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How to Start a Tax Office

Want to Know How to Start a Tax Office? Read On…

How to start a tax officeIn tax year 2011 there were 143,607,800 individual tax returns filed. In 2010 (the most recent year data is available) 56.7% of all individual returns used a paid preparer – that’s 81,426,000 potential clients – a huge potential market whether you are an employee of a large tax firm or working as a self-employed tax preparer.

And with the ever-changing tax laws, job security is virtually guaranteed to knowledgeable individuals.

If you’re looking for a low-cost start-up business, with flexible working hours, a tax preparation business may be just what you need.

Here’s a quick checklist of the steps that you’ll need to take if your interested in learning how to start a tax office:

  • Complete a Qualifying Education course (required in California, highly encouraged everywhere). If you are starting your own tax office, you will need a solid understanding of tax law. Your clients will know if your tax knowledge is lacking and they will not use your services. Referrals from satisfied clients are also one of the number one ways to build your tax practice.
  • Get your Preparer Tax Identification Number (PTIN) from the IRS. This number is required on all tax returns that you prepare.
  • Choose a tax software. The professional tax preparation software that you use is one of the most important decisions that you will make as a self-employed tax professional. Factors that you will need to take into consideration include what type of tax returns you will be preparing and how much you would like to spend. You  can choose a simple pay-per-return package, a basic tax software package that will enable you to prepare simple returns, or an advanced tax program that will allow you to prepare all types of tax returns with many other addons. We can help answer your questions regarding tax software choices.
  • Apply to be an Authorized IRS E-File Provider. Save money, increase your productivity and build your business, while providing a service the majority of taxpayers now expect. IRS e-file has safely and securely transmitted more than 1 billion tax returns since 1990. Nearly 80 percent of all individual federal returns are now e-filed and is required of most tax professionals.
    • Step OneCreate an IRS e-Services Account. An IRS e-Services account makes electronic interaction with the IRS easier. The verification and approval process for creating an account with IRS e-Services can take several days, so plan accordingly. When you apply for an e-Services account, you will need to:
      • Provide your legal name, Social Security Number (SSN), birth date, phone number, e-mail address AND your home mailing address (confirmation of your account will be mailed to you);
      • Provide your Adjusted Gross Income from the current or prior tax year;
      • Create a username, a password and a PIN, and provide an answer to a reminder question for your username;
      • Make sure that every principal and responsible official in your firm signs up for e-Services; and
      • Return to e-Services to confirm your registration within 28 days of receiving your confirmation code in the mail.
    • Step Two – Submit Your Application to Become an Authorized e-File Provider. You can begin the application to become an Authorized IRS e-file Provider once all principals are approved for e-Services (Step 1). The application process is not simple; however, the complexity is necessary to protect the integrity and security of the electronic filing system. Some of the key steps of the application process are listed below:
      • Log in to e-Services and access the online application to become an IRS e-file provider;
      • Select your e-file provider option — return preparers who want to e-file for a client should select Electronic Return Originator (ERO);
      • Enter identification information for your firm, as well as services provided to taxpayers;
      • Enter the name, home address, SSN, birth date and citizenship status for each principal and responsible official in your organization; and
      • Enter current professional status and requested information if the principal or responsible official is an attorney, certified public accountant, enrolled agent, officer of a publicly owned corporation, or bonded bank official; or
      • Call the IRS toll free at 866-255-0654 to request a fingerprint card for any principal or responsible official who is not an attorney, certified public accountant, enrolled agent, officer of a publicly owned corporation, or bonded bank; and
      • Get fingerprinted by a trained professional at your local police station or at a company that provides this service; then
      • Mail the signed and completed card to the IRS.

      The e-file application process is comprehensive, designed to allow you to save your data during the session and to return to the application when convenient. Plan accordingly since the IRS may take up to 45 days to approve an Authorized IRS e-file Provider application.

    •  Step Three – Pass a Suitability Check. After you submit your application and related documents, the IRS will conduct a suitability check on the firm and each person listed on your application as either a principal or responsible official. This may include: a credit check; a tax compliance check; a criminal background check; and a check for prior non-compliance with IRS e-file requirements. Once approved, you will get an acceptance letter from the IRS with your Electronic Filing Identification Number (EFIN).

    We’d love to help answer your questions about becomming a tax professional or how to start a tax office. Feel free to contact us by phone at (888) 342-1040 by email at or by using the chat feature at the bottom of this page.

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