My plan

How to Start a Tax Preparation Business

Tax preparation is seasonal but repeat: clients who trust you come back every year. Federal rules apply from day one — paid preparers need an IRS preparer number — and protecting client data is a legal duty, not an extra. Many preparers add bookkeeping or payroll to fill the off-season.

Reviewed November 5, 2026 · Sources linked inline

Startup costs

We haven't found a reliable published cost range for this business, so we don't show one. Costs vary widely by market, equipment and whether you buy new or used. Plug your own quotes into the worksheet:

Open a tax preparation cost worksheet →

SBA 7(a) loans in this industry

Tax Preparation Services (NAICS 541213): 724 loans approved in FY2024–FY2026. Median loan $100,000; middle half $50,000–$300,000.

Loan size is not startup cost — these loans also fund acquisitions, real estate and working capital. Full breakdown and caveats →

How much competition is there?

Census industry: Tax Preparation Services (NAICS 541213)

Nationwide: 28,762 employer establishments (2023) and 106,403 businesses without employees (2024).

See counts for your county → Counts aren't a measure of saturation — see the caveats on the tool page.

Equipment and supplies

  • Professional tax software with e-file
  • Secure computer with encryption and multi-factor login
  • Scanner and secure document storage
  • Client portal for sharing documents
  • Written information security plan

Licenses and registration

  • Paid preparers who prepare, or help prepare, all or substantially all of a federal tax return for compensation must have an IRS Preparer Tax Identification Number (PTIN); a fee applies. [source]
  • To e-file for clients you'll generally need IRS authorization as an e-file provider — apply well before tax season.
  • A few states have their own preparer registration or licensing rules; check with your state revenue department.
  • If you form an LLC or corporation, register it with your state; if you use a business name other than your own, file a trade name (DBA) where your state requires it (in some states that's the county).
  • Get a free Employer Identification Number (EIN) from the IRS if you will hire employees or form an LLC or corporation. Beware of sites that charge for this. [source]
  • Register an LLC or corporation with your state's business registration office (sole proprietors usually register a trade name/DBA instead). [source]

Insurance to consider

  • Professional liability (errors and omissions)
  • Cyber liability for client data
  • General liability for an office

Get quotes from several carriers or an independent agent; coverage needs depend on your contracts, state and staff.

Financing options

  • SBA 7(a) loans — the SBA's main guaranteed loan program, made through participating lenders. [source]
  • SBA Microloans — smaller loans delivered through nonprofit intermediary lenders. [source]
  • SBA Lender Match — a free tool that connects you with interested SBA lenders. [source]
  • Free counseling from your local SBDC or SCORE chapter can help you build the business plan lenders ask for. [source]

Estimate payments with the loan calculator, then check runway with the cash flow projection.

Ongoing operating expenses

  • Software licenses
  • Continuing education
  • Insurance
  • Office rent (optional)
  • Seasonal staff
  • Marketing

Use the break-even calculator to see how many jobs or sales cover them.

Common mistakes

  • Waiting until January to apply for e-file
  • Weak data security
  • Pricing every return the same
  • No engagement letter
  • Doing nothing with clients in the off-season

Finding customers

  • Referrals from current clients
  • Small businesses that need year-round bookkeeping
  • Community groups and churches
  • Google Business Profile with reviews

Startup checklist

Ticks are saved on this device and appear on My plan.

Compare with other businesses

Sources