Supplemental Income for Business Professionals: Become a Tax Preparer
Even business professionals can find themselves on the wrong side of debt or just constantly short of cash. It’s the main reason people start side hustles. You bring in some extra income that can help you pay down debt or shore up that savings account.
One potentially profitable choice for business professionals is becoming a tax preparer. Odds are good that you have some background in business math and feel comfortable crunching numbers, a key skill for tax preparers.
If you’re thinking of starting a side hustle and think tax prep is right for you, keep reading for our guide on how to become a tax preparer.
The good news here is that you don’t need a degree in accounting to operate as a tax preparer. On the other hand, you don’t want to go into the job completely cold either. Tax preparation classes are likely your best option.
You can find these kinds of courses online and some even offer advanced certifications, which can help you land a part-time job or launch your own tax prep business.
Preparer Tax Identification Number
If you get paid for preparing someone’s taxes, you need a PTIN from the IRS. Getting a PTIN is fairly straightforward. You apply for it on the IRS website or by mail. The application will ask for some basic information, such as:
- Social security number
- Your tax return from last year
- Felony conviction explanations (if applicable)
There is also an annual fee.
Electronic Filing Identification Number
You’ll also want an EFIN, which lets you submit taxes directly through the IRS e-file system. Getting an EFIN is a more complicated process. Among other things, they’ll run a background check and credit check on you. So, if your finances are in a terrible state, you may want to hold off on the EFIN for a while.
As with the PTIN, you apply for the EFIN on the IRS website, where you can find a complete breakdown of their requirements.
Check Up on Your State’s Requirements
Several states impose requirements on professional tax preparers who are not CPAs. Some states require that you register with the state. There are state exams in some states.
You may also need evidence of a tax preparation course. Your state may also impose continuing education requirements, such as courses offered by the IRS, for you to keep working as a tax preparer.
Business Professionals and the Tax Prep Side Hustle
Many business professionals like the tax preparation side hustle because it’s a seasonal side hustle. Tax season ramps up early in the year and winds down in April. That lets you plan around those few months as your busiest time of year.
Business professionals also like it because there is a fairly low bar to entry for the job. You take a tax preparation course, get your PTIN, and you’re good to go in most states.
Looking for more ways you boost your income or manage your finances better? Check out the posts in our Finance and Business sections.