Starting a Tax Practice

Today TaxMama® hears from John with this naïve question. “I have been mulling about this idea for a long time. I want to start a tax prep and services business. I have been doing returns for friends and associates for the past 2 years and want to incorporate. What is my first step? And then the next one? I have read your articles regarding PTIN and such. Whatever advice you might have would be appreciated.”  

Ask TaxMama

 Hi John, 

There’s certainly room for you in the profession. But just doing friends’ tax returns isn’t enough experience – or expertise – to build an entire tax practice around.  Without education or training, there’s no way to do an adequate job for strangers, people you don’t know anything about, when they bring you their information. You have no basis to understand their lifestyle, what are reasonable earnings for their profession or job – or very much, really.  

These days, tax professionals, at all levels, are required to be (a form of) tax police. The IRS expects us to catch (and eliminate or prevent) tax fraud. That takes experience and/or training.  

So, depending on when you want to become a tax pro, I recommend that you start by getting experience. Either get a job – full or part-time – or do volunteer work for VITA or AARP’s Tax-Aide.  

Then, consider getting some additional training so you can pass the IRS’ RTRP exam after tax season. OR, if you want to reach for the ring and get some higher-level training, you can study for the EA Exam. THAT training and passing that exam will make a big difference in your skills as a preparer, taxpayer representative (- and even as an IRS tax fraud catcher).  

Once you’ve got the licenses, THEN you will know whether to incorporate or what. Then you will know how to target your marketing and on what area of taxation you want to focus. So those are the first steps that I recommend.

And remember, you can find answers to all kinds of questions about becoming a tax professional, and other tax and business issues, free. Where? Where else? At

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