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Number Crunching - Small Business Home Office

Tax Preparation Business

By By Linda Lazaro

Don't let anyone tell you, you can't do something that you want to do. Don't let anyone tell you, you aren't smart enough, good enough, skilled enough or pretty enough. And let that "anyone" include yourself!

Hello, my name in Linda Lazaro, and this is my story....

After seventeen years of marriage to to a workaholic who had no problem putting off celebrating our children's birthdays until he could "fit them into his busy schedule", I'd had it. This was not a sudden or easy decision.

For this and other reasons, I'd been thinking about divorce for five years. But, had no idea how I could possibly manage to support myself and three active teen-agers on my own. I somehow knew that if I ended this marriage, he'd never pay the alimony and child support the court would award me. I was right.

In high school, I never received higher than a C in math, more often a D. I remember a high school counselor telling my Mom and me, while discussing the outcome of my STATS; whatever I decided to do in life, it should not have anything to do with math as I had no aptitude for it.

Later, when my husband started his business, I was appointed bookkeeper. I signed up for a community college class. But all the talk about Debits, Credits, and the like, sounded like a lot of to-do about something that could be done a whole lot easier. So in the end, I just did it my way and it was much easier.

But, here I was now; 38 years old, contemplating divorce, with 3 children, a home I was determined to keep and no marketable skills. Or, so I thought. Then one day I noticed a sign in the window of a professional tax office. It indicated that if you successfully completed their Income Tax course, they would hire you. A few minutes later, I had signed up and written out a check that I could ill afford. Little did I realize then that in truth, I couldn't afford NOT to take that course. By January 15th I was employed full time and loving it!

Over the next 5 years, I worked in public tax offices and in the back rooms of CPAs, where I earned a very small fraction of what was being charged to the client. I had answered a hot line where other preparers call to get answers to their tax questions and earned awards for my ability to write a significantly larger number of returns than other preparers in the office.

So what was wrong with this picture? I had proven to have a good rapport with the clients (where I was allowed to work with them), and was capable of writing over 400 tax returns in a 3 month period. So why wasn't I building my own clientele? Fear of failure, of course. A bird in the hand is worth two in the bush and all that. But.... Could I do it? Only if I took that first step.

I had learned over the years that many Internal Revenue regulations are subject to interpretation. In all the places I had worked, the emphasis was; whenever in doubt, always lean towards the IRS. But, what about the guy who had to pay perhaps more taxes than he needed to? So I decided my motto would be; "I work for you, NOT the IRS!"

After having some inexpensive business cards printed out, I handed them out to friends and neighbors. I turned a spare room into an office which cost me nothing, as I already had a desk and a file cabinet. In January, I placed a small ad in the local paper. That first year, I earned a little bit more than what I was earning when I was working for someone else, and in less than half the time! At first, strangers came to me because I was "cheaper". Then, they began sending their friends and acquaintances because they trusted me to do a good job. Word of mouth advertising is especially important in this business. Within a few years I had almost 400 clients of my own, For those first years, I didn't even own a copier, let alone a computer. The tools of my trade were a number 2 lead pencil, an eraser, a stapler, an answering machine and the latest tax charts. So when I tell you startup costs are cheap in this business, you can believe it!

Public income tax preparation is very rewarding for several reasons. But, the best reason of all for a busy Mom is; it's SEASONAL. You start in January, and it's pretty well over by April 15th. You have the summer and fall months to be with your children. Even in those first years, I earned in a season, as much as I could have working somewhere else for 6 months. Now that I have my own business, I earn more in those 3 months than I could working the entire year anyplace else. But, when it's your own business, you do have to be reasonably available for your clients throughout the year for consultation, if needed. Yet, when you work by appointment only, as I do, you can schedule clients between other events in your life, which is another real blessing for busy Moms.

The laws governing income tax preparation for a fee, if any, vary from state to state. So if interested in doing what I am doing, check out the laws in your state. And , there is no time like the present to get started!

Imagine being able to work at home only 3 months out of the year and earning a full year's income. Imagine being able to set your own days and hours you want to work. Imagine never having to worry about being laid off, or working with an objectionable boss or co-worker. This really is a wonderful business for bizy moms, and you can do it too!


Tax Preparation Business
By Carol, CPA

I needed and wanted a source of income that 1) had flexible hours so I could take care of my children instead of using babysitters or daycare 2) had all the work done in my house. Since I home school, I have to be in my home (I noticed that a lot of businesses are “home based” meaning the office is in the home, but a lot of time doing the job is out-of-home) and 3) used my skills, talents and interests. Tall order!

I had worked from home 16 hours a week as a tele-commuter. I still had to hire in-home sitters during most of my work hours because occasionally I had to go into the office. (I hired college students. They were great! Flexible schedules, respected me as older than they, dependable and the children loved them) This arrangement worked well for 3 years, then my new boss said “no more working from home, too many people want to do it”. So I quit instead of give up the flexibility I had grown to love. This experience was important because I learned how to budget my time and the children learned the office was “off limits” to them. I also learned that I could work alone. My friends came from my neighborhood and church, not the workplace.

I decided to spend a little bit of time researching work at home opportunities. I read a lot, I answered ads in business magazines looking for opportunities and I evaluated my skills (the book What Color is Your Parachute? is helpful). I knew my strengths were in math, analysis and organization but not in sales or arts and crafts. So I decided to take the H&R Block tax class. I really enjoyed the class. The challenge of seeing if I got the right answer, seeing if I understood how to fill in the forms, etc. I then worked a season for Block. This job did not fit my 3 criteria mentioned above, but I looked at the experience as “tuition”. Block did offer flexible hours, so I worked weekends and evenings. I didn’t make a lot of money, but I learned a lot! I feel that experience revealed to me that I could do this job well and even enjoy it! As an employee I took Block’s Intermediate Tax class for free and at the same time started studying to get a CPA license. I’m now a fully licensed CPA (the process took 5 years!), but since this is about Tax Preparation business, I'll skip that part of the story.

After the H&R Block experience I felt qualified to begin preparing taxes. I wanted to start small (by this time I was homeschooling and needed to keep the business small). I’d hoped for about 10 returns a year, so I had to carefully consider my advertising. I wanted cheap or free advertising. First I had a big party to celebrate passing the CPA exam, so all my friends and neighbors knew that now I was a CPA. Then I considered all the organizations I belonged to. The biggest audience was my church, but they frown on using the church directory as a mailing list, so instead I taught a Sunday School class to adults called How to Manage Your Money by Larry Burkett. I also told my pastor I would help anyone in the church who need tax advice and couldn’t afford it. Sometimes you have to offer your services free at first to build a reputation. My next step in advertising was the homeschooling organizations I belong to. They allowed free ads in their newsletter as a way to support the businesses of their members. Then I also put ads in my neighborhood newsletter (at $5/issue). My next steps include doing a postcard mailing to friends, neighbors, associates, my children’s friends and former clients. I have avoided doing newspaper ads because I want a little privacy, since I work from home.

The supplies needed to start a Tax Preparation Business are a computer and printer, tax prep software and some folders for organization. As for software, the first year I used TurboTax Home and Office (cost about $75 including the state software). This year I’m using a program that is specifically for tax preparers called TaxAct (cost $95 including state software). I registered with the IRS as a tax preparer and get their newsletter and Package X (a package of tax forms). I also buy Tax forms on CD for $26 from the IRS since it has all the publications the IRS writes. It’s VERY helpful in researching. I also took the IRS VITA (volunteer tax preparer program) class and got helpful information from them. As your practice grows you may consider belonging to a Tax Preparers organization like National Association of Tax Practitioners ( It is also important that you spend time and money keeping up with tax law changes. As a CPA I’m required to take continuing education classes. You could take a class or subscribe to a newsletter like Kiplinger’s Tax Letter (800-544-0155) or buy a book like the annual Tax Guides. You owe it to your clients to keep up to date.

As for revenue, I followed H&R Block’s pricing structure. I charge by the form starting with the 1040 for $30. Other forms are usually $5 to $10 each. Schedule C (Business) is $25 plus $25/hour for any bookkeeping needed. I also charge a $10 trip charge if the client wants to meet in their home.

I hope my story is helpful. Please e-mail me with any questions!

Carol at

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