With 2022 right around the corner, figuring out a better financial situation is on a lot of people’s minds. For some, that will mean looking at side hustle options to bring some extra income next year. One option you might overlook is starting a virtual tax preparation business.
It’s a seasonal kind of gig, with the busiest time in the first few months of the year as people get ready to file their individual taxes. Not sure how you would even begin? Keep reading for our quick guide on how to start a virtual tax preparation business.
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No, you don’t need a tax degree or any kind of college degree to start a virtual tax preparation business. Even so, you will need an understanding of the applicable tax laws and forms you’ll routinely see. You can get that information from an online tax preparation course.
Even better, you can even get a professional tax preparer designation from some of those courses. That’s good for marketing later.
Before you can get serious about tax prep for other people, you’ll need a preparer tax identification number or PTIN from the IRS. Getting your PTIN is comparatively simple. You fill out a form on the IRS website and pay their listed fee. You’ll typically get the PTIN the same day you apply, often within the hour.
If you are serious about becoming a tax preparer, you will also need certification from the IRS as an e-file provider. You can complete most of this application online as well. You will, however, need to pass a credit check and likely submit fingerprints to the IRS before they’ll approve your application.
Most states will require that you register the business name and some locations may also require a business license to operate a virtual tax preparation business. Check your state and local regulations for the applicable requirements. Most tax prep businesses form as an LLC or similar corporation to provide liability shielding for personal assets.
You’ll need a website as the hub of your virtual tax business. The website itself is an advertisement for your business and provides your contact information to clients. It also lets you post your services and list pricing for those services.
If set up correctly, it lets you schedule appointments and provide options for secure document uploads.
How to Start a Virtual Tax Preparation Business? Plan
The answer to the question of how to start a virtual tax preparation business is that you must plan ahead. Make sure you can devote the time for a prep course to get up to speed on the relevant laws and forms. You must also plan ahead in terms of applying to the IRS for your PTIN and e-file provider status.
Block out time for incorporating, registering with the state, and getting your business license. Don’t forget to schedule some time for putting together a website.
Looking for more business tips? Check out the posts over in our Business section.
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