Startup Costs: $2,000 - $10,000
Part Time: Can be operated part-time.
Franchises Available? Yes
Online Operation? No
Tax preparation can be time-consuming, detail-oriented, confusing, and, for most people, frightening. Tax laws change frequently, the IRS has a tyrannical reputation, and most of us balk at arithmetic anyway. But if you've got a head for figures, you like solving puzzles of the financial kind, and you can keep up with changing tax laws, this could be the business for you. You can work with individuals to fill out their yearly tax forms, specialize in small-business tax preparation, or represent clients who've fallen under the IRS' beady eye and are being targeted for hefty liens or penalties. The advantages to this business are that you can work at home, you get to learn an awful lot about everybody's personal and company business (although morally, ethically and legally, you must keep it to yourself), it's recession-proof because people will always need to pay their taxes, and it can be very profitable. As a tax preparation expert, you should have a solid working knowledge of tax laws for your target market--individuals, estates, partnerships, or other types of small or large businesses. (Our tax system is too broad for you to know everything.) You'll need a good eye for math and the people skills to help your clients make the best of a usually nerve-draining situation. You should also have the experience and instincts to judge whether the information your clients give you is A-OK or doesn't quite ring true.
Your clients can be individuals or businesses. Get yourself the business by placing ads in your local Yellow Pages and newspapers, networking with professional and small-business organizations in your area, and with CPAs and attorneys who can refer their clients to you. Direct-mail your brochures to local businesses or to individuals who have just moved to your area.
You don't have to have any sort of license or certification, but you may want to get certified as an EA (enrolled agent) by the IRS. This involves training followed by a rigorous two-day exam, the completion of which is a bonus as far as your credentials are concerned. It also allows you to go before the IRS in place of your client during an audit. (Only enrolled agents, CPAs and attorneys are granted this privilege, which means you can charge more than an uncertified tax preparer.) Whether or not you go for the EA designation, you'll need a computer with a laser printer, a fax machine, a copier, the usual office software, as well as tax preparation software like Intuit's ProSeries. You'll also need reference materials, including the U.S. Master Tax Guide (available on Amazon), and regular updates to all this stuff. You can get a CD containing IRS forms for $22, plus lots of freebies, all for the asking. Be sure to check with your insurance agent about errors-and-omissions insurance as well.