Tax Preparation for Small Businesses: A Comprehensive Guide for Accountants

Experienced tax professionals understand that preparing a tax return for small businesses entails much more than number crunching. Taxation for small businesses is an ever-changing landscape where evolving regulations keep you on your toes. It’s a complex field, which is why we’ve created this guide to help see you through. 

Understanding the Average Cost of Tax Preparation for Small Businesses 

Understandably, small business owners want to know the average cost of their tax preparation. The truth, however, is that it varies. The cost of tax preparation depends on multiple factors, and many are hard to predict in advance. 

The structure of the business itself, as well as its customary practices, plays a significant role. Companies operating in more than one jurisdiction or whose records include a wide assortment of transaction types have more complex taxes, which requires more time to prepare. Some businesses or industries even have their unique filing requirements. Home-based businesses in California, for example, have specific sales tax obligations compared to other businesses in their area. You’ll need to know these requirements before you can file taxes effectively. 

Managing Client Expectations

Be transparent in your first meeting with a small business client. If you see potential hurdles or distinct challenges in their setup, give them a heads-up before it becomes a problem later. Instead of emphasizing the affordability of your services — which could raise questions if you underprice yourself — highlight the value of what you offer. Remind clients of the headache (and time) they could save by hiring a trained tax preparation service. 

It helps to find out what other business tax preparation services charge their clients. The idea is to gain insight into the local tax preparation market so you don’t over- or undercharge. Remember tax preparation services charge based on their experience, qualifications, credentials and complexity of the services. 

Never sell yourself short. If you wish to offer greater affordability, consider doing it as part of an overall service package that balances price with quality for select clients. It helps to cultivate more loyal and long-lasting client relationships as well. For example, you can bundle your service to include books cleanup, tax preparation as well as tax planning services for a lump sum price. 

Small Business Tax Preparation Checklist for Accountants 

Having an accessible tax preparation checklist is a best practice for accountants. It provides a readily available reference guide to prevent confusion at the start of the process. You can also include tips or valuable lessons learned from past experiences as part of the checklist.

Here are the top suggestions you can follow to create a tax preparation checklist swiftly:

Understand the Tax Requirements for Every Business

Businesses with different legal structures have different tax preparation needs. Sole proprietorships are not corporations and can’t be treated as such. 

No matter the classification, research each business’ tax preparation requirements at the local and state levels. You’ll need this information before you can start working. 

Gather the Necessary Financial Documents

It’s time to start collecting the required documents. You’ll need the business to provide a complete record of its payroll — every 1099, W-2, and any other form they’ve sent out related to income. They also need to provide receipts of their expenses and bank statements for the previous year so  you can make an accurate accounting of their legitimate expenses and tax incentives. 

Follow Tax Deadlines

Be mindful of important tax deadlines. The deadline for a specific business will often depend on its structure — S corporations must file by March 15, for instance, but that’s not true for everybody. Your checklist should include all this information for each structure type to avoid unnecessary late filing penalties for your clients. 

Avoid Common Tax Preparation Pitfalls

Finding inconsistencies before you file with a local or state agency can save time down the road.

The Internal Revenue Service (IRS) says simple math mistakes are the most common pitfall in tax preparation. Other serious mistakes include: 

• Providing inaccurate social security numbers
• Inaccurately writing bank account numbers
• Assuming a mistaken due date

However, failing to take advantage of all available deductions and credits is also a significant mistake to avoid. Without carefully reviewing the data, you could end up forgoing a more advantageous tax filing status. 

How to Prepare Taxes for Small Businesses

Choosing the right tax form for your small business clients is crucial. It ensures your client only pays taxes they are responsible for. No one wants to overpay or  incur a penalty from the IRS. Exceptional tax preparation begins with the correct form. 

Get your clients involved in the decision-making progress. After all, it’s about their financial health and they deserve to have a say in the forms you use. This can also help you create customized tax solutions for each of your client’s businesses, which might save them money in the long run. 

Some small businesses can take advantage of tax deductions for their inventory, startup costs, and other liabilities. You need to develop a solid understanding of these to avoid unnecessary charges. Thoroughly review the client’s records to determine their eligibility for specific credits. 

Don’t wait for tax season to make these decisions with your clients. Optimizing a client’s credits and deductions becomes more challenging the closer you are to the filing deadline. Familiarize yourself with their business well before tax season to offer proactive advice year round — not just at the last minute. 

Introduce clients to electronic filing for small businesses. E-filing is a way to process tax returns more efficiently and reduce the odds of calculation errors (since the computer will check for you). Unlike a paper tax return, the IRS will confirm receipt of the client’s e-filing instantly, which may give clients peace of mind. 

You can help clients by: 

• Exploring options for tax preparation software 
• Configuring the software for their own business
• Showing them how to e-file correctly

It’s your responsibility to stay current with the recent tax regulations in your area. Continuing education and regularly attending workshops for tax professionals would be a great idea. It can keep you at the top of your game and ready to give clients the best possible service. 

Tax Preparation Software for Small Businesses

Tax preparation software is more convenient for small businesses than filing manual, paper-based returns. It’s readily accessible from almost anywhere and offers an easy-to-navigate interface. For the tax preparer, software streamlines the data-entry process and weighty calculations. 

Tax preparation platforms will allow you to share your online workspace with clients in real time using cloud-based solutions. Most will also have built-in security to help protect data from prying eyes. Sharing makes it simple to exchange vital documents and make fast adjustments. 

Some of the most popular tax preparation platforms include: 

• TurboTax
• TaxSlayer
• H&R Block 
• TaxAct 

Knowing how to choose the best tax preparation and accounting software for small businesses can be tricky. This is why it’s so essential to cultivate an ongoing professional relationship with your clients — you’ll get to know their businesses better and can provide individualized advice.

Some tax preparation platforms are more complicated than others. TurboTax has an intuitive user interface designed for both experienced professionals and new users. This level of accessibility can make it a more approachable (and affordable) option for small- and medium-sized businesses. TurboTax’s data security features also help protect sensitive financial data from potential threats while using the internet. 

If you’re using a tax preparation platform for the first time, seeking professional assistance is probably a good idea. Many companies offer training programs for using their software, which are held either in-person or online. Do this well before tax season to prepare timely. 

Strategies for Attracting Small Business Clients to Your Tax Preparation Business

Getting new clients for your tax preparation business is a matter of skilled marketing and making the most of your existing talents. 

Like any business, you need a thoughtful sales funnel to nurture leads and bring them gradually to your door. Know your audience — small business owners concerned about their tax situation — and arrange your messaging accordingly. 

Ask yourself these questions: 

• “Who is my ideal customer?” 
• “What industries do they work in?” 
• “What kinds of businesses do they operate?” 
• “What tax preparation services are they most likely to need?” 

Begin with customer research, market analysis, and a detailed marketing plan. Survey your ideal customers to understand difficulties they’re facing right now. Once you know their pain points, you can develop a marketing plan for addressing them. That can mean: 

• Building an online presence on multiple marketing channels to reach a larger audience
• Networking with other tax professionals in your area to send referrals your way
• Creating educational content about taxation or tax preparation aimed at interesting potential clients in your service (known as content marketing)
• Using promotional offers to drive additional business in your direction
• Speaking to organizations or businesses that have monthly meetings such as realtors.
• Offer free phone calls for initial questions and meetings. For example, you see a post on a social media site asking a simple question. Send the person your contact information and provide a time to talk. 
• Offer discounts for referrals.

Creating a strong online presence also means embracing search engine optimization (SEO) and building authority. As you develop your presence on major social media platforms, such as Facebook or LinkedIn, you can generate “buzz” about your tax preparation business via excellent content marketing and advertising. The more people like, share, and otherwise engage with your content, the more your rankings on search engines could improve. This is how you establish yourself as a known small business tax preparation expert in your service area. 

In addition, you can attend large business events that your clients are likely to be interested in. The idea isn’t so much to pitch potential clients right away but build relationships for future business growth. You want to establish a reputation for being a skilled and friendly tax professional, someone who knows small business tax preparation inside and out. 

Increasing your visibility with your potential clientele could significantly enhance their likelihood of contracting your services. 

Other Career Opportunities for Tax Accountants and CPA

Striking out on your own in the tax preparation business is a tall order. It requires a significant upfront investment of time and money; having enough capital available to make it through the initial setup phase isn’t easy.

Before embarking on such a task, consider getting your feet wet first as a remote tax preparer. It will allow you to experience some of the independence and autonomy of a small business owner without accepting a major burden. You can gain experience in the field while working flexible hours and continuing to learn more about the profession. There won’t be administrative overhead weighing you down, either. 

Work as a Virtual Tax Preparer With Intuit

Intuit provides unique training opportunities and a stable income so you can serve clients without the burdens of handling your own tax preparation business. 

If you’d like more information about Intuit’s remote tax preparation career options, simply visit us to explore the possibilities. 

Apply for Business Tax Jobs at Intuit 

Business Tax Expert, Non-Credentialed (Remote/Seasonal)

• 3 or more years of recent experience preparing federal and state business tax returns (1065, 1120 and/or 1120-S) for at least 20 clients/customers per season for compensation, using commercial tax preparation software.
• Minimum of 3 seasons of paid personal Tax Preparation experience, with a minimum of 30 tax returns per tax year required, in a tax practice or retail setting.
• Bookkeeping experience, including books to tax preparation, strongly preferred.
• Experience preparing Business Tax returns for service industry customers strongly preferred.
• Must possess or be able to obtain any related State licenses, certificates, permits, or bonds.
• Must possess an active Preparer Tax Identification Number (PTIN).

Business Tax Expert, Credentialed (Remote/Seasonal)

• Must possess an active unrestricted credential: EA (Enrolled Agent), CPA (Certified Public Accountant), or Practicing Attorney.
• 3 or more years of recent experience preparing federal and state business tax returns (1065, 1120 and/or 1120-S) for at least 20 clients/customers per season for compensation, using commercial tax preparation software.
• Minimum of 3 seasons of paid personal Tax Preparation experience, with a minimum of 30 tax returns per tax year required, in a tax practice or retail setting.
• Bookkeeping experience, including books to tax preparation, strongly preferred.
• Experience preparing Business Tax returns for service industry customers strongly preferred.
• Must possess or be able to obtain any related State licenses, certificates, permits, or bonds.
• Must possess an active Preparer Tax Identification Number (PTIN).