How to Start a Tax Business from Scratch: A Step-by-Step Guide

May 28, 2026

Starting a tax preparation business is one of the most accessible paths to entrepreneurship in the financial services industry. Low startup costs, recurring seasonal demand, and the ability to work from home make it an attractive option, especially for those with a passion for numbers and helping people.

But "accessible" doesn't mean "easy." Here's a realistic, step-by-step roadmap to launching your tax business the right way.

Step 1: Get Your IRS Credentials

Before you can legally prepare returns for compensation, you need two things from the IRS:

PTIN (Preparer Tax Identification Number): Required for every paid preparer. Apply at IRS.gov. Issued immediately online. Fee: $19.75/year.
EFIN (Electronic Filing Identification Number): Required to e-file returns for clients (mandatory if you file 11+ returns/year). Apply through IRS e-Services. Allow 4–6 weeks for approval.

Don't skip these, operating without a PTIN is a federal violation under IRC § 6695.

Step 2: Choose Your Business Structure

Most solo tax preparers start as a sole proprietor or form a single-member LLC. An LLC provides liability protection and looks more professional to clients. Key considerations:

Register your business with your state's Secretary of State office
Obtain an EIN (Employer Identification Number) from the IRS, free at IRS.gov
Open a dedicated business bank account
Consider business liability insurance (E&O coverage is especially important for tax preparers)

Step 3: Invest in Professional Tax Software

Your tax software is the backbone of your business. Consumer-grade software like TurboTax is not designed for professional use. You need professional software that supports:

Multi-return preparation and e-filing
Bank products (refund transfers, advances)
Client management and document storage
IRS compliance and audit support tools

The right software dramatically reduces errors, speeds up your workflow, and allows you to offer bank products, a major revenue driver for tax businesses.

Step 4: Set Your Pricing

New preparers often underprice their services out of fear. Don't. The national average for a basic federal return is $220–$350, with complex returns commanding $500+. Price based on:

Complexity of the return (W-2 only vs. self-employed, rental income, etc.)
Your local market rates
Add-on services (state returns, amended returns, bookkeeping)

Consider offering a tiered pricing menu so clients can self-select their service level.

Step 5: Set Up Your Office (Physical or Virtual)

You don't need a storefront to run a successful tax business. Many preparers operate entirely virtually. What you do need:

A secure, encrypted method for receiving client documents (avoid email attachments)
A client portal or document management system
A professional email address and phone number
A simple website with your services, pricing, and contact info

Step 6: Market Your Business Before Tax Season

Tax season runs January through April, but your marketing should start in October or November. Effective low-cost strategies include:

Google Business Profile (free, drives local search traffic)
Facebook and Instagram ads targeting your local area
Referral programs (offer existing clients a discount for referrals)
Partnerships with local small businesses, churches, and community organizations

Step 7: Build Systems for Repeat Business

The most profitable tax businesses run on repeat clients. From day one, build systems that keep clients coming back:

Send appointment reminders in December/January
Follow up after filing with a thank-you and referral ask
Offer year-round services like bookkeeping or quarterly estimated tax help
Collect reviews on Google to build social proof

Skip the Guesswork, Partner with The Tax Fixer Solutions

Building a tax business from scratch is absolutely doable, but it's a lot easier with the right partner. The Tax Fixer Solutions provides aspiring and growing tax professionals with everything they need to launch and scale: