Provided Services
Your Business Matters
How to Start a Professional Tax
Starting your own professional tax practice is a unique and intricate process, with Internal Revenue Service (IRS) requirements and ever-changing laws adding to the complexity. Whether you are planning on becoming a solo practitioner or starting a larger practice, this page provides a detailed explanation of the steps you can take to start your own professional tax practice to help ease the process for you
Get registered
Register your business with your state
Once you have decided on a type of entity for your business, you can register your business with your state. A common way that small businesses register is by filing a Doing Business As (DBA) name with their state. This can be a simple way to become registered with your state without creating a formal business structure for your company. Another option is to form a limited liability company (LLC) or corporation for your business, which automatically registers your business with the state. Contact your state government to find more information about registering with your state.
Some business types may also require a Federal Employer Identification Number (EIN). While some states enable you to apply for an EIN during the business registration process, some states require a separate application.
Obtain an Electronic Filing Identification Number (EFIN) from the IRS
The IRS requires that all tax preparers or firms filing 11 or more returns must electronically file. Before you can electronically file tax returns, you or your firm must apply to become an Authorized e-File Provider with the IRS and obtain an electronic filing identification number (EFIN). You will need to complete a separate EFIN application for each location from which your business will electronically file returns. Once you have submitted your application to become an Authorized e-File Provider, you will need to send a fingerprint set to the IRS so they can administer a suitability check. This may include a credit check, a criminal background check, a tax compliance check and a check for previous non-compliance with IRS e-File requirements. This process may 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 fill out your e-File application online. First, you will supply identification information for your firm. Next, you will enter information about each principal and responsible official in your organization. You choose your e-file provider option. If you are a return preparer and want to e-file for clients, select electronic return originator, or ERO. If the principal or responsible official is someone who is certified or licensed, such as an attorney, CPA or enrolled agent, they must enter current professional status information. All other individuals need to provide fingerprints to the IRS. You can get a fingerprint card by calling 866-255-0654. The application is comprehensive, but you can save the information, take a break and continue to fill out the application when convenient. When your application has been approved, the IRS will send an acceptance letter and your EFIN.
It’s important to note that some states require e-File providers to submit a separate enrollment application for authorization to e-File individual or business tax returns. Check with relevant state tax agencies to understand state-level e-file requirements.
Obtain a Preparer Tax Identification Number (PTIN) from the IRS
Anyone who prepares or assists in the preparation of federal tax returns for compensation must have a valid preparer tax identification number (PTIN). The IRS issues PTINs to anyone authorized to legally prepare and defend tax documents for individuals and companies. PTINs expire and need to be renewed every year. If you are starting a firm, keep in mind that PTINs cannot be shared by a firm. Every paid preparer must have their own PTIN before they can assist in preparing federal tax returns.
To obtain a PTIN number, you can register on the IRS website. Applying online takes about 15 minutes.