The IRS handles more than 240 million tax returns every year. The agents at the IRS have to process those returns, but someone else has to prepare and file them.
Some people try to do their tax return on their own, but many more will turn to a tax preparer. If you have a good understanding of the tax code and some math skills, that preparer might as well be you!
This guide will go over how to become a tax preparer, so you can begin your own home-based business today.
The First Step of How to Become a Tax Preparer: Education
An independent tax preparer doesn’t need a college degree. You’ll likely want to have your high school diploma or GED backing you up, though.
You’ll also want to take some specialized courses on how to be a tax preparer. You may be able to get training from a private company or a technical college. Your local community college may also offer courses on tax preparation.
If you prepare tax returns for businesses, you’ll need more training.
If you plan to become a credentialed tax preparer, you’ll need to get a license from the IRS. Enrolled agents don’t need any special training, but you will have to pass the IRS test to get your license.
You may also want to consider becoming a Certified Public Accountant. CPAs must be licensed, and becoming one means completing a minimum number of hours of college accounting courses. You’ll then have to pass a test.
Apply for a PTIN
You can start your business as a non-credentialed tax preparer as soon you have some training.
The next step is to get a Preparer Tax Identification Number, or PTIN. This number is provided by the IRS. It allows you to prepare taxes and file them for your clients.
You must be 18 years of age and provide your address and your Social Security number. If you owe money to the IRS or have felony convictions, you’ll need to explain these.
Get Your EFIN
You’ll also need an Electronic Filing Identification Number, or EFIN. You’ll need this number to use the IRS e-file system. If you prepare 11 or more tax returns each year, you must e-file.
You’ll need to create an account with the IRS and submit an application. The IRS will then evaluate your suitability.
Invest in Your Business
You’re now ready to file taxes for your clients. Before you begin, though, the experts at UltimateTax suggest you should make sure you have the right equipment. That includes the software you use to prepare tax returns.
You’ll also want to make sure you invest in good hardware, such as a new computer. You should also have a phone line so your clients can contact you.
Finally, invest in some marketing for your business. A good website and a few well-placed ads can help you get the word out and grow your client list.
Build Your Business Now
If you were wondering how to become a tax preparer, now you know how easy it can be!
Need more tips to get your home-based business of the ground? You’re in the right spot. Take a look around and discover more tips and tricks for business success.
