- Introduction
- Start now!
- Your tax practice defined
- Tools to streamline your tax preparation
- How to grow your tax business
Introduction
To start your own pro tax accounting is a unique and intricate process, with requirements of Internal Revenue Service (IRS) and ever changing laws adding to the complexity. Whether is your plan to become a
self employed practitioner or to start a bigger practice. This article is written to provide a detailed explanation of how you can start your own pro tax accounting practice. It will help to help ease the process for you.
Start now!
First, register your business with your state
The very second you have decided on a kind of entity for your own business, first register the business with your state. The easiest way that you can be able to register your business is by filing a Doing Business As (DBA) name with your state. This will be a simple way to become registered with your state without even you creating a formal business structure for your company.
The second option is for you to form a limited liability company (LLC) or corporation for your business, which will automatically register your business with the state. So, place a call to your state government to find more information about how to register with your state. Some business types might equally require a Federal Employer Identification Number (EIN). While some states will enable you to apply for an EIN during your business registration process, some states will require a separate application for your pro tax accounting.
Find out from the IRS if you will need an EIN for your business.
Some cities might require additional registration, licenses or permits, please do contact your the designated groups for more information.
Obtain your own electronic filling identification number (EFIN) from the IRS
The IRS will require that all tax preparers or firms filing 11 or more returns will electronically file them. Before you will electronically file your tax returns, you or your firm will first apply to be an Authorized e-File Provider with the IRS a obtain an electronic filing identification number (EFIN). You will have to complete a separate EFIN application for every location where your business will electronically file returns. Before you submit your application to become an authorized e-file provider. You must have sent a fingerprint set to the IRS so they will be able to administer a suitability check. This will equally include the following:
- A credit check
- Criminal background check
- Tax compliance check
- A previously check on non-compliance with IRS e-File requirements.
This process might take up to 45 days. So, be patient with them and have this in mind that there is no fee to obtain an EFIN. During dwell more on your pro tax accounting business.
Start your application
To start your application process, create an IRS e-services account, and then you will be able allowed to fill out your e-File application online. First, you will the supply identification information for your firm. Next, enter information about each principal and responsible official in your company. You will then choose your e-file provider option. If you are a tax return preparer and need to e-file for your clients, select an electronic return originator, or ERO. If your principal or responsible official is duly licensed or certified, like an attorney, CPA or enrolled agent. They will enter their current professional status information. All other individuals will need to provide or submit their fingerprints to the IRS. You will get a fingerprint card by calling them on the phone or through emailing them. Usually the application is basically comprehensive, but you will be able to save the information.
Relax yourself and continue to fill out your application when convenient. When your application must have been approved, immediately the IRS will then send an acceptance letter and your EFIN to you. It’s very important for you to understand that some states will require e-File providers to submit a separate enrollment application. For an authorization to e-File individual or business tax returns. Check with the relevant state tax agencies to understand more on state level e-file requirements.
Obtain a your preparer tax identification number (PTIN) from the IRS
Anyone who will prepare or assist in preparing the federal tax returns for compensation must have a valid preparer tax identification number (PTIN). The IRS will issue PTINs to anyone who is authorized to legally prepare and defend tax documents for individuals and companies. PTINs always expires and is renewable yearly. If you are to starting you firm, have this in mind that PTINs will not be shared by a firm. Every paid preparer need to have their own PTIN before they will assist to prepare federal tax returns.
Your tax practice defined
Determine the model of your business
The next challenge now is to determine how your business will be able to bring in revenue, or what the mod of your business will be. Will you be providing yearly advisory and/or accounting services to your clients in addition to your tax expertise. Will you be a tax practice that will be operating on a big seasonal basis? Within your tax practice, will be you focusing on individual tax, business tax, or both? And, what kind of clients will you want if you are allowed to choose? If you will be offering pro tax accounting services, you will need to become an expert in some industries or businesses of a particular size. Probably you want to be offering individual tax services. On what kind of individual? Will you be focusing on high net-worth individuals, self-employed clients, or perhaps you will target your services more broadly?
This is equally the time for you to determine where your practice will be located. Are you going to open a dedicated office, share an office space with someone else, or better still work from home, or even use a virtual office? It’s very important that you make decisions on these elements of your business model now. So that you will be able choose the right pro tax accounting software and tools together marketing tools for your practice.
Pricing your pro tax accounting services
Use one of the Tax Fee Wizard to help benchmark and price your pro tax accounting services. The wizard will be able to give you the average price that pros with the same designations and years of experience do charge for their tax preparation services. Although you may need to adjust your price based on different other factors, which include:
- Clients’ form complexity
- Costs of doing business,
- Pricing strategy, will you be offering the added value of year-round services.
If you’re probably unsure about the best model to follow for your practice. Then talk to one of the experts out there for tips and advice. To make these decisions early will help you make other crucial decisions down the road too.
Understand the tax certification options
Prospective clients often appreciate credentials, and there are so many education and credential options you can choose for yourself and your new tax business. It include the following:
- Certification in the IRS annual filing program
- Learning and certification from the income tax school
- The IRS enrolled agent program for preparers who will help to represent clients in examinations
- Certified public accountant certificate for degreed accountants who are planning to be issuing financial statements.
The IRS annual filing season program
The aim of this program is for the efforts of non-credentialed return preparers who aspire to climb to a higher level of professionalism to be duly recognized.
The income tax school
The income tax school will provide chartered tax professional, chartered tax consultant and chartered tax advisor certificate programs.
Enrolled Agents
An Enrolled Agent is a person who is licensed by the Internal Revenue Service after passing a suitability check. Must have taken an extensive test that covers both individual and business taxes together with representation issues. Have undergo 72 hours of additional education every three years. They will have the most extensive licensing that is provided by the IRS and it’s valid across the entire country.
Certified Public Accountants (CPAs)
CPAs are duly licensed by states or U.S. territories, and must have passed the uniform CPA examination. Each state or territory will establishe their own additional tax preparation requirements such as education and review of certification requirements. Many CPAs may specialize in tax planning or preparing of returns.
Tax attorneys
Attorneys are licensed by a state court or state bar after they must have earned a law degree and passed the bar exam. Attorneys are not only a registered tax return preparer. They can equally prepare a legal defense for their client who is involved in a tax related court case, even for taxes they did not prepare themselves.
Tools to streamline your tax preparation
Decide the professional tax software for your business
This next step is for you to determine what professional tax software is right for you. There are some important factors to consider when deciding on the software:
- Will this software offer the forms you need to support your clients?
- Does the software offer diagnostics to assist you feel confident in the accuracy of the tax return?
- Will the software provider offer a free trial for you to assess the use of the software?
- Does the software integrate with other key software that you will use, this include accounting software, practice management software, a client portal, and more?
Let’s consider some of the popular pro tax accounting softwares
ProConnect tax
ProConnect tax is the number one professional tax software you will see on the cloud. This software is a professional tax software that is dedicated to re-imagining, innovating and streamlining tax preparation. It will save you time, money and equally assist you to work more efficiently.
Lacerte tax
This software is perfect for tax and accounting firms with individual and business clients. Lacerte tax do help tax accounting professionals to complete far more returns in far less time. It will help you to move data easily across your accounting and tax workflow to speed you through preparation, this software will help you finish faster.
ProSeries tax
ProSeries will help you service your clients even faster and confidently beyond just the tax return forms. It’s futures include extensive error checking, integrated tax research, and automated client service tools. You will get an end to end solution that will help you handle and attract more clients. This will result in a more successful tax practice. For those that have used TurboTax, ProSeries is often regarded as an easy transition because of the similarities in the product.
Equally consider other tools that will help you streamline your workflow
Additionally to this core software, companies are offering other integrated tools that will help you work efficiently and partner with your clients or saff from any place. To work with your staff in your virtual office, companies like Intuit will offer desktop hosting for Lacerte and ProSeries, together with Intuit practice management. This will give you one centralized place to be able to see all client activities and manage your firm work and deadlines. To be able to work with your clients in your virtual office, this means you will leverage on the link that Intuit will provide to be able to create a client portal for document collection and management. As well as eSignature to be able to gather and track every digital signatures on a large tax forms and documents.
Ensure you stay up to date with more education
Technology, tax laws and even your client expectations are qlways changing, and it’s very important that you stay up to date to be able to run a successful practice. Companies like Intuit do offer various resources in its accountants training center that will help you continue learning. This will include live and recorded webinars, how-to videos and their peer training via forums. They do keep their customers up to date on the current tax law changes and the impact they will have on Intuit software. With the latest technology update, best practices that will help keep your client’s data secure, how you can grow your firm, and many more.
With trade associations like the National Association of Tax Professionals, together with trade publications, such as AccountingWeb, Accounting Today, and the Journal of Accountancy, will help you to stay educated on the latest in the profession. So read!
How to grow your tax business
Start by marketing yourself
There are many ways to market yourself and your new practice. Let’s look at some of the common ways that you will get the word out about your practice:
Network
In-person networking is very crucial to grow your business as well. Many states and some cities do offer local tax and accounting associations. A major accounting organizations like the AICPA and the National Association of Enrolled Agents (NAEA) always have their national conferences every year to help you network with industry experts and to earn continuing education credits.
Use content marketing
Testimonials, case studies and articles will showcase your expertise, content marketing might be a perfect way to stand out in the industry. You will definitely host content marketing on your own site and share it through your social media accounts to spread the word the out.
Use direct marketing
Email, brochures and flyers will be helpful vehicles to spread the word about your services. Some tax professionals will include discounts and many other incentives in their collateral. You need to consider advertising your services using bulletins distributed by churches, grocery stores and community centers.
Build a website
Today, every business needs a website. You will use your website to tell your potential customers about youself and your business model. It’s being proven based on what tax pros said, that it’s very important to put your picture on the website, and equally the understanding of SEO is a major factor in success.
Always connect on social media
Social media will assist help you to connect with your potential clients and others in the industry, and to develop a brand that will represent your practice. Twitter, Facebook and LinkedIn are great platforms to establish your social presence and connect with your clients, peers and others in your industry.
Ask your existing clients for referrals:
Word of mouth is very important to many people who are looking for a tax pro. So don’t be afraid to ask your clients for referrals. You might consider rewarding them for referrals with discounts or any other incentive. When you don’t have any clients yet, do set up a referral program with your friends and family.
Collaboration
Colloborate with other professionals who will be offering services that compliment, but not in competition with yours.
Expand your practice to serve both small and medium sized businesses (SMBs)
To be able to help your business clients and generate another stream of Income, accounting and bookkeeping services are the things to add to your practice’s offers when you’re ready. There are online accountants portfolio with many tools that will help you grow your client base. As well as sharpen your skills and become more efficient.