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    5 Replies Latest reply on Aug 29, 2011 10:01 AM by jose41

    Opening a home-based tax practice

    Dardevil30 Newbie
      Hello Everyone,

      I am graduate student with bachelor degree in Accounting, I usually prepare tax for my family and myself but this year I decided to open tax practice in my house. I need to buy a reliable tax software, a computer and I also need to build a clientele base. Does anyone have some advices? How should I charge the returns....should it be based on the refund amount or the various forms filed?
        • Re: Opening a home-based tax practice
          FinanceOne Wayfarer

          A good way to get the answers to your questions is to call other one man shop accountants and ask them questions. Call other CPA's that are in different states that you won't be competing with them. You would be surprised how many business owners are willing to share their experiences. Talk to at least 3-4.

          As far as building your book of business goes, the most effective ways will be marketing and referral sources. Loan officers at local mortgage companies are a great referral source. When I owned a mortgage company one of my friends was a CPA and we referred him ALOT of clients through the years. Ask your friends and family to refer people as well. Be creative when identifying referral sources. There are a lot out there.

          By the time tax time approaches you should have a good marketing plan in place and ready to go. Most CPA's ramp up their marketing efforts from Dec-April. You have many options. Some are relatively free and others are expensive. The cheap ones would be things like door hangers and flyers posted around town. Many retail establishments and community centers have bulletin boards that let you post your business. The more expensive marketing techniques would be print advertisement in your local newspaper or direct mail. You can do a 5,000 piece neighborhood saturation post card for less than 30 cents each.

          Another thing you need to do is create a niche for yourself. Think about who needs tax preparation the most and is willing to pay for it. Restaurant employees that receive tips are a great niche. The returns aren't overly complicated and these people usually need help with taxes.
          • Re: Opening a home-based tax practice
            Hi Dardevil30,

            You may want to check with your state to see if there are any requirements for tax preparers. It's usually a reasonably low barrier to entry, but it's important to make sure you have covered all your bases. There tends to be a desire to maintain a certain level of quality control and that requires new preparers to jump through some hoops. Again, it shouldn't be too bad, just check it out.

            You might want to be careful if you plan on charging based on a percentage of refund. Unfortunately, tax preparers have little control over the actual refund amount. Unless of course, you tell your clients to overpay throughout the year. But, then we get into ethical dilemmas that you probably don't want to subject yourself to. And, I can't remember, but it may be against certain State Boards to charge based on refunds anyways. You may want to look into that.

            Other than that, the number of people needing tax return preparation is growing every day. The population of the US isn't going down anytime soon and tax regulations aren't getting any easier.

            Good luck
            • Re: Opening a home-based tax practice
              Dardevil30 Newbie
              I thank all of you guys. Also, more advices are still welcome, a businessman can always use ideas.
              • Re: Opening a home-based tax practice
                jose41 Newbie

                Hello Daredevil,

                Congrats on taking the plunge and starting your own business. The good news about tax prep is that it is not a capital intensive business. Thus, if things don't work out or you move on to something else, there is little to no merchandise to liquidate or office space that will create a tough financial exit strategy.


                Sure, there will be some marketing cost up front. I really like the idea of talking to fellow tax preparers in other areas of your country. Ask them what sort of marketing tools they use: direct mail, email marketing software, local advertisements, etc. Once you obtain some clients, hopefully they will spread the word to their friends and colleagues.  Have you considered delving into social media? It is a great way to develop your niche, and really become an authority in a specific area of your profession. Good luck!