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Tax Season

Hello,

I decided this year that i want to prepare 1040 returns, and i just wondering if anyone would be kind enough to answer some questions i have about preparing. They are are as followed:

1) Do i need to come up with a business name if i am the only who will be preparing taxes? If so does it matter what name i use for my business
2) Aside from the PTIN what else would i need to begin preparing returns?
3) What is the best software to use for a beginner like myself
4) Where would i find an organizer that i could to supply my clients?
5) If i already prepare taxes for a firm that i work at am i still able to prepare returns on my behalf?

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4 answers


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Luis’s Answer

Hi Arturo,

I am an Corporate Accountant with 15 plus years experience. So I will answer your questions in the same order.

1. No you don't need a business name or not even TIN # you are able to use your name and social security number. Is best if you have a separate TIN number you because you want to have your personal tax apart from any business matters. In fact you can have a separate Tax ID even without a Business name. You can verified this information on the IRS webpage under the different business entities.
2. So you need to be certified by the IRS as preparer and they will give you preparer number. Please visit the IRS website and follow the instructions there in how to become a preparer.
3. Any website that is free and the IRS recognizes or recommends, I myself I used different websites and do different scenarios for my customer prior to submit the returns.
4. Dont quite understand the question.
5. Yes.
Again all the information you need is available to you in the IRS website.

Best of luck!

Luis

Hello Luis, That you for that helpful insight with my question. By any chance do you have to have the link so i can read the information. Also for question number four. Allow to rephrase the question i do apology if its confusing. The question is as followed: 4) A tax organizer ( a packet that contains information, and questions so that the client knows what documents to provide to me for preparing their) where would find one that i can use to supply to my clients. Thank you for answering my questions Arturo G.

I only have one question you mention about using free software to complete returns. However wouldn't that only allow to just complete one return. I am just confused on how i could a free software to complete all the returns i plan to file. Arturo G.

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Wantao’s Answer

Hi Arturo,

I am a CPA at PwC. I am more than happy to answer your questions .

1. No, you don't need to create a business and registering a business name. You can simply use the PTIN number.
2. PTIN number is the only thing you need.
3. There are a lot paid and free tax software, such as Turbo tax, HR block, TaxSlayer. Try to google some software.
4. Try to look at your State CPA organization.
5. Yes, you can.

Wish you the best!

Wantao

Thank for the advice Arturo G.

I only have one question for the answer you left about using software that is free. Wouldn't that only allow me to do one return? How would i use the same software for completing all the returns i plan to file. Thank you Arturo G.

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Hassan’s Answer

Hi Arturo

I'm not a tax preparer nor accountant. I would consult with a Tax Lawyer to understand the risks and potential liabilities if you file tax returns on your own.

You would need to check your agreement and terms with the Tax Prep firm you plan to work for to see if they'll allow you to prepare returns on your own time.

https://www.cpapracticeadvisor.com/tax-compliance/article/21140085/2020-review-of-professional-tax-preparation-systems has a list of software for Pros. I would suspect that those will be pretty expensive.

I'd be very careful about preparing returns on you own computer. I suspect you will be liable for any data breaches and have certain requirements to store and retain confidential client data. I assume that the above tax programs handle that for you and that's part of why they're expensive.

Hassan recommends the following next steps:

https://www.microsoft.com/en-us/microsoft-365/business-insights-ideas/resources/how-to-become-a-tax-preparer
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Mark’s Answer

Hi Arturo,

As a CPA and a former owner of a small tax preparation company I am happy to answer your questions:

1. You are not required to have a special business name in order to open a tax practice. Having a PTIN would be sufficient
2. A PTIN is all that is needed to start the practice, however if you believe this practice will be longer term you may want to consider incorporating, because there is a liabilities associated on the tax preparer
3. Utilizing a tax software such as UltraTax is one of the most user friendly software to use for starting a business. TurboTax while easy to use for personal taxes, is very difficult to utilize for operating a tax practice
4. Organizations like the AICPA have organizers available to use for tax practices however requires a membership to obtain
5. Yes

Wish you the best of luck in your practice!

Mark

Mark recommends the following next steps:

Consider certifications that will allow you to speak to the IRS on behalf of your future customers such as a CPA, or Enrolled Agent
Incorporating can assist in limiting your personal liabilities that can exists
Consider joining an local Chamber of Commerce can assist in helping to pull in new clientele
As mentioned earlier joining your State CPA board will help you build a network of professionals that you can use to bounce questions off
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