What is the Downfalls of being a Tax Preparer --?

Question

do you work on the "off season" (after taxes are due)

What are the pros and cons is what I need to know.

Thanks - looking into it!!!

Answer 1

It depends on your "market."

If you do returns for the EIC crowd (low income, W-2s only), the rush is January and February.  You would expect to work 8-10 hour days 6-7 days a week or lose the business to a competitor.

If you do returns for the non-EIC wage crowd, you peak period will be February 15-April 15, then again in October (when the extensions expire).

If you do returns for small businesses, you will have due dates of 3/15 and 9/15 (soon to include 8/15 since one set of extensions is to shrink to 5 months).  You can also have work making sure their 940 and 941 returns are filed properly.  Your down time will be more likely in May, July and November.

Answer 2

1.  Crazy income stream, mostly bunched between December and April.

2.  Clients that will blame you for their tax screwups, such as the woman who quitclaimed her home to her son who then almost immediately sold it and gambled away the proceeds.  She got stuck with a heavy Gift Tax bill (it was worth well over the $1,000,000 lifetime exclusion in this case) and he got hit with a huge short-term capital gains tax as her basis was around $250k.  Neither of them had enough cash to pay the bills and they're now living hand-to-mouth in a nasty apartment and making payments to the IRS.  How this is all MY fault still escapes me -- and NO, they never paid my bill.

3.  If you specialize in corporate taxation or partnerships you can sometimes even out the income stream if your clients file on a fiscal year basis

4.  If you specialize in "problem cases" such as back taxes, Offers in Compromise, etc. you can make pretty good money on a more even basis since the IRS hits taxpayers for old debts all year long for the most part.

5.  Offering a full-service payroll service to small and medium businesses can be an excellent way to maintain a steady income stream.  Just make SURE that they ACH the payroll funds to an account that you set up and don't hand over any payroll checks or run your transfers until the funds are confirmed as available!