is to start producing your content. It can be overwhelming to carry the weight of PR management on your shoulders. Yet, accounting professionals can market their businesses very successfully.

Go through the tools and tips we’ve discussed and take note of how bigger, more popular competitors market their services. The right marketing strategy for your business will click in your mind sooner than you think, and the rest will take care of itself.

Also, learn more how you can also Market & Sell your services online.  Get 2+ clients a month leveraging your social media presence and technology to get the clients you need to grow your business.

Image source: https://unsplash.com/photos/gcsNOsPEXfs

How to Market and Brand Your Start-Up Accounting Business for Free Online

Starting up an accounting business can seem like an excellent idea, you understand the market and you have something in you that wants to push this forwards and make your idea a reality. The best advice we have is to not let go of that feeling. It can be hard in the current market to do, but if you do, you have a wealth of opportunity right in front of you (pardon the pun). We are here to show you exactly how to market and brand your start-up accounting business for free online.

 

Website

 

The biggest deal for a new accounting business is their website. You have to be on point with everything otherwise customers will not trust you and go with a different server. Ensure that your links work, your pages load and that your instructions are clear. Have a no-nonsense voice for your brand that gets right to the point and answers the questions of people visiting your site before they even ask them.

 

If you can be ahead of the game with your website then you are halfway there. If you need a solution to be online, consider these template websites for accounting professionals. Ensure that everything on your website is cohesive. The colors, your business name, and your logo. Every page needs to be professional and relevant.

 

Ensure that the usability of your website is second to none. People want to understand the site without instruction. Setting up an account and using the site comes secondary, though is still supremely important. But first, you need to get your branding on point.

 

Branding

Create a brand that is professional, all-knowing, and approachable. Have a huge FAQ section with relevant questions and a brand voice that people can rely on. 

 

Create a name for your business that evokes heartfelt trust while at the same time being strong and dependable.

 

Create a logo for your business that works in the world of finance. Choose colors that evoke trust, dependability, power, and thoughts of money. Use elements like triangles to show power and squares to show dependability. Make your logo so rich that it gets customers feeling like they can get wealthy just by clicking on it. Then use it everywhere.

 

We have access to an excellent logo creator with many templates and elements you can use; check it out at www.logocreator.io

 

Be Active

 

Be active in publishing your accounting business. Use social network sites as a springboard to gather people who are interested in the world of finance or small businesses that might want to use your services. Join Facebook groups and trawl LinkedIn for possible customs. Get Tweeting and try to get famous people responding to your tweets.

 

On your social pages, post content daily. You can create brilliant Infographics here, which can give information on finance and accounting to get more people interested in your business. 

 

You should also get making videos. These can be a great way to access as many people as possible. Create short videos that capture people’s attention in the first two seconds. Brand them with your logo and keep them interesting, informative, and dependable.

 

Self-Care

 

Starting an accounting business will be stressful. It can mean a lot of hours on the computer feeling like you are getting nowhere. There is a lot of competition out there too, it can be a struggle to get yourself seen.

 

Do not give up. You can do this. But take breaks. Running a small business can take over and before you know it you are working longer hours than you did in the office. This is great short-term and you will probably love it, but after a while, it can take its toll.

 

Ensure you have days off per week and hours off each day to spend eating, exploring, and doing the things that made you want to set out on your own in the first place. This will shine through in your business management and is important.

 

Don’t go it alone

 

Always remember, with Universal Accounting you can also be in business for yourself but not by yourself.  Check out how and meet the Universal Accounting team here!

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