I've been MIA for quite a while, showing up a little here and there, however, it's been b/c I've almost been ashamed to show my face considering I had high hopes after quitting the slowlane job back in Feb to have a decent eCommerce business up by now. I figured that time was my biggest enemy, when in reality it was excuses and fear. Despite having the tools I felt I need(30DC knowledge, MS proficiency, WWB membership, Chris Malta mentorship, these forums, etc) I found every excuse why any of the products I felt were "niche" just weren't niche enough or wouldn't have high enough margins and ultimately gave up on that route for the foreseeable future as it was a "Tekel Syndrome" getting in the way of my true passion- tax preparation business!!!
I've wanted to get into this business for a few years, but have been stuck in Chicago for various reasons(house, wedding, etc) and have finally made the move to AZ to live and work with my dad. As far as preparation, I attended the IRS Tax Seminar in late Aug in Vegas and just completed the H&R Block Intro To Taxes Course, which has been pretty comprehensive and impressive for an intro course.
For this tax season I'll technically be an "apprentice" with my dad, a CPA/EA with over 35yrs experience who is stuck in a S/E situation(S- has a side business with about 100 clients, E- works for a "friend" and has about 1500 clients, I thought he'd be a partner, but he's just an employee there). To say that the office he works at now is Hell would be an understatement, the owners are an old friend of his and his wife, the husband works 80+ hr weeks during the tax season and the wife is the "boss" who has turned a kitchen table business into a $600k+/yr business(about $300k is profit), however they treat my dad and all their employees like garbage and we were ready to start our own business this year, but fell behind and felt it would be best for my wife and I to experience a tax season before going off on our own.
As far as how this fits in to the teachings from the book....
CENTS analysis:
Need:
Short answer: EVERYONE needs their taxes done.
The more relevant answer- in their location in Avondale, there are about 6 tax offices within 1/4 mile of their office: The Big 3(Jackson-Hewitt, H&R Block, Liberty Tax), 2 "fly by night" offices and 1 professional CPA office. Despite this, the office my dad works at still services about 4500-5000 clients during the tax season. So there is a need, not to mention new IRS laws, namely those affecting Rapid Refund Loans, will hurt the fly by night businesses and even the established franchises who have come to depend on these clients for the last few years.
Entry:
Prior to taking the H&R Block course, I figured to be a paid preparer I'd need to either be a) an hourly employee at HRB making $8.50/hr + commission... but not able to start my own practice w/o professional designations(i.e. CPA), b) get an accounting degree, get a CPA.
Well I found out that prior to the '10 Tax Season(starting this Jan) that ANYONE could prepare taxes, CPA or not and to combat this the IRS is finally requiring ALL paid preparers to register for a PTIN number(+$64.50 annual fee) in addition, anyone who doesn't already have a PTIN(I do) and is not either an enrolled agent(EA), CPA or licensed attorney, will have to take a competency exam to get their PTIN.... therefore the fly by nights will disappear and the "entry" to this business will be more difficult, not that there weren't thousands of college educated individuals like myself that didn't already have a self-imposed barrier to entry in believing you need an accounting degree AND a CPA to prepare taxes.
To top it off, I will be preparing for my Enrolled Agent exam following this tax season, if you don't know what an EA is, it's the complete tax pro, while most people think of a CPA when it comes to taxes, the truth is that only a small portion of the CPA exam covers taxes and to top it off a CPA is not required to take any further tax courses as part of their Continuing Professional Education(CPE), while an EA is solely focused on taxes and can also represent clients in front of the IRS in tax court.
Control:
The first tax season as an employee there will be no control, however, we do have the "S" business on the side that we control and next tax season it will be our business to build from the ground up. As such we need to be discreet about building our side business as they have accepted the current business knowing that they have been able to control and use my dad the last few years assuming he'd never have the balls or know-how to do a full-scale business on his own.
While the idea of buying out the current business is a possibility, there is plenty of homework that needs to be done, not to mention my dad has been lucky enough to have never signed a non-compete contract, so all 1500 of his current clients are fair game in addition to the rest of the West Valley market that we will target through building a website, effective internet marketing as well as good ol' word of mouth.
Scale:
See above. The Phoenix Metropolitan area is one of the top 10 largest metro areas in the country and the West Valley area is still growing, however as a one-location business at the moment our scale will be limited which is why it will be essential to plan out building a franchise and/or a content system(selling info to an unlimited market instead of services to a limited market)
Time:
See above. Starting out this will be slowlane, however, a 3month/yr(mid-Jan to mid-Apr) business is not entirely slowlane, the fact that it is predicated on the "hours for dollars" method is. There is a dire need for a better tax franchise considering that anyone off the streets can work at Jackson-Hewitt or Liberty Tax and while HRB is more professional, there is still a need for a higher level franchise that employs only EA's. In addition, the price gouging of most "professional" CPA firms who usually just farm their work out to interns or low level employees and charge for their "signature" on the tax return as opposed to their professional work(my dad has seen countless examples of this- charge $1500 for a tax return that looks like a high school kid did it). Finally, tax advice is very valuable and lead generation is not out of the question if we want to focus on directly servicing only our area while providing value to other tax professionals throughout the country in getting them clients.
I've wanted to get into this business for a few years, but have been stuck in Chicago for various reasons(house, wedding, etc) and have finally made the move to AZ to live and work with my dad. As far as preparation, I attended the IRS Tax Seminar in late Aug in Vegas and just completed the H&R Block Intro To Taxes Course, which has been pretty comprehensive and impressive for an intro course.
For this tax season I'll technically be an "apprentice" with my dad, a CPA/EA with over 35yrs experience who is stuck in a S/E situation(S- has a side business with about 100 clients, E- works for a "friend" and has about 1500 clients, I thought he'd be a partner, but he's just an employee there). To say that the office he works at now is Hell would be an understatement, the owners are an old friend of his and his wife, the husband works 80+ hr weeks during the tax season and the wife is the "boss" who has turned a kitchen table business into a $600k+/yr business(about $300k is profit), however they treat my dad and all their employees like garbage and we were ready to start our own business this year, but fell behind and felt it would be best for my wife and I to experience a tax season before going off on our own.
As far as how this fits in to the teachings from the book....
CENTS analysis:
Need:
Short answer: EVERYONE needs their taxes done.
The more relevant answer- in their location in Avondale, there are about 6 tax offices within 1/4 mile of their office: The Big 3(Jackson-Hewitt, H&R Block, Liberty Tax), 2 "fly by night" offices and 1 professional CPA office. Despite this, the office my dad works at still services about 4500-5000 clients during the tax season. So there is a need, not to mention new IRS laws, namely those affecting Rapid Refund Loans, will hurt the fly by night businesses and even the established franchises who have come to depend on these clients for the last few years.
Entry:
Prior to taking the H&R Block course, I figured to be a paid preparer I'd need to either be a) an hourly employee at HRB making $8.50/hr + commission... but not able to start my own practice w/o professional designations(i.e. CPA), b) get an accounting degree, get a CPA.
Well I found out that prior to the '10 Tax Season(starting this Jan) that ANYONE could prepare taxes, CPA or not and to combat this the IRS is finally requiring ALL paid preparers to register for a PTIN number(+$64.50 annual fee) in addition, anyone who doesn't already have a PTIN(I do) and is not either an enrolled agent(EA), CPA or licensed attorney, will have to take a competency exam to get their PTIN.... therefore the fly by nights will disappear and the "entry" to this business will be more difficult, not that there weren't thousands of college educated individuals like myself that didn't already have a self-imposed barrier to entry in believing you need an accounting degree AND a CPA to prepare taxes.
To top it off, I will be preparing for my Enrolled Agent exam following this tax season, if you don't know what an EA is, it's the complete tax pro, while most people think of a CPA when it comes to taxes, the truth is that only a small portion of the CPA exam covers taxes and to top it off a CPA is not required to take any further tax courses as part of their Continuing Professional Education(CPE), while an EA is solely focused on taxes and can also represent clients in front of the IRS in tax court.
Control:
The first tax season as an employee there will be no control, however, we do have the "S" business on the side that we control and next tax season it will be our business to build from the ground up. As such we need to be discreet about building our side business as they have accepted the current business knowing that they have been able to control and use my dad the last few years assuming he'd never have the balls or know-how to do a full-scale business on his own.
While the idea of buying out the current business is a possibility, there is plenty of homework that needs to be done, not to mention my dad has been lucky enough to have never signed a non-compete contract, so all 1500 of his current clients are fair game in addition to the rest of the West Valley market that we will target through building a website, effective internet marketing as well as good ol' word of mouth.
Scale:
See above. The Phoenix Metropolitan area is one of the top 10 largest metro areas in the country and the West Valley area is still growing, however as a one-location business at the moment our scale will be limited which is why it will be essential to plan out building a franchise and/or a content system(selling info to an unlimited market instead of services to a limited market)
Time:
See above. Starting out this will be slowlane, however, a 3month/yr(mid-Jan to mid-Apr) business is not entirely slowlane, the fact that it is predicated on the "hours for dollars" method is. There is a dire need for a better tax franchise considering that anyone off the streets can work at Jackson-Hewitt or Liberty Tax and while HRB is more professional, there is still a need for a higher level franchise that employs only EA's. In addition, the price gouging of most "professional" CPA firms who usually just farm their work out to interns or low level employees and charge for their "signature" on the tax return as opposed to their professional work(my dad has seen countless examples of this- charge $1500 for a tax return that looks like a high school kid did it). Finally, tax advice is very valuable and lead generation is not out of the question if we want to focus on directly servicing only our area while providing value to other tax professionals throughout the country in getting them clients.
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