Is it worth it to offer S Corp tax preparation as a tax professional?

Short answer, yes. Honest answer, it depends. 

It should be no surprise that offering higher-level skilled tax preparation work brings in higher dollar figure invoices.  Whether you are charging by hour or by form, these corporate tax filings require a level of expertise that can take years to cultivate. Some of the possible considerations when making this decision would be the software program, knowledge gaps, additional services, and additional liability. 

Professional tax programs necessary to complete higher level tax returns usually come with an increased tax software cost. Additionally, the increased software capability means increased software education, but it’s not just the software knowledge needed to complete the tax filings. Anyone can plug numbers onto lines in a tax program. A tax office offering corporate tax filings will need to have knowledgeable tax preparers, ready to navigate whatever obstacles these cases may bring to the table. 

A professional tax preparer or owner of a tax preparation business will need to expand their tax knowledge and learn to do S Corporation tax returns.  When offering the preparation of S Corporation tax filings, they will likely encounter messy books, messy statements, accounting documents that do not match prior year tax filings or worse. The tax preparer may find that they are spending billable time clarifying and reconstructing business data. This is an absolute need. Many, if not most, S Corps will not be able to give the tax preparer perfect books for a perfectly matching tax filing that also perfectly matches the prior year’s filing. This can be very time consuming work. On top of that, tax law changes so regularly that tax preparers need to stay on top of current business tax law updates.

Having a background in accounting or bookkeeping would be beneficial when there is a need to help with a client who has poorly kept or no books whatsoever.  Offering additional services such as payroll services, accounting, tax planning and strategy will bring in additional revenue and will add value to current clients while attracting new ones with a wide array of relevant services. 

Along with offering S Corporation tax filing services comes additional liability.  All tax preparation businesses should have Errors & Omissions liability insurance (E&O insurance). The IRS issues steep penalties when deadlines are missed.  These penalties can be levied monthly and on each owner so if this happens it is a big problem that can cost both the tax preparer and the business owners.  Mistakes in work of this sort can cause very large problems, problems big enough to get a small tax office sued which is another reason to carry E&O insurance. 

While offering higher-level services does absolutely increase your revenue, it also comes with some pretty serious requirements and liabilities. If a tax preparer is not ready for the increased financial cost of software, increased time cost of educational requirements or the additional liabilities that come with higher-skilled tax filings, it may not be wise to offer such services. These are offerings that require dedication to excellence. Anything less can result in self-wrought problems.