What does it cost to start my own tax prep office?
Starting a home-based tax business can be done without very much money. Since you will have very little overhead, you can charge less than your competition and still make a good profit.
It doesn't cost much at all to become a tax preparer. Only four states require licensing. The IRS charges $50 for a Preparer Tax Identification Number (PTIN). The IRS does not charge for an Electronic Filing Identification Number (EFIN). After completing this, you are officially a tax preparer.
The most important things that you will need to start a home-based tax preparation business, are:
A computer, printer and a copier
A high-speed internet connection
Professional tax preparation software
Basic office supplies
You probably already have a computer, multi-function printer, an internet connection, and a phone. Because of this, your initial out-of-pocket expenses should run between $300 - $500. $500 - $1,000 total should be enough to cover all of your start-up expenses for the first year or so. Some of the expenses, such as part of the cost on the tax preparation software, can be deferred and paid for with the money that you make "in season" preparing the tax returns.
As far as marketing goes, start by talking about your new business to people in your community, such as family, friends, and co-workers, before advertising or marketing to the general public. Talk to your family, friends, and co-workers and pass out your business cards. This is a low-stress way to get started while you fine-tune your tax preparation business. And don't forget to always ask for referrals when you deliver a client's tax return and they are happy with your service. Word-of-mouth is the number one way that independent home-based tax preparers get new business.
If you are good at attracting and retaining clients, you can make excellent money.