How To Start Your Own Cpa Firm – Starting your own professional tax practice is a unique and complex process, with Internal Revenue Service (IRS) requirements and ever-changing laws adding to the complexity. Whether you are planning to become a sole practitioner or start a larger practice, this page provides a detailed explanation of the steps you can take to start your own professional tax practice to make the process easier for you.
Once you’ve decided on an entity type for your business, you can register your business in your state. A common way to register small businesses is by filing a business name (DBA) with their state. This can be an easy way to register in your country without creating a formal business structure for your company. Another option is to form a limited liability company (LLC) or limited liability company for your business, which automatically registers your business with the state. Contact your state government for more information about registration in your state.
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Certain types of businesses may also require a federal Employer Identification Number (EIN). While some states allow you to apply for an EIN during the business registration process, some states require a separate application.
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Click here to see if you need an EIN. Some cities may require additional registration, licenses or permits, so contact the county clerk for additional information.
The IRS requires all tax preparers or businesses that file 11 or more returns to file electronically. Before you can file tax returns electronically, you or your business must apply to become an authorized e-filer with the IRS and obtain an Electronic Filer Identification Number (EFIN). You must complete a separate EFIN application for each location from which your company will file returns electronically. After you submit your application to become an authorized electronic filing provider, non-certified professionals must submit a set of fingerprints to the IRS so they can administer an eligibility check. This may include a credit check, criminal background check, tax compliance check, and a check of past non-compliance with IRS e-filing requirements. This process can take up to 45 days. There is no fee to obtain an EFIN.
To begin the application process, create an IRS e-Services account and then complete your e-File application online. First, you will provide information to identify your business. Next, you will enter information for each key and responsible officer in your organization. You select your electronic file provider option. If you are a return preparer and want to send electronic files to customers, choose Electronic Return Source or ERO. If the principal or responsible officer is someone who is certified or licensed, such as an attorney, CPA, or enrolled agent, they must provide current professional status information. All other individuals must submit their fingerprints to the IRS. You can find the most up-to-date information about the EFIN application process on the IRS website Become an Authorized E-Filer.
It is important to note that some states require electronic filing providers to file a separate registration application for authorization to file individual or corporate returns electronically. Check with relevant state tax authorities to understand electronic filing requirements at the state level.
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Anyone who prepares or assists in the preparation of federal compensation returns must have a valid tax identification number (PTIN). The IRS issues a PTIN to anyone legally authorized to prepare and file tax documents for individuals and businesses. The PTIN expires and must be renewed annually. If you are starting a business, please note that PTINs cannot be separated from the business. Every paid preparer must have their PTIN before they can help prepare federal tax returns.
The next challenge is to determine how your business will generate revenue or what your business model will be. Will you provide consulting and/or accounting services to your clients year-round in addition to your tax expertise, or will you be a tax practice that operates primarily on a seasonal basis? In your tax practice, will you focus on corporate tax, individual tax or both? And what kind of customers do you want if you can choose? If you offer business tax services, you can become an expert in certain industries or companies of a certain size; If you offer individual tax services, will you focus on high net worth individuals, self-employed clients, or perhaps target your services more broadly?
It is also time to decide where your practice will be located. Will you open a separate office, share an office, work from home or use a virtual office?
It’s important to make decisions about these parts of your business model now so you can choose the right professional tax software and tools, as well as marketing tools for your practice.
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Use this tax fee guide to help you define and price your tax services. The guide gives you the average price that professionals with similar designations and years of experience charge for their tax preparation services, although you may want to adjust your price based on several other factors, including the complexity of the client’s form, your costs of doing business, your pricing strategy and whether you offer value-added services throughout the year.
If you are unsure about the best model for you and your practice, speak to one of our experts for advice and guidance. Making these decisions early will help you make other important decisions down the road.
Prospective clients value references, and there are many training and credentialing opportunities for you and your new tax business, including certification in the IRS Annual Filing Program, Income Tax School training and certification, the IRS Enrolled Agent Program for preparers who plan to represent clients in examinations, and even a CPA certification for CPAs planning to issue financial statements.
Some states, including Oregon, California, Maryland and New York, have their own certification or registration requirements for professional tax preparers. Check with your state to find out if there are additional regulations.
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The next step is to decide which professional tax software is right for you. There are a number of important factors to consider when choosing software:
Intuit® is an industry leader in providing professional tax solutions for every budget and practice style. Whether you plan to prepare simple or complex returns, whether you prefer desktop or online solutions, whether you plan to file professionally linked returns or tax returns on technology-enabled mobile devices, Intuit can tailor a solution as unique as you.
In addition to this basic software, Intuit and other companies offer other built-in tools to help you work efficiently and collaborate with your customers or get rid of whatever you are.
To work with your staff in a virtual office, Intuit offers desktop hosting for Lacerte and ProSeries, providing the freedom and flexibility to work anytime, anywhere.
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To work with your clients in a virtual office, you can use Intuit Link as a client portal to collect and manage documents and eSignature to collect and track digital signatures on a variety of tax forms and documents.
Finally, Intuit Pay-by-Refund gives you an easier way for customers to pay your handling fee, ensuring they’re refunded and you get paid.
Tax laws, technology, and even client expectations are constantly changing, and staying current is critical to running a successful practice. Intuit offers several resources in the Intuit Accountant Training Center to help you continue learning, including live and recorded webinars (including many that offer free CPE credit), videos, and training via forums. We keep our customers updated on the latest changes in tax laws and their impact on Intuit software, the latest technology updates, best practices for keeping your customer data secure, how to grow your business, and more.
Intuit Accountants also offers the Tax Pro Center – a collection of valuable content, including articles, infographics and more, that provide tax law insight, client relationship building and workflow efficiency to help you take your practice to the next level.
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Finally, trade associations, such as the Riksförbund of Tax Professionals, as well as trade publications such as
While there are many ways to market your new practice, here are some common ways tax professionals get the word out about their practices so you can start developing a plan for marketing your practice:
To further assist your business clients and generate another income stream, consider adding accounting and bookkeeping services to your practice’s offerings when you’re ready. The Intuit QuickBooks Online Accountants portfolio has many tools to help you grow your client base, sharpen your skills, and become more efficient. By becoming certified as a QuickBooks ProAdvisor, you receive benefits such as a free listing in the Find-A-ProAdvisor directory, free or discounted products for you and your clients, and discounted support.
Download our How to Start a Tax Preparation Business Checklist to guide you as you take the necessary steps to start your own tax preparation business.
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Visit the IRS website for tax professionals for additional resources, including Circular 230 on the Application of Regulations Governing the Internal Revenue Service.
Intuit, QuickBooks, QB, TurboTax and Mint are registered trademarks of Intuit Inc. Terms, features, support, pricing and service options are subject to change without notice. Working with accounting can be very economical
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