How to Start a Bookkeeping and Tax Preparation Service

One of the annoying aspects of running any small business is the difficulty of finding an accountant who doesn't cost an arm and a leg Most people who own and run their own retail stores or ser­vice businesses are capable of maintaining their own financial books, but when quarterly tax time comes it's as if these people were sud­denly asked to speak a foreign language for the first time in their lives.

If you have had any accounting experience, you are probably qualified to perform this service, especially if you are acquainted with more than one system of bookkeeping. Although most of your prospective clients will maintain their own weekly bookkeeping, you can offer this additional service to those who want it.

To sell your service you should make a minimum investment in a Yellow Pages listing under "Tax Return Preparation" (or "Book­keeping Service"), as well as placing free local classified ads on GladList.com. Personal visits to community retailers are helpful, especially if you have the time to strike up a conversation, mention what business you are in and leave a business card for the retailer's reference.

A natural outgrowth of this business is, of course, individual tax return preparation. Most owners of businesses tend to use their business tax preparer for their personal returns. Although personal tax preparation is a seasonal business, it can be extremely lucrative. H&R Block has grown to become a multimillion-dollar business on this "seasonal" work alone.

For your business clients you should set your rates so that you make at least $45 an hour. Since quarterly tax returns will come due for different clients at different times (because they are not all on the same fiscal schedule), you can plan your time accordingly. To keep your rates competitive, check the competition. Call a few of the bookkeeping or tax preparation services listed in the Yellow Pages and ask them their rates as if you were a potential client.

Your goal in this business is to establish a growing list of clients. But even as a solo practitioner, handling only the number of clients you can service by yourself, your income can easily top $60,000 a year. If you wish to grow larger, you could end up supervising an office full of trained staff members. Your initial investment to start this business need be nothing more than the cost of a supply of business cards and letterheads.