At the start of any venture, the first step is always research. Conducting due diligence and grasping the full scale of the risk, as well as the potential reward, is crucial to making sound business and investment decisions. As an accountant, tax professional, or even a bookkeeper, it may be time to start looking at ways to elevate your career. Starting a virtual tax practice is a path full of potential, involving very little risk.
A New Chapter
Many professionals decide to begin their virtual tax practice on a part time basis. This is to say, some are more comfortable working a full-time 9-5 while running their virtual tax practice in their spare time. Others still, simply choose to only run a virtual tax practice part time - without relying on any other means of income.
The options for serious professionals looking to elevate their career in the tax world are absolutely abundant. Certain tax licensing companies say that the owner of a virtual tax practice working only part time during peak tax-season, can prepare the taxes for 100 entities. On average, tax prep professionals charge about $300/return.
Reaching an Annual Income In a 4-Month Span
In other words, a part time tax prep professional partnered with Jumping Jax can profit $30,000+ in a 4 month time span. For a comparatively low start-up cost, and some of the easiest marketing opportunities available, opening a virtual tax practice has never been easier. Considering the $300 profit/return is an average, and some tax-prep professionals charge much higher fees depending on their target markets, the volume of opportunity really starts to become clear.
Believe it or not, starting a virtual tax practice doesn’t take that much. For instance, someone without any financial background or tax prep experience can have the tools they need to build a successful virtual tax practice within a few months.
In fact, starting a virtual tax practice is an extremely cost effective investment. One tax-prep professional posted a graphic that details the start-up costs, and projects anywhere from about $2k to $3.5k. That’s for an individual getting started nearly completely on their own. Though this budget does include $1,000 for coaching and mentoring - which at this point, is a standard cost as the pathway to a successful virtual tax practice has already very much been paved.
On the other side of the market, there are licensing-options. These will be explored in depth later, but the difference in start-up cost is noteworthy. Licensing fees from a company like Jumping Jax Taxes cost $5,000 upfront, and $2,500 annually afterward.
Understanding the difference in start up cost can lead to a more informed decision. An individual’s current position could also be a determinant in ultimately deciding.
Getting Off The Ground With Friends and Family
Once the start up costs have been handled the real work begins. The first few months of the virtual tax practice will be about getting some ‘wins’ from a business perspective. In other words, reaching out to coworkers, friends, and family members, to offer tax services of the brand new virtual practice.
In the beginning of any venture entrepreneurs should look to leverage their sphere of influence. This is the bubble of people most immediately influenced by any individual. As referenced above, this often includes family members, friends, and coworkers. Other examples might include organizational members, community members, and neighbors.
While the first few months will be important to getting comfortable with running a virtual tax practice, and acquiring the first few clients, it is also important to think about establishing long-term goals and expectations. There’s nothing wrong with offering promotional pricing out of the gate, especially to those closest, but it’s important to think about how consumers will react to something like a change in pricing from the first year to the second year.
Although this can often happen, it is important to be honest and open with customers that the initial pricing of tax prep services may differ in the future, especially as the practice becomes established, and the promotional rates end. Not only this, but narrowing services to a niche market, which are covered next, can drive up the price of tax prep services.
So, after bagging a few victories from the business perspective, and getting the name of the new practice out to the immediate community, it’s time to really dial in on what differentiates this practice, from others. Hence, choosing a niche market.
Choosing a Niche Market
Niche markets are powerful in business industries across the marketplace. These are sub-markets that are composed of a much smaller demographic grouping. With today’s technology the smallest target-market can be whittled down to a single person.
Niche Market Examples
To start out, however, a virtual tax-practice can choose a much broader niche market. Some examples of niche markets specific to the tax prep marketplace are: real-estate investors, small-business owners, restaurant owners, night-club owners, and there are many others.
Real estate investors are a specifically affluent niche-market which generally means that higher tax-prep fees can be charged. This also comes with experience, and market-industry knowledge. The more expertise you have in any one niche-market, the higher tax-prep fees you can charge.
Benefits of Choosing a Niche Market (or two)
Choosing a niche market is a vital aspect to achieving high levels of success. In choosing a niche market, or two, for the virtual tax-practice to focus on, operations can be optimized to serve those markets specifically. Furthermore, this leads to better and more successful marketing efforts, higher rates of customer loyalty, and stronger customer referrals.
Customer referrals remain today as one of the most powerful marketing tactics that exist. Gaining a strong reputation among a specific niche-market or group of professionals is an extremely strong tactic that drives a slew of positive business metrics.
Establishing a Community Presence
One of the other benefits to choosing niche markets is the ability to establish a community-presence. Having a presence in any specific community is a proven method of generating more personal referrals and word-of-mouth traffic. This can also translate to online communities, and niche-markets that have online communities.
Having an established presence within a niche market can create a robust presence that is both tangible in the physical community, as well as virtual in both the remote nature of the practice, as well as existing in niche market communities online and across social media platforms.
Successful Marketing Tips
After choosing a niche market or two, there are some general rules to marketing that will convert clicks into leads, and leads into customers. In marketing, there’s an important balance to strike between both following the trends of the time, and being unique and different. However, the most vital aspect in marketing is offering a direct solution to the consumers needs.
Need Based Service
Tax-prep services are an absolute necessity for nearly 70% of the national population. This immediately makes opening a virtual tax prep office a strong investment opportunity because it is a need-based industry.
Depending on the niche market, some marketing tactics will need to be adjusted and varied, however the goal should always be to peak interest with the potential client, and get them to engage with you. Posing a question that’s unrelated to the actual service, but is related to the end result of the service can be a good way to hook interest.
Leveraging Social Media
No matter the target markets or target demographics, social media plays a massive and significant role in a comprehensive and successful marketing strategy. The most powerful social media platforms to leverage would be Facebook, LinkedIn, Instagram, and Twitter. The best thing about social media marketing is that it’s free. There are, of course, paid ads, however, even those are relatively inexpensive and can be very effective.
Combining unique and interesting content that engages the target customer with both paid, and free social media marketing campaigns can lead to an outstanding increase in customer conversions.
Benefits of Starting A Virtual Tax Practice
There’s a wide spectrum of benefits to starting a virtual tax practice. Ranging from financial freedom and independence to offering a practical avenue to prosperity during the international pandemic. Not only this, but as mentioned earlier, tax prep services are a real need in every community.
Being able to build a need-based business that offers real value to the client can lead to endless opportunity. In fact, after achieving a certain level of success, there’s no reason not to hire additional employees to take on the additional bandwidth. This type of growth can compound on itself, allowing the original owner of the virtual tax practice an abundance of opportunities.
Owners of virtual tax practices can use the additional income to expand into additional markets, or pursue life-long dreams. After achieving financial freedom through a virtual tax practice, it becomes much easier to invest in real estate, start-up companies, or other avenues of passive income.
One additional, and significant, benefit to opening a virtual tax practice and establishing financial independence, is the ability to create generational wealth and generational success. Putting one’s family in a position to not only succeed in the current day, but also successful in generations to come.
No matter if you’re brand new to tax prep services, or a seasoned accountant with years of experience, taking the leap of opening your own virtual tax practice can elevate your career to the next degree.
Wrapping Up - A Step by Step Summary
Opening a virtual tax practice could be the perfect next step in your career. To conclude, here is a step-by-step list of actionable items that summarize the contents of this guide.
Educate, Equip, and Coaching
With certainty, the first step to opening a virtual tax practice is to get the required education. After properly certifying, and ensuring you’ve acquired the proper software, and technology to run your virtual tax office, it’s also a good time to find a coach.
There is an abundance of resources available, and choosing a coach is a good way to ensure you’re following the right steps. This is a very established path, and it’s much easier to walk with the guidance of someone who has already been where you are now.
Once certified, equipped, and coached, it’s time to incorporate. Even as a single-person LLC, it’s suggested that you incorporate to sever any personal liability between you and your tax practice. This ensures that your personal assets are protected.
Win The First Season
Now it’s time to win those first few clients. As discussed above, the first clients will often stem from an individual’s sphere of influence. More simply, the people most immediate to an individual. This includes friends and family, and anyone that can be considered personally close.
As a needs-based-business, winning these first few clients can be specifically easy, especially when paired with promotional pricing, or other launch specials.
Choose Niche Markets
With a few wins and a strong first-season under your belt, it’s time to narrow your focus and really define the markets you want to serve as a tax-prep professional.
Choosing a niche market or two can greatly benefit your tax prep company, define service price-points for your demographic, and even generate stronger marketing tactics more specific to your target market.
Invest in Marketing
Now that you’ve defined your niche markets, it’s time to really begin marketing. This includes using social media as a free marketing tool, but also springing for paid ads on social media when necessary.
Word-of-mouth within an industry is also a specifically strong marketing technique. There is no real one-size-fits-all marketing technique, but understanding your niche market will certainly drive successful marketing campaigns, making marketing investments worth their while.
Finally comes the reap of the rewards stage. After growing your virtual tax-practice to the level you’re comfortable with, you can begin looking at alternative financial goals. Life-long dreams, and even diversifying your own financial portfolio.
Whatever your dream may be, bring it to reality through starting a virtual tax practice.
Get Started Opening A Virtual Tax Practice Today
There’s nothing quite as exciting as taking the first step toward a new venture. In opening a virtual tax practice, there will be plenty of work, however, with that work comes plenty of opportunity as well.
Every virtual tax practice, no matter how it’s started, can benefit from the technology and software that Refundo offers. This includes a tax-software product suite boasting powerful audit-protection programs, prep-fee collection software, and even tax-refund advances.
Embracing tax-software technology can massively increase efficiency, lead to overall operational savings, and a significant growth to the book of business. This growth is coupled with an increase in customer loyalty and customer retention.
The software Refundo offers is some of the most sophisticated and best designed tax-prep software available. Get in touch with Refundo today to discuss the needs of your virtual tax prep firm.