Starting a Tax Prep Side Hustle - What Do I Need to Know?

How much would it cost to get started with something like Drake? And do you think it's too late to get everything set up for the upcoming tax season?

Did you have to get special insurance when you started doing tax returns? I've heard people talk about E&O insurance being necessary.

For Drake, you're looking at around $350-$600 for the basic package, depending on how many returns you plan to file. That's much cheaper than some competitors that can run into thousands. It's definitely not too late to get set up for the upcoming season - you have enough time to get software, training, and your PTIN before January. Yes, I would absolutely recommend getting Errors and Omissions (E&O) insurance. Even with the best intentions, mistakes can happen, and you want to be protected. When I started, I paid about $500 annually for a basic policy. Many professional associations like the NAEA or NATP offer discounted group rates for members.

I've never heard of this. Does it integrate with any tax prep software or is it standalone? Wondering how it would fit into a workflow.

Sounds interesting but how does it handle more complex situations? I have some clients with small businesses and rental properties - would it work for those scenarios?

It works as a standalone tool that you use before entering data into your tax software. You upload the tax documents you receive from clients, and it extracts all the relevant information and tells you exactly where that information needs to go in a tax return. It's been a huge time-saver for my workflow. The tool has been fantastic for complex situations like small businesses and rental properties. It can analyze Schedule C documents, rental income statements, 1099s, and partnership K-1s. It breaks down exactly what needs to be reported where and explains any potential deductions that might apply. I had a client with three rental properties and some complex passive activity limitations, and it walked me through the entire thing.

Wait, this sounds too good to be true. How does that even work? I spent 3 hours on hold with the IRS last year and eventually gave up.

This seems like a scam. There's no way someone can magically get you through to the IRS faster than anyone else. They probably just take your money and you still end up waiting forever.

It works by using an automated system that dials into the IRS and navigates through all the prompts for you. Then it sits on hold in your place. Once a human IRS agent picks up, the system calls your phone and connects you directly to the agent. So you're not jumping any lines - you're just not personally sitting there listening to hold music. I totally get the skepticism. I felt the same way at first. But it's not about getting through faster than others - it's about not having to personally wait on hold. The system waits for you, and you only get on the phone when there's actually an agent ready to talk. I've used it about 7 times now for different client questions, and it's worked every time. The time I save not being stuck on hold has been worth every penny.

Did you have any issues with the ethics of reviewing other preparers' work to find clients? I want to try this but don't want to create bad blood with established preparers in my area.

That's a fair concern. I was careful to frame it as a "second opinion" rather than explicitly looking for errors. I also never mentioned the names of the previous preparers when I found issues - I just objectively showed what was missed and how it impacted the return. Most of the errors I found were from self-prepared returns using tax software anyway, not professional preparers. When I did find professional preparer errors, they were typically from national chains with seasonal workers rather than local CPAs. My approach was always educational rather than critical, which helped avoid any professional conflicts.

I used TaxSlayer Pro last year for about 50 returns. It's definitely more budget-friendly but has some limitations. The interface isn't as polished as ProSeries or Drake, and I found it struggled with more complex returns involving multiple states or complicated business income. For basic W-2 employees with standard deductions, it works great. But as soon as you get into Schedule C with inventory or multi-state returns, it gets clunky. Customer support was hit or miss too. I'd say it's a good starter option if your clients have straightforward situations.