Tax Preparation Business in Orange County

Doing Taxes for profit. Photo credit D Shaw

This is a bifurcated industry.  We can divide it into the retail business and the expert business.


Let us know if you have found any good books on this subject.  We are still working on this article.

Feb 2013  A court has ruled that the IRS does not have the authority to regulate tax preparers based on competency, but they still can require tax preparers to register.  Article on their website .

Tax prep software

These seem to be the two most used software




Basic Tax Prep Education National Association of Tax Preparation Professionals.  They have on-line training and training seminars in San Diego and Santa Ana.  The basic course costs about $180.


H&R Block and Jackson Hewett also offer classes.  Usually they are a few months before Tax Day.  They are geared toward getting people to work on a temporary basis in their tax centers, and that’s not a bad way to get into the business.  You learn their system so next year you can decide whether or not to start your own tax business.  These classes usually run one to two weeks.

Income Tax Fundamentals 2011 (with H&R BLOCK At Home(TM) Tax Preparation Software CD-ROM) National Association of Tax Professionals.  They offer seminars and continuing education classes.

Retail Tax Preparation Business


This might be changed because of the court ruling.  See above for more info.

Surprisingly there does not appear to be a statutory requirement for an educational background, experience, or credentials to help people do their taxes.  You will be classified as an un-enrolled agent, and cannot represent your clients before the IRS.  The IRS is increasing the minimum standards.  You will have to:


You need to rent retail space so that your customers can find you.  It is best to rent in a busy shopping center with a lot of customers.  A more affluent area might not be better.  With the retail business, you are helping those who need their money NOW and want you to file electronically because they don’t have access to a computer.  And you will be helping out those who may not feel they have a literary level necessary to complete the tax forms themselves.  Surprisingly, a lot of people in Orange County have limited literacy because they did not finish high school or came from a different country and are not fluent in English.  (According to an LA Times article, the drop out rate is over 1/3 in public schools in the county to the north.)  Or, they may know how to speak Spanish but the forms intimidate them.  Remember that tax returns to lower income households can be large because they can “get back” more money than they put in.


Another reason people get their taxes prepared is because they can get their refund money the same day.  With electronic filing, the IRS says it can get money to people in around eight days.  Many of the tax preparation chains offer refund loans.  People are willing to pay a percentage of their check to get the money as soon as possible.  (Some of these people go on to pay another percentage of their refund to have their check cashed because they don’t have a bank account.  One of the reasons the Treasury Department has started issuing debit cards is to help these people out.)


We could ballpark the set up costs for this type of business at around $15,000.  It all depends on the lease you are able to get.  Most landlords don’t want to rent for a couple of months, but you don’t want to be stuck paying for expensive retail space for 9 months.  And retail spaces seem to start at around 1,000 sq feet.  That’s much more than you need.  One thing to consider is sub-leasing from a business in a retail center.  Check out Clist for these opportunities or approach related businesses.

Expert Tax Preparation

Tax prep for businesses and wealthy individuals can get very complicated.  These people spend weeks gathering up their records and adding things up before they head off to their tax prep person.  They just don’t have the time to do it themselves, and while a computer program like Turbo-Tax can fill out the return, at some level there are judgments to be made and they need to develop a tax strategy.


One example of people who use professional tax services are landlords—the cheapest people around.  Why do they see a pro, when they could get the forms on-line (or at the library for a minority of them that are too cheep to pay for a computer)?  –Because things get complicated.  For instance you have spent money improving your building.  Is that a repair, or an improvement?  If it is an improvement, how many years do you have to depreciate it and what type of depreciation schedule do you use?  How do you write off the travel expenses to your building? …


Even owners of a small business need professional help.  Just look at the Schedule C workbook.  There are so many deductions, but do you qualify?  What about accelerated depreciation?  How much can you put into your retirement plan?


To get into this business, you will need to have some credentials.  You will want to be in an office environment.  You will want to keep the office year round so your clients can find you, and may want to do some sort of related business during the rest of the year such as book keeping or payroll.  In theory you could work out of your home, but this may not seem professional enough to your potential clients.  You do not need to be in retail space or have someone dress up like a clown because your clients will not be walking off the street.


There are two types of credentialed professionals that are perceived as qualified to help with these uber-complex returns: CPA’s (Certified Public Accounts) and EA’s (Enrolled Agents)  CPAs EAs and Attorneys  have the right to represent clients (tax payers) before the IRS.


To get a CPA you need an undergraduate degree in accounting, and pass an exam.  It’s not easy.


To become an Enrolled Agent (EA) you have to have qualified experience working as an employee with the IRS or pass a written test.,,id=100710,00.html


They check your background.  If you have been evading your taxes, you will be disqualified.  Once you qualify, it takes about 120 days to become enrolled.  The test is currently administered by a private company that has contracted with the IRS.  Information about the test is here: The IRS Publication 1796 goes over the material on the test.  It is in DVD format and you can order it from the federal government book store here:  It is not an easy study at home course.


San Diego State University offers a nine unit (?3 classes?) of graduate level courses in their Executive Education Program that will help you master the EA material.  Click here .  They don’t have much about it on their website.  They also offer a 30 unit MS degree in Financial and Tax Planning.