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Starting your own tax document preparation service is a great business option for operating at home. Not only do you gain financial freedom and independence, but you also have the availability to structure your time in the way that you want. Having the freedom to create your own income with unlimited earning potential is not possible when working for another company.
If you enjoy working with numbers and helping people stay financially responsible, then this is a great business opportunity for you. It doesn’t take up a large chunk of your time and can be done in addition to another job. Individuals who have decided to retire early and stay-at-home parents find this type of business to complement and add to their lives. Being in this industry allows the freedom to enjoy holidays, summers, and any other desired or needed time off.
Anyone comfortable with tax software will be able to easily integrate this business, but even people who are not can learn these self-explanatory tools. By beginning this service you are able to offer a large group of clients financial stability.
Myths about Tax Document Preparation
As with any business dealing with consumer finances, there are a few misconceptions about the industry. The top 2 myths that new business owners deal with include:
- You must be an expert with numbers. This, thankfully, is not completely true. If you take the time to understand the basics of tax document preparation, you will be prepared for the job. Exceptions to this are not common and only take a Google search to remedy. The more important aspect of starting a tax document preparation service is handling the customers. Operating this type of business is all about building trust and relationships. Dealing with client’s finances is very personal and having the ability to work with people is paramount. Your clients will be looking for your guidance.
- An accounting degree or CPA is required. In some aspects of the financial business, this may be true but not for tax document preparation. Many who consider this business venture shy away from this is for this reason, but they are simply misinformed. Take a look at your state’s regulations to be sure that you fulfill the other requirements. While it isn’t a requirement to be certified, there is a need to be prepared.
Start a Tax Preparation Service Online
A tax document preparation professional is able to earn $100 or more per hour. In the busy tax season working a 40-hour week that’s $4,000! During the first season, you may not make this much if you are still expanding or growing your business and learning. But, by incorporating effective marketing and great customer service your business can grow at a remarkable rate. Add this information to the freedom of having summers and vacations off it becomes a win-win situation!
Outline your business plan
In order to begin your online business in tax document preparation, you will need to have a plan. This business plan will be your guide to getting started as well as to scaling your company. It is an important way to stay on track and hit growth goals. You can also use this guide to see your shortcomings and avenues for improvement.
- You will need to take a few courses in tax preparation services so that you are able to build a solid foundation for your business. If you are using existing software, the developing company of that software may have resources for you to use.
- You will want to complete the IRS Annual Filing Season Program.
- Continuing education will always help to keep you and your business ahead of the game when it comes to document preparation services. Increasing your tax knowledge helps you to give your clients the best service available.
- The proper documents for taxes are always evolving and changing. Know and understand the changes each year to reduce errors.
- Build a website, market online or in-person, and know your customers. These aspects are some of the most important pieces for your growth.
- Find a way to take payments through a virtual terminal online or payment gateway. Depending on how you plan on taking customer transactions, the type of terminal will change. Review your options and set up with a high risk document preparation payment processor to ensure the security and protection of your account.
Tax Document Preparation Merchant Account
In order for your business to begin processing payments, you will need an integrated merchant account. The problem comes when the banks and payment processors hear your industry type. The tax document preparation industry is high risk in their eyes. Fraud and chargebacks mar the typically secure industry type. Because of that, many banks will not approve the tax preparation merchant services application. But that isn’t the only reason for the hesitation.
- There is no actual physical brick-and-mortar business location. A business that operates online can easily hide behind the veil of a www. URL. All eCommerce merchants are found to be higher risk than in-store merchants because they can hide much more about their business. And, of course, banks and merchant service providers don’t like ambiguity or the risk of fraudulency.
- Revenue is very inconsistent because it is a seasonal business. Even though there are large corporations that file their taxes throughout the year, the majority of business will come right before tax day. This inconsistency is an inconvenience for transaction processing because they cannot accurately judge a business’s health at any time of year.
- Fraud on behalf of the customer is a big concern. There is no way to judge if the customers or businesses you are servicing are 100% legitimate. It wouldn’t be the first time (or the last) that a tax document preparation business is used to legitimize a fraudulent customer without their knowledge.
- Chargebacks are much more common when the business is online and for companies handling personal information such as finances. The larger percentage of chargebacks for a business account, the greater the chance of the merchant account being closed. If your ratio of transactions to chargebacks is too high, you will be penalized and possibly even blacklisted from payment processing. This is why it is important to protect your business from credit card chargebacks from happening in the first place.
High risk credit card processing
The only way to acquire an equipped merchant account that will reduce these risks is to contact a high risk provider. They are experts at boarding accounts that many others ignore. The possibility of fraud and chargebacks does not scare them away because they will have solutions that reduce these risks. Make sure that you equip yourself with the perks that your business needs and look into high risk credit card processing.
Tax document preparation services are an excellent way to own your own business and enjoy freedom.