How to start a tax preparation business


How to start a Tax Preparation Business - Tax Preparation Business Plan Template

Are you interested in starting your own Tax Preparation Business?

If you're thinking about starting a tax preparation business, there are a few things you need to know. First, you'll need to obtain the proper licenses and certifications. Second, you'll need to find the right software and hardware for your business. And third, you'll need to market your business to potential clients. In this blog post, we'll walk you through each of these steps so you can get your tax preparation business up and running as quickly and smoothly as possible.
Business Plan
When starting any business, it is important to have a plan. This is especially true for a tax preparation business. Below are some key components that should be included in your business plan:
1. Company description: Write a brief description of your company, including what services you will offer and your target market.
2. Market analysis: Research the tax preparation industry and your specific market. This will help you understand the competition and what demand exists for your services.
3. Business structure: Decide on the legal structure of your business and register it accordingly. This will determine things like taxes and liability.
4. Financing: Figure out how you will finance your business, including start-up costs and ongoing expenses. You may need to seek out investors or take out loans.
5. Operating plan: Create a detailed plan for how you will run your business on a day-to-day basis. This should include things like your office set-up, staff, and systems for processing taxes.
By taking the time to create a comprehensive business plan, you will increase your chances of success when starting a tax preparation business.
Target Market
When you're starting a tax preparation business, it's important to think about who your target market is. There are a few different ways to approach this. You can focus on a specific demographic, like small business owners or seniors. Alternatively, you can focus on a specific type of tax return, like individual or corporate. Whichever approach you take, it's important to have a clear understanding of your target market. This will help you make decisions about everything from your marketing strategy to the services you offer.
Business Model
There are a few different business models you can choose from when starting a tax preparation business. You can work as an independent contractor, hire employees, or open your own brick-and-mortar office. If you decide to work as an independent contractor, you’ll need to find clients on your own. You can do this by networking with local businesses, advertising your services online, or partnering with another tax preparation company. If you decide to hire employees, you’ll need to find qualified tax preparers and train them on your process. You’ll also need to handle all the HR and payroll responsibilities that come with being an employer. Opening your own brick-and-mortar office is the most complex option, as you’ll need to find a suitable location, build out the space, and handle all the marketing and operations yourself. But it can also be the most rewarding, as you’ll have complete control over your business.
Competitive Landscape
If you're considering starting a tax preparation business, it's important to understand the competitive landscape. There are a few different types of businesses that compete in the tax preparation space, including:
-National tax preparation chains: These businesses have a national footprint and often offer a variety of services beyond tax preparation, such as financial planning and bookkeeping.
-Regional tax preparation firms: These businesses typically have a smaller footprint than national chains, but may offer more personalized service.
-Independent tax preparers: These businesses are typically run by a single individual or a small team. They may be less expensive than larger firms, but may not offer as many services.
When considering starting a tax preparation business, it's important to understand who your competition will be and what they offer. This will help you determine what services you need to offer and how to price your services competitively.
Costs & Pricing Strategy
The cost of starting a tax preparation business can vary depending on a number of factors. The biggest factor is whether or not you choose to franchise. Franchises typically have higher initial costs, but they also come with built-in brand recognition and support from the franchisor. If you choose to start your business from scratch, your initial costs will be lower but you will need to invest more time and effort into marketing and building your brand. Either way, you will need to factor in the cost of office space, equipment, software, and supplies. Pricing your services is another important consideration. You will need to research your competition and set your prices accordingly. It is also important to consider what type of pricing model you will use. Some businesses charge by the hour, while others charge a flat rate per return. There are pros and cons to both pricing models, so be sure to consider what will work best for your business. whatever pricing model you choose, be sure to clearly communicate your prices to potential customers. Nothing is more frustrating than starting work on a return only to find out that the price is higher than what was quoted. Be upfront about your pricing so that there are no surprises
Forming a Legal Entity
If you want to start a Tax Preparation business, you will need to form a legal entity. This will protect you from personal liability and help you raise money for your business. You can choose to form a sole proprietorship, partnership, limited liability company (LLC), or corporation. Each type of entity has its own pros and cons, so you will need to choose the one that is right for your business. If you are the only owner of your business, a sole proprietorship may be the best option. This type of business is easy to set up and you will not have to deal with much paperwork. However, sole proprietorships offer no personal liability protection, which means that you could be held responsible for debts incurred by your business. Partnerships are similar to sole proprietorships in that they are easy to set up and offer no personal liability protection. If you decide to form a partnership, you will need to choose a business partner who you can trust and who has complementary skills. It is important to have a written partnership agreement that outlines each partner's roles and responsibilities. A limited liability company (LLC) offers personal liability protection and is a good option for a small group of founders. 
Opening a Business Bank Account
When you’re ready to start your Tax Preparation business, one of the first steps is to open a business bank account. This will help you keep your personal and business finances separate and will make it easier to track your expenses and income. To open a business bank account, you’ll need to have the following information and documents:
-Your business name and address
-Your Social Security number or Employer Identification Number (EIN)
-A list of the owners, officers, and directors of the company
-Articles of incorporation or a business license
-A voided check or deposit slip from the account you’ll be using for your business
Once you have all of the required information and documents, you can visit your local bank or credit union to open a business checking account.
Setting up Business Accounting
If you're starting a Tax Preparation business, one of the first things you need to do is set up your business accounting. This will ensure that you're keeping track of your finances and that you're complying with any financial regulations that apply to your business. Here's a quick guide to setting up your business accounting:
1. Choose an accounting software. There are many different accounting software packages available, so do some research to find one that will suit your needs.
2. Set up your chart of accounts. This is a list of all the categories of income and expenditure that you will track in your accounting system.
3. Set up your bank account. You will need a business bank account to manage your finances effectively.
4. Keep track of your income and expenditure. Make sure you keep accurate records of all money coming in and going out of your business.
5. Prepare and file your tax return. Once a year, you will need to file a tax return for your business. Make sure you keep on top of this so that you don't miss the deadline
Setting up Business Insurance
As a business owner, it is important to protect your company with the proper insurance. When setting up a Tax Preparation business, you will need to consider the following types of insurance:
-Product liability insurance: This will protect you in the event that a product you designed and printed causes injury or damage.
-Professional liability insurance: This will protect you in the event that a client suffers damages as a result of your work.
-Business property insurance: This will protect your equipment and premises in the event of damage or theft.
-Business interruption insurance: This will protect you in the event that your business has to stop operations due to a covered event.
-Employee dishonesty insurance: This will protect you in the event that an employee steals from your business.
Speak with an insurance agent to determine which policies are right for your business
Setting up a Business Website
If you want to start a Tax Preparation business, one of the first things you need to do is set up a website. This will be your online home base, where potential customers can learn more about your business and what you have to offer. There are a few key things you need to include on your website:
-An About page: This is where you can tell your story and give potential customers a sense of who you are and what you stand for.
-A portfolio: Showcase your best version on your website so that potential clients can see your work.
-A contact page: Make it easy for people to get in touch with you by including your email address and/or social media links.
-Pricing information: Let visitors know how much you charge for your services.
By having a well-designed website, you’ll be able to attract more customers and grow your Tax Preparation business
Obtaining the Necessary Permits
If you want to start a tax preparation business, you'll need to obtain the necessary permits from your local government. Depending on where you live, this may require a business license, a tax registration certificate, and/or a professional license. You can usually find out what's required by contacting your city or county clerk's office. Once you have the necessary permits, you'll be able to start advertising your tax preparation services. You can do this by putting up flyers in local businesses, posting on online classifieds sites, or even setting up a website. Whatever marketing methods you choose, be sure to include your contact information so potential customers can reach you.
Setting up a Business Number or Appointment Setter
When you’re ready to start your Tax Preparation business, one of the first things you need to do is set up a business phone number or an appointment setter. You can use a service like Google Voice to set up a business phone number for your Tax Preparation business. Google Voice will give you a free business phone number that you can use to make and receive calls. Once you have a business phone number, you can start taking calls from potential customers. When you get a call, be sure to take down the customer’s name, contact information, and what they need. Once you have this information, you can give the customer a call back to discuss the project in more detail and give them a quote.

Developing a Marketing Strategy

A marketing strategy is essential for any business, and tax preparation businesses are no different. To maximize visibility and attract new customers, it is important to invest in SEO-optimized content, targeted advertising campaigns, and other forms of promotion. Branding your services is also important to ensure clients get the most out of their tax preparation experience.

Hiring Employees

When starting a tax preparation business, you will need to hire staff to help with the workload. Consider looking for candidates who have experience in the industry, or who have a background in accounting or finance. Ensure that you provide employees with all of the necessary training and tools to perform their role efficiently.

Developing Clientele

Building a clientele can take time, but there are several ways to do it. Consider offering discounts or loyalty programs to draw in new customers. Customer service should be a priority; when clients feel valued and appreciated, they are more likely to recommend your services or come back for future business.

Identifying Potential Partnerships and Alliances

Identifying potential partnerships and alliances is an important part of marketing your tax preparation business. Look for referral networks, local businesses, accounting firms, or other potential partners that could help grow your client base. Consider offering incentives or discounts to partners who refer new customers to your business.

Professional Development and Continuing Education

Professional development and continuing education is essential to staying up-to-date with the latest tax laws and regulations. Investing in professional development classes or seminars can help keep you ahead of industry trends and ensure you offer the best service possible to your clients.

Utilizing Technology

Utilizing modern technology can make running a tax preparation business much easier and more efficient. Investing in software solutions like payroll processing systems or automated filing services can save time and money while improving accuracy and customer satisfaction.

Networking and Building Relationships

Networking is an important part of growing any business, particularly for a tax preparation business since referrals are so important for success. Attend local events, join professional organizations, or create online profiles on social media channels to reach out to potential customers or partners. In order to practice as a tax preparer legally, you will need to obtain any necessary licenses or certifications required by your state or local government authorities. Be sure to research all licensing requirements before starting your business so that you are compliant with all regulations from day one.

Creating an Exit Plan

Creating an exit plan should be one of the first steps when starting a tax preparation business; this plan should include strategies for succession planning as well as steps for winding down operations if necessary in the future. An exit plan can help ensure that all employees are taken care of if the business does not succeed as anticipated, as well as provide peace of mind for owners who may eventually want to retire from their business venture down the road.
If you're thinking of starting a tax preparation business, there are a few things you need to keep in mind. First, you need to be aware of the competition. Tax preparation is a competitive business, so you need to make sure you're offering a competitive price. Second, you need to be familiar with the tax code. This will help you prepare accurate tax returns for your clients. Finally, you need to be able to market your business. You need to let potential clients know what you can offer them and why they should choose you over the competition. If you keep these things in mind, you'll be well on your way to starting a successful tax preparation business.

Why write a business plan?

A business plan is a critical tool for businesses and startups for a number of reasons:
  • Business Plans can help to articulate and flesh out the business’s goals and objectives. This can be beneficial not only for the business owner, but also for potential investors or partners
  • Business Plans can serve as a roadmap for the business, helping to keep it on track and on target. This is especially important for businesses that are growing and evolving, as it can be easy to get sidetracked without a clear plan in place.
  • Business plans can be a valuable tool for communicating the business’s vision to employees, customers, and other key stakeholders.
  • Business plans are one of the most affordable and straightforward ways of ensuring your business is successful.
  • Business plans allow you to understand your competition better to critically analyze your unique business proposition and differentiate yourself from the market.
  • Business Plans allow you to better understand your customer. Conducting a customer analysis is essential to create better products and services and market more effectively.
  • Business Plans allow you to determine the financial needs of the business leading to a better understanding of how much capital is needed to start the business and how much fundraising is needed.
  • Business Plans allow you to put your business model in words and analyze it further to improve revenues or fill the holes in your strategy.
  • Business plans allow you to attract investors and partners into the business as they can read an explanation about the business.
  • Business plans allow you to position your brand by understanding your company’s role in the marketplace.
  • Business Plans allow you to uncover new opportunities by undergoing the process of brainstorming while drafting your business plan which allows you to see your business in a new light. This allows you to come up with new ideas for products/services, business and marketing strategies.
  • Business Plans allow you to access the growth and success of your business by comparing actual operational results versus the forecasts and assumptions in your business plan. This allows you to update your business plan to a business growth plan and ensure the long-term success and survival of your business.

Business Plan Content


Many people struggle with drafting a business plan and it is necessary to ensure all important sections are present in a business plan:
  1. Executive Summary
  2. Company Overview
  3. Industry Analysis
  4. Consumer Analysis
  5. Competitor Analysis & Advantages
  6. Marketing Strategies & Plan
  7. Plan of Action
  8. Management Team

The financial forecast template is an extensive Microsoft Excel sheet with Sheets on Required Start-up Capital, Salary & Wage Plans, 5-year Income Statement, 5-year Cash-Flow Statement, 5-Year Balance Sheet, 5-Year Financial Highlights and other accounting statements that would cost in excess of £1000 if obtained by an accountant.

The financial forecast has been excluded from the business plan template. If you’d like to receive the financial forecast template for your start-up, please contact us at . Our consultants will be happy to discuss your business plan and provide you with the financial forecast template to accompany your business plan.

Instructions for the Business Plan Template

To complete your perfect Tax Preparation business plan, fill out the form below and download our Tax Preparation business plan template. The template is a word document that can be edited to include information about your Tax Preparation business. The document contains instructions to complete the business plan and will go over all sections of the plan. Instructions are given in the document in red font and some tips are also included in blue font. The free template includes all sections excluding the financial forecast. If you need any additional help with drafting your business plan from our business plan template, please set up a complimentary 30-minute consultation with one of our consultants.

Ongoing Business Planning


With the growth of your business, your initial goals and plan is bound to change. To ensure the continued growth and success of your business, it is necessary to periodically update your business plan. Your business plan will convert to a business growth plan with versions that are updated every quarter/year. Avvale Consulting recommends that you update your business plan every few months and practice this as a process. Your business is also more likely to grow if you access your performance regularly against your business plans and reassess targets for business growth plans.


Want a Bespoke Business Plan for your Tax Preparation Business?

Our Expertise


Avvale Consulting has extensive experience working with companies in many sectors including the Tax Preparation industry. You can avail a free 30-minute business consultation to ask any questions you have about starting your Tax Preparation business. We would also be happy to create a bespoke Tax Preparation business plan for your Tax Preparation business including a 5-year financial forecast to ensure the success of your Tax Preparation business and raise capital from investors to start your Tax Preparation business. This will include high-value consulting hours with our consultants and multiple value-added products such as investor lists and Angel Investor introductions.


About Us


Avvale Consulting is a leading startup business consulting firm based in London, United Kingdom. Our consultants have years of experience working with startups and have worked with over 300 startups from all around the world. Our team has thousands of business plans, pitch decks and other investment documents for startups leading to over $100 Million raised from various sources. Our business plan templates are the combination of years of startup fundraising and operational experience and can be easily completed by a business owner regardless of their business stage or expertise. So, whether you are a budding entrepreneur or a veteran businessman, download our business plan template and get started on your business growth journey today.