Do you want to start tax preparation business plan?

Executive Summary 

Company Summary 

Services for customers 

Marketing Analysis of Tax Preparation Business


Personnel plan

Financial Plan

Do you want to start tax preparation business plan?

Do you really want to start a business with a little or no tension of managing your employees with literally no startup investment and no restriction of working hours? Well, you might be wondering whether such sort of business exists.

If you really have some knowledge of accountancy or if you have done some tax-related course, then starting a tax prep business will surely meet all the requirements of your dream business. You can start this business only by preparing taxes yourself or by renting a small office, hiring some staff for you.

Whether you are starting on a small scale or a large scale to get high paying clients, the first step will always be to prepare an effective business plan. To help you in making an effective business plan covering all the details, we are providing here sample business plan of a tax preparation startup named, ‘ConsulTax.

Executive Summary

2.1 The Business

ConsulTax will be a registered and licensed tax preparation service, owned by George Brad. The office building will be located in Madison, Wisconsin, USA. Business will be based upon preparing taxes such as federal and state tax, income tax, self-employment or any other tax for households as well as business owners.

2.2 Management

Before you start a tax preparation business, you must decide on which scale are you going to extend your startup. If you are starting on a large scale, you will need a strong management system with a detailed management plan else you can go through with a simple one.

As of George, although he is starting on a small scale, yet he has prepared a complete management plan for his business for the sake of completeness.

2.3 Customers

When you are doing so many efforts to start a tax business successfully, then why ignore the important fact of exploring about your customers. You must remember you will be working with multiple customers of different temperaments at the same time, so try to understand the demands they can have with a tax preparer.

Our customers will mostly be the owners of small businesses, head of small institutes, property owners, earning members of a household etc.

2.4 Business Target

Our target is to balance the initial cost of the startup with earned profits within a year of the launch. We aim at earning a net profit margin of $10k per month by the end of the first year.

Tax Preparation Business Plan 1

Company Summary

3.1 Company Owner

ConsulTax will be owned by George Brad, a business graduate from the University of Illinois. To be a professional tax preparer, George has taken the training from Accreditation Council for Accountancy and Taxation (ACAT), has got himself registered with Internal Revenue Service (IRS) after clearing their course, and finally obtained his Preparer Tax Identification Number to enter the field with a proper professional background.

3.2 Why the Business is being started

Millions of people have to pay a tax every year as the per policy of their country which is being changed by higher office holders continuously. Large companies and notable landlords usually afford a full-time accountant whereas, small business holders and mediocre seek the services of tax preparers to do all the confusing stuff for them. Considering this demand, freedom with respect to time and his marketing skills, George is starting a tax preparation business in his city.

3.3 How the Business will be started

ConsulTax will be a small tax preparation business, operating from a small office. George has decided to hire just two tax professionals, and other staff to help him starting a tax business.

The startup summary is as follows:

Tax Preparation Business Plan 3

The detailed startup requirements are given below:

Start-up Expenses 
Research and Development$32,750
Expensed Equipment$32,750
Start-up Assets$0
Cash Required$332,500
Start-up Inventory$32,625
Other Current Assets$232,500
Long-term Assets$235,000
Total Requirements$245,000
Start-up Expenses to Fund$11,875
Start-up Assets to Fund$15,000
Non-cash Assets from Start-up$18,750
Cash Requirements from Start-up$0
Additional Cash Raised$18,750
Cash Balance on Starting Date$21,875
Liabilities and Capital$0
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
Planned Investment$0
Investor 1$332,500
Investor 2$0
Additional Investment Requirement$0
Loss at Start-up (Start-up Expenses)$313,125
Total Funding$255,000

Services for customers

Before thinking about how to start a tax preparation business, you must decide what you will offer your customers. This preplanning and knowledge about what you have to do and what level of client’s satisfaction you will have to meet will make you more observant about your business and targets.

While creating your tax preparation business plan, you must include the detail about how you will be able to provide the optimal and efficient services to meet all the client’s satisfaction and needs. If you want to have an idea which services are provided by others in the market, you can take help from this sample business plan for the tax preparation startup, ConsulTax.

The services offered by ConsulTax are:

  • Income Tax Preparation
  • Income Tax Return Preparation
  • Standard Tax Preparation
  • Capital Gains Tax Preparation
  • Other financial consulting and advisory services

The services will be increased after we have established ourselves as a successful business. We want to become the number one choice for our fellow citizens, that’s why we are preparing for our services before time to ensure and guarantee the quality of our services.

Marketing Analysis of Tax Preparation Business

After you have decided the services you will provide to your customers, the next step is to make marketing plan for tax preparation business. Marketing analysis is extremely important because it gives you an idea of your position in the market.

The marketing plan includes exploring what is going on in the market, who will be your customers and competitors. While preparing your tax services business plan, tax preparation marketing should be considered seriously, especially if you are working alone. You will need a strong marketing plan to market your services and get introduced to as many people as possible. Otherwise, you can sort out other advertisement techniques by reading tax preparation advertising samples available on the web. Another way of getting more and more ideas about business plan preparation service is to observe what others with the same or nearly same business are doing to market them.

We are also providing the sample business plan for tax preparation service of ConsulTax for your help.

5.1 Market Trends

There are several small businesses running in the United States which cannot afford a full-time tax consultant or accountant but need the assistance of a professional tax preparer almost every time they need to pay their taxes. Millions of people have to pay a tax every year as the per policy of their country which is being changed by higher office holders continuously. A person who is indulged in the day to day tasks always needs assistance with doing that tedious task, so the demand of this business is really high.

According to a report by U.S. Bureau of Labor Statistics, there were more than 90 thousand jobs for the tax preparers in the country in 2014. The value has increased by a significant amount in 2018. According to IBISWorld, there are about 118,890 registered and licensed Tax Preparation firms running in the United States of America alone. More than 292 thousand have got their employment through this business, generating a revenue of $10 billion annually. Moreover, the business is forecasted to increase by the rate of 4.5% annually. These stats show that you will not be at loss, provided that you plan your business successfully.

5.2 Marketing Segmentation

It is very important to analyze the market segmentation of the future customers of your services before developing your business plan. Our experts have identified the following type of target audience which can become our future consumers:

Tax Preparation Business Plan 5

The detailed marketing segmentation of our target audience is as follows:

5.2.1 Corporate Sector: The biggest consumer of our services will be the corporate sector in Madison, who needs a lot of documentation and following of policies while preparing for their different types of taxes. During the initial stages of our business, we will mainly focus on the small companies to get us introduced to big dealers with much experience.

5.2.2 Earning Members: Our second target group comprises of the workers servicing in Madison, we will do the work of tax preparations for them to save them from the trouble of doing things by themselves about which they know nothing.

5.2.3 Property Owners: Our third target group consists of small and large property owners in Madison. We will advertise our services to get work offers from property owners for tax preparation.

The detailed market analysis of our potential customers is given in the following table:

Market Analysis
Potential CustomersGrowthYear 1Year 2Year 3Year 4Year 5CAGR
Property Owners32%11,43313,34416,55318,74520,54513.43%
Corporate Sector48%22,33432,34443,66552,54466,43210.00%
Earning Members20%12,86714,43315,99917,56519,13115.32%

Business Target

Our target is to balance the startup cost of our business with the earned profits within a year of the launch and; to earn the profit margin of $10k per month by the end of the first year.

5.4 Product Pricing

At the very initial stage of your business, product pricing must be decided by analyzing both the market demands and the position of your competitors. After great research and interpretation, George has decided to keep the prices of his services initially low as to get introduced to a wider scale of customers and building long-lasting relations with them.


Sales strategy must be developed and properly written in your tax preparer business plan as it is the stepwise guide for you to enhance and extend your business to approach your business target. It consists of an effective advertisement plan and a competitive approach which you can better understand from this sample tax preparation business plan.

6.1 Competitive Analysis

There are a lot of tax preparation businesses running all around here. However, we are passionate that with our unparalleled and exceptionally good service, we will soon be able to make our place in the market. To get introduced to our customers and to interact with more and more people we have decided to keep our prices low at the initial stages of the startup.

6.2 Sales Strategy

To introduce ourselves to the target market, we have come up with the following ideas of advertisement,

  • We will distribute our brochures to our neighboring facilities and expected customers
  • We will put our ads in newspapers and magazines
  • We will start our campaign through social media sites
  • We will be giving a 20 % discount on the second offering by the same client

6.3 Sales Monthly

Tax Preparation Business Plan 7

6.4 Sales Yearly

Tax Preparation Business Plan 9

6.5 Sales Forecast

Tax Preparation Business Plan 11

Sales Forecast   
Unit SalesYear 1Year 2Year 3
Income/ Standard Tax Preparation1,887,0302,680,3202,588,240
Income Tax Return Preparation802,370815,430823,540
Capital Gains Tax Preparation539,3207702301,002,310
Consulting/ Advisory Services265,450322,390393,320
TOTAL UNIT SALES3,494,1704,588,3704,807,410
Unit PricesYear 1Year 2Year 3
Income/ Standard Tax Preparation$140.00$150.00$160.00
Income Tax Return Preparation$600.00$800.00$1,000.00
Capital Gains Tax Preparation$700.00$800.00$900.00
Consulting/ Advisory Services$650.00$750.00$850.00
Income/ Standard Tax Preparation$2,149,800$2,784,000$3,383,200
Income Tax Return Preparation$120,050$194,500$268,500
Capital Gains Tax Preparation$50,110$71,600$93,000
Consulting/ Advisory Services$139,350$194,600$249,850
Direct Unit CostsYear 1Year 2Year 3
Income/ Standard Tax Preparation$0.70$0.80$0.90
Income Tax Return Preparation$0.40$0.45$0.50
Capital Gains Tax Preparation$0.30$0.35$0.40
Consulting/ Advisory Services$3.00$3.50$4.00
Direct Cost of Sales
Income/ Standard Tax Preparation$989,300$1,839,000$2,679,700
Income Tax Return Preparation$66,600$119,900$173,200
Capital Gains Tax Preparation$17,900$35,000$52,100
Consulting/ Advisory Services$19,400$67,600$115,800
Subtotal Direct Cost of Sales$1,294,100$1,699,400$2,104,700


Personnel plan

Here comes the most influencing and effective step from one of the steps to starting a tax business and that is your required staff.

George has developed the following personnel plan for his company.

7.1 Company Staff

George himself will handle the management tasks and will initially hire the following people:

  • 1 Accountant to maintain records
  • 2 Tax Preparers to help him in tax related services
  • 1 Assistant to assist in day to day work
  • 1 Front Desk Officer to receive calls, and attend customers
  • 2 Drivers for quick transport when needed while preparing taxes

7.2 Average Salary of Employees

 Personnel Plan   
Year 1Year 2Year 3
Tax Preparers$145,000$152,000$159,000
Front Desk Officer$42,000$45,000$48,000
Total Salaries$317,000$340,000$363,000


Financial Plan

If you are going to start tax preparer business, you might be wondering that what do i need to start a tax preparation business? It is luckily the business with the lowest startup costs and can be run successfully by a small team. But it doesn’t matter whether you are starting your business on a large scale, hiring too many people, investing too much on the advertisement, or on a small scale, you will need to prepare a financial plan. A financial plan maps the company’s expenses with the earnings and answers the questions like how the startup costs will be balanced, how the company will be able to meet its financial targets.

If you too are wondering how to start a tax service business, just be systematic and organized to cover all the steps successful people usually take. First prepare your business plan, like the one of ConsulTax that we have shown you here. Focus on your advertising strategy as well as a detailed financial plan to help you through the startup phase.

Now, we are providing the financial plan of ConsulTax which was made by George himself, we are showing just a rough estimation but still, you can have a lot from it.

8.1 Important Assumptions

 General Assumptions   
Year 1Year 2Year 3
Plan Month123
Current Interest Rate10.00%11.00%12.00%
Long-term Interest Rate10.00%10.00%10.00%
Tax Rate26.42%27.76%28.12%


8.2 Brake-even Analysis

Tax Preparation Business Plan 13

 Brake-Even Analysis 
Monthly Units Break-even5530
Monthly Revenue Break-even$159,740
Average Per-Unit Revenue$260.87
Average Per-Unit Variable Cost$0.89
Estimated Monthly Fixed Cost$196,410


8.3 Projected Profit and Loss

 Pro Forma Profit And Loss   
Year 1Year 2Year 3
Direct Cost of Sales$15,100$19,153$23,206
TOTAL COST OF SALES$15,100 $19,153 $23,206
Gross Margin$293,969$366,781$439,593
Gross Margin %94.98%94.72%94.46%
Sales and Marketing and Other Expenses$1,850$2,000$2,150
Leased Equipment$0$0$0
Payroll Taxes$34,510$40,726$46,942
Total Operating Expenses$188,766$220,744$252,722
Profit Before Interest and Taxes$105,205$146,040$186,875
Interest Expense$0$0$0
Taxes Incurred$26,838$37,315$47,792
Net Profit$78,367$108,725$139,083
Net Profit/Sales30.00%39.32%48.64%

8.3.1 Profit Monthly

Tax Preparation Business Plan 15

8.3.2 Profit Yearly

Tax Preparation Business Plan 17

8.3.3 Gross Margin Monthly

Tax Preparation Business Plan 19

8.3.4 Gross Margin Yearly

Tax Preparation Business Plan 21

8.4 Projected Cash Flow

Tax Preparation Business Plan 23

 Pro Forma Cash Flow   
Cash ReceivedYear 1Year 2Year 3
Cash from Operations
Cash Sales$40,124$45,046$50,068
Cash from Receivables$7,023$8,610$9,297
SUBTOTAL CASH FROM OPERATIONS$47,143 $53,651 $59,359
Additional Cash Received
Sales Tax, VAT, HST/GST Received$0$0$0
New Current Borrowing$0$0$0
New Other Liabilities (interest-free)$0$0$0
New Long-term Liabilities$0$0$0
Sales of Other Current Assets$0$0$0
Sales of Long-term Assets$0$0$0
New Investment Received$0$0$0
SUBTOTAL CASH RECEIVED$47,143 $53,651 $55,359
ExpendituresYear 1Year 2Year 3
Expenditures from Operations
Cash Spending$21,647$24,204$26,951
Bill Payments$13,539$15,385$170,631
SUBTOTAL SPENT ON OPERATIONS$35,296 $39,549 $43,582
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out$0$0$0
Principal Repayment of Current Borrowing$0$0$0
Other Liabilities Principal Repayment$0$0$0
Long-term Liabilities Principal Repayment$0$0$0
Purchase Other Current Assets$0$0$0
Purchase Long-term Assets$0$0$0
SUBTOTAL CASH SPENT$35,296 $35,489 $43,882
Net Cash Flow$11,551$13,167$15,683
Cash Balance$21,823$22,381$28,239

8.5 Projected Balance Sheet

 Pro Forma Balance Sheet   
AssetsYear 1Year 2Year 3
Current Assets
Accounts Receivable$12,613$14,493$16,373
Other Current Assets$1,000$1,000$1,000
TOTAL CURRENT ASSETS$201,259 $237,468 $273,677
Long-term Assets
Long-term Assets$10,000$10,000$10,000
Accumulated Depreciation$12,420$14,490$16,560
TOTAL ASSETS$198,839 $232,978 $267,117
Liabilities and CapitalYear 1Year 2Year 3
Current Liabilities
Accounts Payable$9,482$10,792$12,102
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
Long-term Liabilities$0$0$0
TOTAL LIABILITIES$9,482 $10,792 $12,102
Paid-in Capital$30,000$30,000$30,000
Retained Earnings$48,651$72,636$96,621
TOTAL CAPITAL$189,360 $222,190 $255,020
TOTAL LIABILITIES AND CAPITAL$198,839 $232,978 $267,117
Net Worth$182,060$226,240$270,420


8.6 Business Ratios

 Ratio Analysis    
Year 1Year 2Year 3Industry Profile
Sales Growth4.35%30.82%63.29%4.00%
Percent of Total Assets4.35%4.71%5.80% 9.80%
Accounts Receivable5.61%4.71%3.81%9.70%
Other Current Assets1.75%2.02%2.29%27.40%
Total Current Assets138.53%150.99%163.45%54.60%
Long-term Assets-9.47%-21.01%-32.55%58.40%
TOTAL ASSETS100.00%100.00%100.00%100.00%
Current Liabilities4.68%3.04%2.76%27.30%
Long-term Liabilities0.00%0.00%0.00%25.80%
Total Liabilities4.68%3.04%2.76%54.10%
NET WORTH99.32%101.04%102.76%44.90%
Percent of Sales
Gross Margin94.18%93.85%93.52%0.00%
Selling, General & Administrative Expenses74.29%71.83%69.37%65.20%
Advertising Expenses2.06%1.11%0.28%1.40%
Profit Before Interest and Taxes26.47%29.30%32.13%2.86%
Main Ratios
Total Debt to Total Assets2.68%1.04%0.76%67.10%
Pre-tax Return on Net Worth66.83%71.26%75.69%4.40%
Pre-tax Return on Assets64.88%69.75%74.62%9.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin19.20%21.16%23.12%N.A.
Return on Equity47.79%50.53%53.27%N.A.
Activity Ratios
Accounts Receivable Turnover4.564.564.56N.A.
Collection Days9299106N.A.
Inventory Turnover19.722.5525.4N.A.
Accounts Payable Turnover14.1714.6715.17N.A.
Payment Days272727N.A.
Total Asset Turnover1.841.551.26N.A.
Debt Ratios
Debt to Net Worth0-0.02-0.04N.A.
Current Liab. to Liab.111N.A.
Liquidity Ratios
Net Working Capital$120,943$140,664$160,385N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales0.450.480.51N.A.
Current Debt/Total Assets4%3%2%N.A.
Acid Test23.6627.0130.36N.A.
Sales/Net Worth1.681.290.9N.A.
Dividend Payout000N.A.


Download Sample From Here