Foundational steps to growing your tax business
Before we dive into the more specific steps and strategies of tax business success, one must first cover seven common-sense, foundational steps needed to succeed long-term.
1. Success starts with proper education and training
A great place to start is by mastering Individual 1040 tax returns because most people in the United States are required to file a 1040 return each year. However, you should also consider pursuing training on tax compliance for sole proprietors, estates, trusts, and small businesses, through webinars, in-person, online courses, or even audiobooks.
Even a better consideration for both new and old tax preparers is to consider completing the IRS - Annual Filing Season Program (AFSP). Within this valuable program tax pros with an active PTIN can receive current tax related training. In addition, completion of said course enlists participants in a public database of return preparers on the IRS website, thereby increasing exposure to potential customers.
2. Avoid failure by creating a sound business plan
Sit down and write out your short-term, mid-term, and long-term goals regarding your business objectives, the type of services you want to offer, how much you’ll charge for them, and when you might want to hire staff.
Should you start by just offering basic 1040 prep services or should you also include business return and payroll services in your menu offering?
3. Make securing proper licensing a priority
Tax preparation businesses need to comply with state and federal licensing requirements, which, of course, vary by state and change regularly. In addition, to avoid suspension and fines, you’ll want to make sure you have registered for a PTIN (Preparer Tax Identification Number) and EFIN (Electronic Filing Identification Number) and that you’re up to date with required continuing education credits.
4. Adopt the right tax preparation software (Your core business technology)
Your tax prep software is one of your most important business investments. Make preparing accurate tax returns manageable by choosing a comprehensive tax preparation software solution that helps you easily import client data, auto-populate and link tax forms, and catch any errors before you e-file to the IRS and share the tax return with the client.
The great news for growth-minded tax pros is that recent tax software advancements in artificial intelligence and mobile technologies make much of the grueling aspects of tax prep work quick, accurate and easy. To put yourself ahead of the curve, buying a tax prep software that incorporates all of the abovementioned technology components is a must.
5. Enhance your productivity with key ancillary tech tools
Once you have your core technology nailed down, it’s time to add additional productivity tools to boost your efficiency, your bottom line, and your clients’ satisfaction.
When thinking of productivity tools, think of tools that make customer interactions easier for everyone involved, including self-service document portals, mobile applications, e-Sign capabilities (for remote tax form signings) and integrated genAI powered-tax research libraries.
6. Seek to exceed your client’s expectations
While the end result of preparing one’s taxes can be exciting (a much-anticipated refund), the process of getting there can be stressful. However, you the tax preparer can make the entire tax return process more palatable and lessen taxpayer stress.
Go the extra mile by constantly striving to improve your soft skills (meaning the areas that make you likable and attractive to others). When you're assisting a taxpayer with a stressful return, make a point to show empathy, kindness, positivity and a 'here to help' attitude.
Make a point to stay in touch via direct means like a birthday card, or a check-in call. Stay on their minds via indirect means with an educational newsletter. While these traits do not involve crunching numbers, they go far in building customer loyalty and future word-of-mouth referral.
7. Open your tax business to serve a diverse marketplace
Granted there will be certain customer prospects that will not be a fit for your business, but your goal should be to make your business as open to as many paying customers as possible. This means widening your service appeal across age and income classes.
On the generational / age front, what makes for a satisfying tax engagement experience to a baby boomer (who often prefers face to face interactions) is often different than that of a millennial (who typically prefers mobile and virtual interactions).
On the income class front, having a business that accommodates the full spectrum of customers, from higher-income clientele that have more complex needs and an appetite for tax advice to those that may be on a tight budget, but benefit greatly from bank product funded advance tax refunds, keeps the marketplace wide open to paying customers.
