Wednesday, July 24, 2013


In looking back at my 40+ years in the business, if I were to start all over again I think I would limit my practice to 1040s.  Period.  No 1065s.  No 1120s.  No 1041s.  Just 1040s.

I would probably have to, as I have done, also provide year-round bookkeeping and accounting services for additional income.  But I would not accept any clients that collected and remitted state and local sales tax, or any other kind of tax, and I would limit my involvement to keeping the books and preparing payroll and payroll tax returns and reports, but I would not prepare the corporate income tax returns.

If possible I think I would also try to avoid bookkeeping, accounting, and payroll.

Why?  To limit my need to keep up-to-date to 1040 issues only, and to limit my exposure to agita and liability for FUs. 

My ideal practice – for me personally – would be preparing 1040s from February to April, and writing, relaxing, and “wandering” for the rest of the year.  Hopefully the writing would provide additional income so there would be no need to take up bookkeeping, accounting, and payroll.  Other tax preparers could substitute teaching CPE for writing, or do both.  As for me, I am not a confident or experienced public speaker - so I would limit my activity to writing, which I enjoy and am good at.

Actually I enjoy bookkeeping and payroll, and always have.  But I do acknowledge the potential for agita and liability.    

Today I do not accept any more new 1040 clients, and do not accept any non-1040 clients.  But I do have some existing business clients that I really cannot “drop” due to long-time, and often personal, relationships.  So I still do prepare quarterly sales tax returns and 1120s.  I have been able to lose preparation of multiple 1120s for a business client due to a merger.  I will continue to do the year-round bookkeeping and payroll for a couple of more years, but have handed off the 1120 preparation.

When I say limit my practice to 1040s I mean just that.  One of the problems of business clients is that they come to me to prepare various non-tax related government forms, reports, and questionnaires – like business census forms and municipal rental real estate reports.  These forms all usually have a financial aspect – and I do not object to providing specific financial information available to me – but they also involve other information about which I have no personal knowledge and no interest to learn about.

This happens with 1040 clients, too.  I am often given census forms, student loan applications, property tax reimbursement applications, loan applications, utility discount applications, and the list goes on.  However I specifically state to clients in writing that I do not, and will not, prepare these forms, reports and applications.  The most I can do, I tell clients, is provide specific financial information from the completed tax return needed to answer specific questions.     
Here is what I tell my clients (in writing) -

"I prepare income tax returns.  I do not prepare mortgage or loan applications, census forms, college financial aid applications, prescription drug or utility discount program applications, Property Tax Reimbursement applications, or any other such forms.  Please do not ask me to fill out these forms!  I have no special experience, knowledge or expertise with any of these forms - I do not know any more about them than you do.  The most I can do is provide you with any needed income information from your tax return."
All these non-tax forms, for both business and individual clients, are truly a PITA.  I have no knowledge or expertise in preparing these forms and applications.  And I do not want any knowledge or expertise in preparing these forms and applications.  In the past when I have given in and filled out such forms I have merely read the instructions and followed them as best I could – the same as the client could do himself/herself.  But most of all – I just do not want to be bothered with these forms.

There are preparers out there who do solicit such forms, especially college financial aid applications, as a post-tax season sideline source of income, and do acquire knowledge and expertise in these forms.  That is fine.  It is just not for me.

So preparers who are just starting out in “the business” – maybe you want to think about limiting your business to 1040 preparation. 

What do my fellow experienced tax pros think?

PS – thanks for allowing me to “ramble”.



  1. I operate like you suggest by focusing on 1040s -- although I'll also tackle some business returns. I don't involve myself in non-tax financial forms. I'm a little different than young people just starting out because I'm comfortable with the income from a solo operation while also providing writing services, tax training, and practice consultation.

    However, someone with a tax business can only grow in prosperity by adding services and staff. Maybe bookkeeping services are a good fit (not payroll, too low margin) but it depends upon the competency of the individual and the availability of capable labor. Certainly preparation of business returns is a suitable opportunity.

    In fact, the competition for 1040s alone is fierce. Many individuals are qualified candidates for do-it-yourself on TurboTax (although not as many as think they are) or the H&R Block system for getting a low price and having the tax prep fee easily deducted from the refund on an e-filed return (although people with complex tax situations need preparers with more experience). This is a marketing issue, but it does entail consideration of the tax entrepreneur's time allocation in growing a business. I find young practitioners benefit more by adding business tax return preparation than battling for misinformed do-it-yourself 1040 clients.