[Michael]

I just completed my CPA exams!!!! I work in internal audit and dont really know anything about taxes besides the general information from the REG exam. Recently I had a friend who i helped with answering some questions for her tax return, gave her the advice she still couldnt figure out hwo to use the tax software and ended up going to H and R Block to have them to do it for 185 dollars!

I told her why the hell would you go to someone for that you couldve just come to me and I would’ve done it. i’m 27 and the only information for my taxes are my w2, student loan intrest and dividend interest. doing it on turbo tax takes 10 mins. So now i’ve thought about opening a small tax business and just working on small 1040 returns and charging way less then the big name companys.

Has anyone done this? Any advice or where do I even start. This wouldnt be my full time carerr just something on the side around tax season. Thank you!

REG - 63,74,70,81!!!
FAR - 44,73, 81!!!!
AUD - 51,81!
BEC - 73,77!!

3 years later and I'm officially done. Never give up no matter what!

[Anonymous]

I have been thinking the same thing.

Drake Tax software is what I hear a lot of people using.

[elprezidente07]

Just because you can do it for less doesn't mean you should. Also, “on the side” in tax season is something unheard of. Its called busy season for a reason.

All that to say, would the client who comes to you for tax return prep fee of $65 be willing to pay you a fair rate when they get an IRS notice and you have to spend 3 or 4 hours resolving it? The cost of continuing education every year?

AUD // F x2 P 92- (Test server crashed! It really does happen!)
REG // F, F, F, P - 75 Aug 2014
BEC // P - 80
FAR // F, F...now its time for my greatest trick yet.
Ethics // Very.

75 to stay alive

[Tripp11]

A friend of mine (Midwest) worked as a Controller and did tax returns on the side. He would estimate a charge anywhere between $150-$200 depending on a brief review of the prior year return. He found it enjoyable and he said he averaged about 75 returns per year in the last few years. He said his business started off small, by just helping friends and family, but referrals drove his business up.

He was also smart enough to have each client sign an “engagement letter” where he outlined the initial fee, expectations, CYA verbiage, and also that he would charge X amount per hour for any additional consultation necessary if the return was ever questioned or audited.

I believe this year he said he hired a temp to do data input on most of the returns based on hard copy tax files he set-up. He gave her a template on where certain numbers come from and where to report them. Said it lightened his burden significantly.

AUD - 93
BEC - 80
REG - 86
FAR - 83

[mady_cs]

@michael It's a legitimate question. I can't give you much advice, but what I can say is that the CPA that was doing my taxes did do it “on the side”. He was open nights and weekends after he came home from his other job. By the way he worked in the IT department for his company, so having his CPA was just a plus for him, if you will.

Wiley CPAexcel

FAR - 4/02/16
REG - 5/26/16
AUD - 66
BEC - TBD

[Missy]

Yes, plenty of people do taxes on the side, the reference to busy season above is only because that's a business trying to process as many returns as possible without having to double the staff.

My only suggestion is be honest with yourself and your potential clients. For example my brother in law is self employed and his previous tax preparer screwed up YEARS of tax returns. He came to me and offered me a decent fee to fix it for him. I'm not a tax person by trade and I know someone more tax savvy would do a better job in a fraction of the time so I declined it. Same with a friend who asked me to help with the taxes on her mother's estate, its well beyond my comfort level so I told her she would be better off elsewhere. And don't take on more clients than you can reasonably handle. Just because yours only take 10 minutes, you can't make any assumptions about anyone else's-particularly if you have to keep chasing them down for information, and you will have to do that!

But for my friends and family's personal straightforward taxes, I do them, on the weekends.

Old timer,  A71'er since 2010.

Finance manager/HR manager

 

 

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[megn]

I used Drake for about a month and switched. I hated it.

You would need a PTIN from the IRS to be able to sign returns, and you are required to sign any returns for which you've been paid a fee to prepare.

That said, it's difficult to weed out only people with “simple” returns. I can't tell you how many people I've had tell me that they only had W-2 income, and it turned out that they had more complicated things going on – side businesses (including farming), asset sales, stock transactions, etc. Most of the people that you come into contact with do not understand what “simple” means or realize how many different types of transactions have to be reported.

If you don't ask questions about other income that they may not think about and something is reported to the IRS that is not reported on the tax return, it is a matter of WHEN, not if, they will receive a notice. It goes straight to automatic underreporting. I've spent time working in tax controversy (and my fiancé is a tax attorney). Things can get very messy very quickly.

Friends and family are one thing, but getting involved with the general public is another ballgame.

FAR - 2/14/14 - 87 - CPAExcel and Wiley Test Bank
BEC - 5/2/14 - 79 - CPA Excel and Wiley Test Bank
AUD - 8/28/14 - 86 - CPA Excel, Wiley Test Bank, and Ninja Notes
REG - 1/30/25 - 86 - CPA Excel, Wiley Test Bank, and Ninja Notes

DONE!!!

[Gatorbates]

I did it. Finishing up my first “busy season”. I work full time in industry, did tax returns on nights/weekends (with a wife and two small kids). I used Drake. I didn't want to overwhelm myself the first year so I did minimal advertising. Landed about 8 clients. Made about 5k, which was totally worth it. Incorporate as an S Corp, sign up with IRS for e-filing, get your PTIN. Wasn't too difficult.

Licensed Florida CPA:
B: 71, 73, 79
A: 83
R: 78 (expired), 77
F: 74, 74, 80

It's finally freaking over.

[Anonymous]

Gatorbate…I am thinking about the same method next tax season.

May- CPA

June- Incorporate, E&O insurance

July-NOV..all kinds of tax cpe and Drake training…I already have PTIN and 2 tax seasons under belt

My question which I will probably find out (July-NOV) is why S-Crop over LLC ?

[Michael]

Thank you everyone for the respones.

I am by no means trying to start any sort of large company right off the bat my vision was to help friends and family and the lazy colllege kids or those who dont feel like figureing out how to use turbo tax and do their returns. The point about IRS follow ups and engagment letters is a great idea because you need to start covering your tracks when you do work for others. I appericate everyones advice!

REG - 63,74,70,81!!!
FAR - 44,73, 81!!!!
AUD - 51,81!
BEC - 73,77!!

3 years later and I'm officially done. Never give up no matter what!

[Anonymous]

I work in a local CPA firm full-time doing taxes, compilations, CFO services, etc. and also have my own seasonal tax prep business. This year I've had around 65 or so 1040 returns and 3 S corp returns so far, none of which have been too complex or too lengthy to complete. I've never advertised or formally offered tax prep services to the public and have received all of my work via client referrals, so my expenses are just the LLC registration, E&O insurance, tax prep software, and other general office supplies.

For software, I use TaxAct Professional as you can purchase a package with free unlimited e-filing and online backup space if you buy early enough, so it's been very cost effective for me thus far. We used Drake at my firm in 2011 and I'm personally not a fan of their software. However, I've heard some good things about their online platform, Drake Zero, and I've also received codes for free returns prepared through Intuit Tax Online as part of their ProAdvisor program, so I may look into one of those two options next year to get more of my work on the cloud.

Doing personal tax work in the late evening after doing business tax work all day through the early evening is definitely stressful when you start out, but after a few years of doing so you can find your stride more easily and determine how many personal tax clients you can take on before you get overwhelmed. My situation is probably a bit unique in that my employer is completely aware of my personal tax business and is fine with it as my personal tax clients are not the “caliber” of clients our firm generally does work for (e.g. simple W-2 returns, just a Schedule A, just a Schedule E, etc.). Actually, I've even gotten some monthly compilation work and payroll clients for my firm via my personal tax business, so both my employer and I have benefited from it.

Just keep in mind what the usual fees are for similar returns in your area as you don't want to attract too many potential clients who are just looking to price shop from year to year. Those clients are usually the ones that involve the most work and generate the least amount of return. In my area, you can go to H&R Block and have a simple W-2 return prepared for around $125, so I start my base price at $85. That still gives me a decent profit but saves clients enough to keep them coming back each year.

[Kimboroni]

All of this, one potential reason for an S corp vs an LLC is that some states won't let LLCs do CPA work. California comes to mind.

AUD 84 (1/9/14-Wiley books/TB + free materials)
FAR 83 (5/21/14-the above + NINJA 10 Pt Combo Lite)
REG 84 (7/9/14-Wiley books/TB + NINJA Audio/FC/Notes)
BEC 76 (10/5/14-Wiley books/TB + NINJA Audio/FC)

Disclaimer: My ninja avatar is not meant to imply that I have any affiliation with this site other than being a forum member. That's a pic of a T-shirt that my daughter gave me for my birthday. 🙂

[tomq04]

The starts are aligning just right for me to start my own side business doing just this next year. I'll be writing up some information how it goes probably in the fall, I want to detail what it takes to get rolling (not much), and what psychological obstacles I have had to overcome this year to get there.

REG- (1) 76
FAR- (2) 64, (5)74, (7)83 (Over achiever!)
AUD- (3) 70, (4) 75
BEC- (6) 75

[ibCPAsoon]

Have you considered being a seasonal at a CPA firm?

Will help bring in that extra income without having to worry about paying for the costs of being up to date with tax software, printing/assembling returns, any research material, etc.

Just throwing it out there!

BEC - PASS JULY 2014
FAR - PASS DEC 2014
AUD - PASS FEB 2015
REG - PASS MAY 2015

[Michael]

I have a full time job as an intenral auditor. I don't know much about a tax besides the basics so this would just be side a business on nights and weekends even if I could do 5-10 returns in a year I think would be a great start.

REG - 63,74,70,81!!!
FAR - 44,73, 81!!!!
AUD - 51,81!
BEC - 73,77!!

3 years later and I'm officially done. Never give up no matter what!

[sdguy]

I've thought about this too. What does it cost to get decent tax software? And what does everyone recommend?

AUD: 83
FAR: 77
REG: 86
BEC: 86

[Author]

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