What You Need to Do to Start a Tax Prep Business in 2020
Have you ever considered starting an at-home tax prep service business? If you’ve ever considered it, you must be aware of what you have to do to become one. A critical thing you need to get started is a tax preparer’s license. Depending on which state you live in, there are a variety of different requirements that have to be fulfilled to obtain one. They can range anywhere from passing an exam to registering with the state. Here are some of the basic requirements you need to fulfill to start a tax prep service business.
Obtain a tax information number
According to the rules of the IRS, all tax preparers are required to get a federal preparer tax information number. Preparing someone’s taxes and being compensated for it without a PTIN will subject you to a fine. On the IRS website, you can apply for a PTIN. Make sure you’re prepared to provide information for identification. You’ll need to have your most recent tax return information, any records of federal convictions, tax problems, and your social security number. In addition, all applicants have to pay a $50 fee to obtain the PTIN.
You won’t need a college degree, but you will need a high school degree or a GED. Once you have one, you’ll need to get training to be able to effectively perform the job. Depending on which kind of taxes you plan on doing will determine how much you need. If you’re just preparing taxes for individuals, you won’t need as much training. If you plan to do business taxes, the training will be more extensive. If you already have an existing background in doing taxes, you might not need as much as education. In order to get the education and training you need; you can take tax courses at a local community college or a national tax preparation firm. You could also get on-the-job training from tax preparation companies. While you don’t need to have credentials in order to be a tax preparer, more people will likely hire you and potentially pay you more.
Obtain an EFIN
If you’re starting a tax prep service business on your own, you’ll need to have an electronic filing identification number. It’s a requirement to E-file returns when you prepare more than 11 tax returns in a year. You’ll need to make an IRS e-services account, submit an e-file application, and pass the suitability check. Fingerprints may be required, so be prepared to pay a $50 fee to get them done.
Follow state licensing requirements
State-issued licenses or registrations are required to obtain for non-credential tax preparers in some states. They may also require education requirements as well. If you’re an attorney, an enrolled agent, or have a CPA, there’s a possibility you could be exempt from these requirements. Be sure to research what your state requires.
Starting a tax preparation service is possible. You just need to make time to take the necessary steps required. This is the basic information to follow if you’re interested in getting started. Payment Cloud has more on how to start a tax doc prep service if you need more information.