Independent tax preparer?

Question

Can one take the tax prep classes from H&R Block or Jackson Hewitt and, instead of working for them preparing returns, start up a tax prep business of their own? Is there a commitment to these companies when you sign up for their prep classes?

Answer 1

I know of a couple who together took the HRB class and opened an independent tax prep business. They had no previous experience in the tax field and didn't do too badly as far as preparing returns correctly.  They did make some mistakes that they fixed on amended returns when the customers called them a few weeks later. They did this for free since it was their own mistakes.

As far as customers, well that's where they had the biggest problem. They didn't even get 100 customers this first year.  So paying rent really hurts.  But when I talk to them they seem to be really positive about it and want to keep at it until they are successful.

You may want to get some experience first. But if they can do it, I dont see why you can't.

Answer 2

Yes you can take one of there classes and go out on your own.  The only two states that require any type of license are California and Oregon.  But you would not have the experience to do a wide range of returns after only taking the basic class which I have taught for years.  Working in an office with the back up of experienced prepares is invaluable.  I would never recommend any one to go on there own without a couple of years experience.  

Answer 3

I am kind of surprised to see that six people have answered this already but none had answered it correctly.

As of two years ago, H&R Block started requiring people to sign a form on the first day of class that stated that they are not taking the class with the intention of competing in the tax business against Block.  So, no you cannot legally take Block's class in your case.

Jackson Hewitt's class is a joke and not worth going near.

What everybody else said is very true.  You will not be qualified to start doing taxes alone for the public with just one class.  I have been doing taxes for decades and I don't know that I would be ready to.

Answer 4

At the very least, you need to realize that some states license tax preparers.  You need to find out if your state does.

Personally, I would never want to be a Lone Ranger tax preparer.  Nor would I want to go to someone who was a sole proprietor.  You wouldn't be able to handle every kind of tax return that came in the door (though you might think you could) and you certainly wouldn't have anyone else to bounce ideas off of.  Worse, you won't have any experience yet with the downside of a bad tax return so that you can avoid contributing to them.    

While HRB advertises its classes as a possible way to get hired with them, the offers for interviews and placement are limited to the individuals who excel in the class.  The type of individual they are looking for is someone who already had a tax-orientation before they walked into the class.

The HRB class is a good introduction to tax basics--the course I saw was better than the class I took in college.  However, the course is the equivalent of 3 semester hours.  That is 45 hours spent in class, asking questions and testing.  Yes, attendees are expected to read and study on their own and not rely on what is covered in class, but there simply isn't enough time to cover everything, let alone in depth.

In contrast, the IRS will hire phone assistors and spend weeks going over every word of publication 501 (filing status and exemptions) and then have the employees only answer questions on those 26 pages of information for the rest of the filing season.  Those employees are drilled on picking up on inconsistent information and asking detailed questions.  After the filing season, many do account calls and see the damage done when someone claims  a "nephew" or "stepchild" for EIC purposes, then loses on an audit and is forced to pay the money back.  Many preparers do not practice due diligence and verify that the nephew is the child of the taxpayer's brother/sister or that a taxpayer was ever married.

Answer 5

Cannot answer your question, but would like to ask one of you:

Are you prepared to pay for the necessary malpractice liability insurance to keep you from losing your shirt if you make a mistake?

uu

Answer 6

Technically no. H&R is not in the business of educating independent tax preparers. If you tell them you do not want to work for them they wont sign you up. If you take their class you are guaranteed an interview but not guaranteed a job. You can take the class but dont tell them you have no intention of applying. Each year you have to take continuing education units. I dont think that liability is very much. H&R Block pays for your liability and you can take all the ceu you can manage for $20 per year.

Answer 7

Here is a link to some classes you can take.  The link comes with no recomendations, positive or negative about them.  

California requires you take a 60 hour course approved the the California Tax Education Council before being licensed in the state.

Answer 8

  There is really no commitment required to take these classes, but you may want to work for a tax prep firm for a season or two before starting out on your own.   There's a lot involved in this business, besides tax expertise, and the H&R Block classes only give you the basics at that.  There's a lot of competition in this field, also.  Look how many questions on this site get answered by several people within a couple of minutes.  

Answer 9

Sure you can strike out on your own.  If you decide to go to work for block or one of the other big preparers but if you do you will have to sign a non-compete agreement that basically says that you won't prepare retrains for anyone else.  A better option would be to go to work for another independent tax preparer and don't sign a non-compete agreement.  What ever you do, don't tell your prospective employer that you want to strike out on your own.

Other posters are right there is more to the business than knowing how to prepare taxes.  I wouldn't let not knowing a lot about advanced subjects.  If you know pubs 501 and 596 well you will avoid the vast majority of problems, Other than that you need to know how to research your subject.