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Getting started in tax preparation

Steps to go from doing taxes for friends and family to running a legitimate solo tax preparation business.

  1. 1

    Get a PTIN from the IRS

    Apply at irs.gov/ptin (about $20, renewed annually) — this is the baseline federal requirement to prepare returns for pay, required even for uncredentialed preparers.

  2. 2

    Decide on a credential path

    Choose between staying uncredentialed (PTIN only, cannot represent clients before the IRS), completing the voluntary IRS Annual Filing Season Program (a lighter continuing-education record that adds some client-facing credibility), or pursuing the Enrolled Agent (EA) or CPA credential, which allows full IRS representation and commands materially higher rates.

  3. 3

    Check your state's registration requirements

    California (CTEC registration plus an education course and surety bond), Oregon (state licensing exam, the only state that licenses preparers outright), Maryland, and New York all impose their own registration requirements on top of the federal PTIN — confirm your state's rules before taking paying clients, since several other states have narrower registration or bonding requirements too.

  4. 4

    Apply for an EFIN to e-file returns

    Register with the IRS e-file program to get an Electronic Filing Identification Number — most clients expect e-filing, and it's required to submit more than a handful of returns electronically as a paid preparer.

  5. 5

    Get professional liability (E&O) insurance

    Covers claims tied to preparation errors or missed deadlines and is increasingly expected by clients, especially small-business clients with more complex returns.

  6. 6

    Choose professional tax software and a client-document workflow

    Pick software sized to your expected return volume and states served (Drake, TaxSlayer Pro, or similar), and set up a secure client portal rather than collecting W-2s, 1099s, and SSNs over email.

  7. 7

    Set your pricing and engagement letter before peak season

    Decide your per-return pricing tiers (simple, standard, complex/business) grounded in a target hourly rate, and have a signed engagement letter in place before the January-April rush, since that compressed season leaves no time to negotiate contract terms client by client.