Starting a Small Business


Vicky’s Story

Vicky always dreamed of owning her own business someday. She wanted to prepare people’s taxes and she knew she would develop a plan! “There will always be taxes and I wanted work that would never go away, something where I could build a future based on my abilities to work hard and develop relationships,” Vicky recalls.

Initially Vicky was worried that if she worked, she’d lose her Social Security Disability Insurance (SSDI) benefits. However, she talked to a Work Incentive Consultant and learned that SSDI has several work incentives that meant that she could try out working without having to worry about losing her benefits immediately. Feeling reassured by this knowledge, Vicky decided to look for a job where she could learn more about taxes.

Eventually, Vicky got a part-time job for an experienced tax preparer. At her job, Vicky earned about $900 per month. She also continued to get $985 in SSDI for a total monthly income of $1,885. For health coverage, she got Medicare and paid $35 each month to have AHCCCS Freedom to Work coverage.

As she learned about preparing taxes at her job, Vicky decided to explore what it would take to have her own business. She researched some programs that could help her plan her future business and got especially interested in Individual Development Accounts (IDAs) and in the services offered by the Arizona Rehabilitation Services Administration (AZRSA).

The AZRSA helped Vicky develop an estimate of how much money she would need to start her own tax preparation service. Her initial expenses would include getting a computer, proprietary tax preparation software, phones, marketing brochures, various office expenses, and licensing fees. When she added everything up, Vicky figured that she could start her business with just $6,000. One of the ways she could do it so cheaply was that she decided she could run her business from home. Since rent for an office would be expensive, Vicky decided to start small and keep costs down.

The AZRSA also helped Vicky find a good IDA program that would help her save up the $6,000 she needed to get her business started. The nonprofit running her IDA program provided a 2:1 match, meaning that for every dollar Vicky saved up in her IDA, the nonprofit would give her $2! The nonprofit said it wouldn’t put in more than $4,000, but that was still pretty awesome. Vicky quickly calculated that if she saved up $2,000 of her own money, the nonprofit would put in the full $4,000 and she’d have a total of $6,000 to start her business!

Based on her work salary and her SSDI benefits, Vicky had enough money to put $160 into her IDA account every month, while the nonprofit put $320 in her account every month. With this formula, Vicky was able to save up almost $6,000 in the first year! Here’s a table showing how her money grew:

Months since IDA opened Total money deposited by Vicky Total matching money deposited by the nonprofit Total value of Vicky’s account
Vicky’s IDA Savings
1 $160 $320 $480
2 $320 $640 $960
3 $480 $960 $1,440
4 $640 $1,280 $1,920
5 $800 $1,600 $2,400
6 $960 $1,920 $2,880
7 $1,120 $2,240 $3,360
8 $1,280 $2,560 $3,840
9 $1,440 $2,880 $4,320
10 $1,600 $3,200 $4,800
11 $1,760 $3,520 $5,280
12 $1,920 $3,840 $5,760

Between the money in Vicky’s IDA and a couple of hundred dollars a friend lent her, she had enough to get her business started and keep it going for the first year. Vicky remembers learning a lot during that year: “I knew I would be busy the closer we got to tax day, but I wasn’t ready for the 23 people who showed up at my home office the day before taxes were due!” It worked out well for Vicky though, because after filing extensions for most of those 23 last-minute filers, Vicky had enough business to carry her into the summer.

Today, Vicky continues to build her client base and is trying to expand her services beyond tax preparation. She has even hired a half-time assistant. Vicky is especially focused on working with the senior community, because thanks to her experience with her own disability, she understands the needs of many seniors. She says, “I know taxes aren’t going away, so I think I’ll have plenty more work in the years to come.”

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