The absence of bookkeeping in a business is like a road without signs because you’re likely to arrive at a different place than intended. Any large business learned the value of financial records produced by bookkeepers is crucial for proper management.
Bookkeeping is essential to every business for both financial and legal reasons. Without record keeping, it is difficult to get a business loan, and impossible to do taxes. Even more importantly, without the information that bookkeeping provides, wise decision-making is tricky and can lead to disastrous conditions.
There is a close correlation of success with those that realized the importance of bookkeeping and those that did not. Those that thought bookkeeping was an unnecessary luxury judged the success of their business by the amount of money in their bank account. Their thinking was “If I have money, I must be doing well.” That assumption, all too often, caused them to always be in the “fire-fighting” mode of management. Unfortunately, a lack of a bookkeeping system would end disastrously for the owner, with mortgages on their home, and bill-collectors hassling them. It even led to bankruptcy too many times.
Certainly, bookkeeping does not guarantee success. Nor is it all that is needed. Yet it leads us to information that can help us make well-informed decisions. Allen Bostrom, in his book “In the Black”, states “You hear a lot about the importance of making decisions based on data. What I have learned is that decisions should be based on wisdom, not necessarily data alone.” He goes on by describing the Wisdom Pyramid which is a triangular shape with “Data” at the bottom and topped by “Wisdom”. In other words, data leads to information, information leads to knowledge, and knowledge leads to wisdom.
In summary, the difference between achieving entrepreneurial dreams and disaster for a small business owner is often based on their appreciation or lack of appreciation for the information coming from a bookkeeping system.
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.
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.
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 to start a tax preparation service 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.
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.
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.
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 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.
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.
As an accountant, you know the importance of setting a budget and sticking to it. Starting your own accounting business will require a disciplined adherence to a budget, and one of the things you need to fit into that budget is branding. Your company’s brand is best described as how your customers feel when they think about your company. No matter what type of brand you’re going for, branding your company is the way you shape how those customers feel. Here are a few things to keep in mind when you’re branding your new accounting company while staying within a budget.
First, the Name
Your new company has to have a good name that’s easy to say and remember and gives a potential customer an idea of what you’re all about. Many accounting firms just take on the names of their owners, and that’s an acceptable practice; it’s a sign of credibility in the industry and gives you some legitimacy. However, consider coming up with a different name that includes one of these keywords relating to accounting:
These words will help your online branding by helping your business rank higher on SEO, especially if you can find a way to include one or more of them in your company name.
Create Your Logo
Your logo is an integral part of your brand. If you’ve branded correctly, seeing your logo should make your customers feel certain emotions, often without them even realizing it. Accountants usually have a professional type of logo; luckily, LogoCreator.io has a variety of templates for almost every industry, so you can make your very own logo without being too outlandish or unusual for the rest of the industry. People like to see some uniqueness, but you still want them to realize that you’re an accounting firm.
Part of creating your logo is determining your company’s color scheme, another important factor that will help guide any promotional items you might have made to distribute, your website design, or even the interior of your offices. You don’t have to spend money in this step, but it is important to consider what colors you want people to associate with your company. Certain colors are also more or less associated with certain emotions; you can find out more about that here.
Keep Your Marketing On Brand
Now that you have a name and a logo, you can start marketing your company. You will probably want to consider getting on at least a couple of social media platforms, and you might even consider starting a blog on various accounting topics. You have expertise that other people are looking for, and especially in this field, starting a blog can help build your reputation as an expert accountant. Blogs also give you a good amount of content to share on your social media profile, which helps drive traffic to your site. If people in your area are already used to visiting your site for valuable information, that makes them that much more likely to seek out your services too.
However, remember that your content and marketing should be on-brand. This means you need to find a voice and tone for your posts, one that doesn’t clash with what you want your business known for. If you need help figuring out a good voice for your branding, you can find some helpful information at Column Five Media.
Branding really involves getting people to feel a certain way when they hear about or see your business. It’s the face of your company, and it should be something you put some thought and effort into. Branding your accounting business on a budget isn’t difficult; it just takes some thought and planning to get right.
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