Top 6 Things To Do if You Want to Start a Tax Business

By Terry Judge | August 26, 2021

If you’re thinking about starting a tax business, here are the top things you’ll want to do to get started.

Step 1: Take a solid foundational tax course

If you’ve prepared tax returns for friends and family but have never taken a tax course, you will likely have some gaps in your tax knowledge. Taking the time to complete a foundational tax course will help make you a well-rounded tax preparer. The Comprehensive Tax Course is a perfect course for beginners and will teach you how to prepare tax returns and research tax issues for most Form 1040 individual, non-business taxpayers; plus the basics of Schedule C/self-employed tax returns.

Step 2: Check with your state to see if there are any tax preparer requirements

  • State requirements for tax return preparers can range from nothing, to annual registration, a required beginner course, and/or a state exam that you must pass. You may also have continuing education requirements. So, you’ll want to check with the state to see if you have specific requirements you must meet. States like California, Connecticut, Iowa, Maryland, New York, and Oregon, do have requirements.
  • Many states still don’t have any requirements! See if your state has requirements.

Step 3: Register for your Preparer Tax Identification Number (PTIN)

Every person who is compensated for preparing, or assisting in the preparation of, federal tax returns for the general public must have a PTIN. You can do this right away, and it will only take you a few minutes to apply. The cost is $35.95 annually. Learn more about getting your PTIN.

Step 4: Apply for your Electronic Filing Identification Number (EFIN)

Securing your EFIN will enable you to e-file tax returns for your clients. It can take a while to get approved, so you’ll want to apply right away. This is only needed if you decide to have your own business. Learn more about getting your EFIN.

Step 5: Purchase and read the Guide to Start and Grow Your Successful Tax Business

This guide will give you lots of tips to get started as a first year tax business owner. It’s a fast read, covers a lot of areas, and is a good summary of what you’ll need to do in your first years as a tax business owner. Check out the Guide.

Step 6: Complete the IRS Annual Filing Season Program (AFSP)

The AFSP is a voluntary IRS program that gives non-credentialed tax preparers a way to set themselves apart from the competition. Completing this program also gives non-credentialed preparers limited representation rights for their tax clients, and they are also listed in the IRS federal tax preparer directory.

When you take and complete Surgent’s Comprehensive Tax Course, you can easily pass the Annual Federal Tax Refresher Course (AFTR), which is a large part of the AFSP. Again, this is a voluntary program, not a requirement. So, you don’t have to do this extra step, but it is a wise move!

BONUS: When you register for Surgent’s Comprehensive Tax Course, you receive a FREE 6-hour AFTR (Annual Federal Tax Refresher) Course — no additional cost to you!

Upon completion of both courses (Comprehensive Tax Course and AFTR Course) and registering for your PTIN, you can be approved as an IRS Qualified Preparer and receive an AFSP – Record of Completion from the IRS. Learn more about the AFSP.

Note: You can find some great information on the Small Business Administration website of additional things you’ll want and/or need to do to start your own business.

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