Step-by-step guide to starting a tax prep business

business tax preparation

When complete, you just subtract your expenses from your business earnings to arrive at you net profit or loss. You then transfer this amount to your personal income tax form and include it with all other personal income tax items. If you are looking for free tax help and free filing for simple tax returns then H&R Block’s free version is the best choice for you.

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Recommended resources from our tax experts

You can also be an authorized e-file provider with an EFIN, which allows you to file tax returns electronically through the IRS e-file tax portal. Tax preparation is the process of helping individuals and businesses with their taxes. Tax preparation services range from simple audits to comprehensive tax planning, so there are many options for those who want to prepare their taxes. Depending on your skills and expertise, you can also choose to specialize in a particular area, such as accounting, business formation, or payroll, to name a few. Schedule C is a simple way for filing business taxes since it is only two pages long.

  • The most common forms needed for education tax credits are included in its free online software.
  • It may cost more money to hire someone for professional tax assistance, but the time and effort saved in the long run can be well worth it.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan remains $7,500 for 2024.
  • Another advantage of using online tax software is the time it saves.
  • For example, you can keep taxpayers informed of any new tax law or tax code changes that may impact their tax returns and keep them up to date with the most recent tax forms.

Read on for tips on how to start a tax prep business as well as advice on where to find potential clients, how much capital you need, and other considerations before diving in headfirst. Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your tax preparation business is sued. Some of the leading competitors pay individual tax preparers as little as $10 an hour. Others pay a commission of perhaps 20 percent of the fees generated. You’ll also be responsible for tax withholdings and your FICA and Medicare contribution for each hire. E-filing is a way to process tax returns more efficiently and reduce the odds of calculation errors (since the computer will check for you).

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If your tax situation is more complex or you are unable to gather all of the needed documents by the normal tax deadline, you may want to consider requesting an extension. Know business tax preparation checklist you’re set up right with help from a QuickBooks expert who can help you connect your banks and credit cards, and learn best practices to use QuickBooks with confidence.

  • The idea is to gain insight into the local tax preparation market so you don’t over- or undercharge.
  • In addition, small businesses have other tax-related tasks they’re expected to complete.
  • Our professional bookkeeping services can help give you time back for your business.
  • We narrowed our list to four finalists offering the overall best online tax software for small businesses.
  • Having an accessible tax preparation checklist is a best practice for accountants.
  • We selected TaxSlayer Self-Employed as the best choice overall for small business filers because it can handle complicated returns for the best price among the big players.