Discussion:Want to get out of the Rat Race, start on my own

Can you tell me how you first started out if you were in a similar situation..leaving corporate environment to opening up your own business. Pros/Cons?

Can you make a good living just by preparing income tax returns? If not, what other types of (tax) work can you do to supplement income?

Some background about myself...I started out in Big 4 preparing individual returns and now I'm in the private sector working in the corporate tax area. Individual returns are more interesting to me than large corporate returns. Also I get more satisfaction with working on 1040's since I get to help people and not companies.

Thanks!

Being a good business owner is not the same as being a good tax professional.

Hint for success: what income will you have when it's not tax season? Better have a plan.

Just had that flatly refused. Wanted it all upfront. With no guarantee or adjustment for customers who leave

I wouldn't have sold this way either. I used PAS when I sold my practice in Georgia and got 80% up front, and the other 20% over 3 years. It was worth the 10% brokerage fee. The buyer got an SBA loan (helped by my broker at PAS). 4ever, you can check out practices for sale at his website: CPASALES.COM

(although not all buyers and not all sellers are CPAs)

In purchasing a practice, you also have to look at what services the selling practice offers - if you're not into write-up or audits, don't purchase a practice heavy into these. You won't be happy doing work you hate (or can't do), and you will overpay unless you price based only on retained clients.

It's really working for me because I have time to prepare, study, review, and re-review the returns, so I know that they are accurate. My clients love the attention that they are getting (probably it's not going to last forever, if I get really busy).

I did so much better the second year because of the referrals and because I now I know what marketing works and what doesn't.

I was hoping that if I start something on my own--a busy season will generate an income similar to what I am bringing in currently at my day job. During off season I would be a stay-at-home mom =) But after researching, I feel that I would need to provide other tax services (small business) in order to supplement income. Which I don't mind either.

Lalva--I looked into tax franchises but you pay so much in royalties! Can you tell me how you got started (did you incorp, how you got your customers, etc)? I dont mind starting small that way I can test it out before quitting my day job.

Thanks!

Then on Feb 23, 1991, while doing a tax return of a client from Yonkers at 8:30 pm on a Saturday night, we heard fire sirens. A guard told us to get out of the building. 8 floors of the 31 sotry building next door burned; three firemen were killed and we could not get back into our office for 5 days, and had to vacate, working first in the Bellevue Stratford Hotel and then in temporary space the landlord found us.

So if we could survive that, and my partner's later discovery that she had MS and had to retire, I think you can do it.....develop a client base working for others and they will follow you.

I left my day job after 19 years; it took that long to get the confidence to get out on my own. I left to be home more with my kids, tax seasons were killers. I've only been out on my own for a year, but it's great. I haven't advertised yet, so far it's word of mouth.I sent letters to friends with business cards saying I'm on my own now. My firm has given me the smaller returns they don't want and I get referrals. So far the income isn't as much as the day job, but I expected that. The additional costs are high, such as paying for your own CE, license renewal and research materials. But the costs are worth it to be working from home with my own hours. I have heard, and really hope it's true :-), that you double your client base the next tax season. Also, this site has been a great help. Good luck.

I didn't explained myself well. I worked for a franchise for two years just to gain experience, I didn't buy one, and I don't recommend that you do that. Then I started from scratch, since I signed up a two year non-compete clause with my employer, so I didn't take any of my very happy clients. I work from home, so my start up costs are not too high, just a laptop, printer, software (Pro-Series), and others. I e-mailed a flyer to all my friends saying that I started my own tax business and I gain a few new clients, then those clients are referring others and, like I said my practice grew 100% the second year. The only marketing that I am doing now is Craigslist.org. The first year I paid to be in some internet search list, and I didn't get any clients from them, also I am paying big bucks (at least I think that's a lot) to be in the yellow pages book. That's going to go too, since it's not working either. My recommendation is that you should start part time before leaving your job, or if you can take your clients with you, just keep your overhead low and grow from there. Good luck!

You will be swamped by people wanting you to advertise with them. Be selective. Start with the very minimum and have a system for monitoring the return. I only advertised one year. Didn't get enough business to pay for the ad and none of the clients came back the second year.

You may be able to work out an arrangement with your present employer to do sub-contract work for them. Also talk with other CPA's; they're usually looking for help. Don't wait until January to make these contacts though. As you know, during tax season they're too busy to think about it.

I only receive clients in my house if they are my friends, for security reasons, and also because my citi doen't let me do it.

DZCPA--I like your suggestion. The reason why I am hesitant about quitting my day job is b/c I make a decent salary (IMO) for what I do. I will probably try home-based for the upcoming busy season and if it works out, then work the 1 or 2 part time jobs. BL/Lalva--That is actually my concern about starting home-based...I really don't want to have strangers coming over to the house and at the same time, I don't want to go to their houses either. This will be a problem 4 me...=(

Another question...if I start preparing returns at home, is it necessary to form a separate entity?

You don't say what state you're in. The tax structure of your state needs to be taken into account. That said - GENERALLY I suggest being a sole-P for the first year. This will reduce your paperwork and costs. After you start making money, you can go to an LLC or Corp if that's appropriate. I do suggest opening another checking account. This will help you keep track of your income and expenses.

Your local Chamber of Commerce probably has some "starting a new business" info. Get it. You'll need to find out about the local regulations regarding home based businesses and occupational licenses. Also contact your insurance company about liability insurance. Your homeowners policy won't cover this. Talk with your agent about what happens if a client comes to your house and slips on your front porch (may not be covered).

2) If you do complex tax returns, instead of just easy tax returns, you will have plenty of work after tax season preparing returns that you had to file extensions for. I do just as many tax returns July to Oct 15th as I do Jan to Apr 15th and make just as much money during that time.

The skills you possess as a tax professional are usually easy to transfer to other areas.