For many people, a regular day job either doesn’t provide enough money or doesn’t engage their minds. People in these categories often look for side hustle opportunities to boost their income or do something new and interesting.
While there are many potential side hustles out there, many of them require an ongoing commitment throughout the year. For someone looking to, for example, log some extra work for part of the year, a tax preparation business may prove an ideal fit.
Not sure how to start a tax business? Keep reading for some key steps.
Surprisingly, you don’t need a degree in accounting or to be a CPA to do tax prep. That said, a CPA business or tax accountant business will often offer tax prep as one of their services.
For the purposes of the IRS, just about anyone can prepare taxes. That said, the wise budding tax prep entrepreneur will invest some time in a tax prep certification course. These courses help ensure you have a working knowledge of relevant tax laws, tax forms, and small business tax preparation.
You can head over here to see example course details.
PTIN and EFIN
You will also want a PTIN and EFIN from the IRS. The PTIN is your preparer tax identification number. It’s how the IRS identifies you as the preparer when you submit someone else’s tax forms.
The IRS puts some basic requirements in place for the PTIN, such as social security number, address, and debit card for the application fee.
Your EFIN is your electronic filing identification number. Most tax forms get filed via e-file systems now, so you’ll need this. The application for this is more in-depth and includes a suitability check.
Unless you plan on opening a tax prep franchise, you’ll want to set up your own business. That typically means creating an LLC and registering with the state. Check your state and local regs for any license or permit requirements.
This is also a good opportunity to set up some basic marketing, such as a website and local ads. You can also generate some word-of-mouth by preparing taxes for friends and acquaintances once you’re up and running.
You don’t necessarily need a rented office space, but you will minimally need a dedicated workspace in your home. Think in terms of a desk, a good chair, a reliable computer, and Internet access.
Your Tax Preparation Business
Setting up your tax preparation business isn’t something you can do over a long weekend. It takes some planning. For example, you must block out the time for a certification course to get up to speed on tax laws and tax forms.
You should also schedule time in your upcoming calendar for dealing with LLC paperwork, website setup, and getting some basic marketing in place. Don’t forget about building yourself an office space.
Looking for more tips about setting up a side hustle? Check out some of the other posts over in our Business section.