You will want to check with your local governmental agency to see if you need to obtain an small business license before operating this type of home business.

If you are interested in the world of income taxes, take a tax class.  Several tax companies offer tax preparation courses for the individual that wants a better understanding of the system.  These classes teach you how to prepare tax forms and how to interpret tax laws.A tax preparer needs to have a business name.  Registering your name with the local business bureau makes you official.  You can create business cards, letterhead, and other business tools for the business.  Consider creating a website to go along with your other advertising.

Tax Preparation is a great way to start a Financial Services Company. It is easy to find Tax clients, but for those of us that need a year-round income stream, what do you do the rest of the year? While Tax Preparation is somewhat seasonal, Accounting and Bookkeeping services are needed all year long. What's more, the clients that your Tax Preparation service brings in are ideal clients for Accounting and Bookkeeping Business. Likewise, when you do a company's books, you are the logical choice to do their taxes, since you are more intimately familiar with their financial information than anyone else. The two services feed each other clients, making marketing efforts for each much easier.

If you don't already have experience I would strongly suggest that you go work for one of the national franchises for a couple of years. Just jumping is will be a major injustice to your clients. H & R Block has a national policy against doing work on the side but everybody violates that as a means of starting to build a client base (I don't work for them by the way). Others allow you to do outside tax work but will take a very dim view if you take any of their clients. All of the national franchises conduct a 'Tax School', which is the best place to start. The $139 to $359 depending on the franchise .

Sorry I couldn't reply sooner, but I was busy with my home-based tax business.  I have had my own tax prep business for over 20 years, so I will share a few items with you that I believe could contribute to your success. Go to IRS.gov and find out all you can about becoming an Enrolled Agent or what the new Paid Preparer licensing rules will involve.  Sign up for a P-Tin (Preparer Tax Identification number), to become an ERO (Electronic Filing Originator), and for IRS update emails.  The IRS annually hosts Nationwide Tax Forums which have excellent seminars and an expo with vendors representing tax software, products, and services.  You definitely will need a software package that not only fits your needs but is within your budget.  Purchase tax reference books/guides to help you find answers to your clients questions quickly.    It is also very important to purchase malpractice insurance, join a tax professional organization, and to sign up online to recieve daily, weekly, monthly emails from tax and accounting websites.  (AccountantsWorld and Accounting Web are two excellent sources for tax current events.)  Advertise in your local area in church bulletins, community newspapers, on pens, and hand out your business cards liberally.  My signature piece of advertising is my annual newsletter that I write each January.  I write short articles about 'hot button' issues and try to explain tax items in plain easy to read english.  To compile my newsletter, I save articles all year to give me ideas.  I print several hundred copies to send out to each client, as well as their brokers and attorneys that I have contacted in previous tax years.  I also take a handful of my newsletters to club meetings, my hairdresser, school meetings, my bank, etc. Most importantly, spend a few minutes talking with your clients about their families and their lives when they come to meet with you.   And then, follow-up your completion of their returns with hand written thank you cards to your clients.  Since I mail a printout of my clients' Electronic Filing Acknowledgments, I've found it more personal to tuck it inside their thank you card. I hope that I've given you lots of food for thought and wish you the best of luck in this new endeavor!        

Thank you for Fireplace-guy for chiming in! Check ou the Maryland Small Business Guide for steps to start your small business. Good luck!

Maryland has a site just for you: http://taxpros.marylandtaxes.com/ Pay special attention to the law that goes into effect June, 1st 2010. You'll also want to consider using an LLC instead of a solo prop to remove personal liability from the company.