Breaking into Tax Preparation: A Comprehensive Career Guide

If you’re considering a career in tax preparation, you may be surprised to learn there are a lot of avenues to becoming a professional tax preparer that don’t involve years of education or a large financial investment. In fact, tax preparation can not only offer you employment in an in-demand industry field, it can also provide you the opportunity to start your own business with a reliable revenue stream pretty quickly.

Getting started requires some basic tax knowledge and the ability to meet certain IRS requirements. Here’s a quick guide for understanding what you’ll need to do to launch a career – or even your own business – in tax preparation.

Interest in tax law and changes

Tax industry knowledge is definitely a plus if you’re looking to pursue a career in tax preparation, so it can be a great business add-on or second career for a bookkeeper, accountant, financial adviser, or tax attorney.

Transferable skills

Being a professional tax preparer requires a lot of talents and capabilities beyond knowledge or interest in tax law, and you might be surprised to learn that you probably already have some skills that could readily transfer into a career as a tax professional:

• Interpersonal and customer service skills

• Critical thinking and problem-solving capabilities

• Communication skills

• Time and project management experience

• Attention to detail

A strong sense of ethics and integrity are critical to a career in tax preparation as well, since you will be reviewing and managing sensitive information, both personal and financial, for your clients.

Education requirements

Education or degrees in math or accounting are not required to become a tax preparer. More important is being able to understand basic bookkeeping and accounting and having an interest in expanding your tax knowledge.

Join professional organizations for tax pros like the National Association of Tax Professionals (NATP) or the National Society of Tax Professionals (NSTP). These offer you access to workshops for continuing education as well as opportunities for professional networking.

Certifications and licenses

You can enroll in several low-cost continuing education and certification programs to build your expertise. For example, many tax professionals choose to become an IRS Enrolled Agent. This certification allows you to represent clients before the IRS and instantly boosts your credibility. In fact, it’s the highest credential the IRS awards tax preparers.

You can gain the knowledge to handle basic tax returns relatively quickly. Take advantage of the IRS’ Annual Filing Season Program to start gaining the necessary education in tax prep and explore various other online resources for setting up a tax prep business.

Applying to tax preparation offices

When you’re just starting out as a tax preparer, you may find it helpful to work for an established tax prep service before attempting to go out on your own. Not only will you be able to ask questions and gain experience during tax season, but you’ll also learn about state and local requirements for where you plan to start your business. Plus, if you decide to transition later to starting your own tax preparation business, you’ll be able to demonstrate to your clients that you already have experience.

Starting your own tax preparation business

Many features that make a tax business relatively easy to launch—low startup costs and the ability to work from just about anywhere—also make it a highly competitive field. That’s why it’s critical to know how to build and market your tax business. Here are some key steps to get started:

1. Decide if you’re going to operate a brick-and-mortar office or remote business. If you’re just starting out and limited on funds, then a remote office with low overhead may be the way to go. Cloud-based tax preparation software makes it easy to work from home and collaborate with clients from any device at any location with an internet connection.

2. Research your local competition. Look at what kinds of services other tax pros in your area offer, and see if you can identify gaps. You can often build your own niche just by targeting an overlooked tax audience.

3. Define your niche. Once you’ve identified an overlooked audience or two, say military families or sole proprietors, work on becoming an expert in those fields. Clients prefer specialists to generalists, so focus your education and marketing efforts on learning the nuances of the tax code for your niche audience.

4. Market your tax business. If you build it, they won’t necessarily come. You have to get your name out there, and earn your clients’ business. Here are some ways to build a client base:

• Ask friends, family, and colleagues for client referrals.

• Get involved in your community and meet prospective clients by volunteering, setting up a booth at local festivals, or sponsoring a local high school sporting team.

• Build a website that is search-engine friendly and clearly explains your areas of expertise.

• Establish a social media presence using a platform your niche audience uses, like LinkedIn or Facebook, and be sure to regularly post relevant content and engage with users.

• Send out a monthly e-newsletter to prospects highlighting your expertise through advice pieces for your target tax audience, and establish yourself as a trusted authority.

Staying up to date on industry changes

A career in tax preparation requires constant continuing education. Tax laws change all the time, so it’s critical you stay up to date on your industry. If you already have experience in an industry where learning new skills, regulations, and laws is part of the job, tax preparation could be a good fit.

Stay up to speed on tax law by subscribing to IRS e-newsletters, which provide you regular updates on a wide array of tax topics. You can customize your e-newsletter subscriptions so you only receive those that are most relevant to your interests or prospective client base.

Ready to learn more about how to enter the field of tax preparation? You can access a lot of the information you’ll need to get started online, everything from how to obtain a Preparer Tax Identification Number from the IRS to how to choose the right tax prep software. With the high demand for talent in the field, the schedule flexibility it can often offer, as well as the opportunity it provides to start your own business without a large financial investment, tax preparation can be a financially and personally rewarding career option for professionals coming from a variety of other industry sectors.