How to start an accounting or tax practice

What you can sell depends on your credential

In most trades the license decides whether you may open. In this one it decides what you may sell once you do. “Anyone who prepares or assists in preparing federal tax returns for compensation must have a valid 2026 PTIN before preparing returns,” says the IRS, and that number alone lets you prepare returns. Representing clients is a different matter: “Attorneys, CPAs, and enrolled agents continue to be the only tax professionals with unlimited representation rights, meaning they can represent their clients on any matters including audits, payment/collection issues, and appeals” (IRS Annual Filing Season Program). Attest work and the letters “CPA” on the door need a state firm license.

That gives five common shapes for a new practice:

• Seasonal tax preparation. Individual and small-business returns, with a PTIN, an EFIN and, in California and New York, state registration.
• Enrolled agent practice. Preparation plus representation: notices, audits and collections, year round.
• Bookkeeping, payroll and client accounting services. Monthly work that does not depend on April. In the CPA.com and AICPA benchmark survey reported by the Journal of Accountancy, “only 10% of respondents” still used hourly billing as their main pricing method.
• Licensed CPA firm. Audits, reviews and compilations as well as tax and advisory work, under a state firm license.
• Franchise tax office. Common, though no primary data on its share of the market was found.

How many firms, and how small. The 2023 County Business Patterns file counts 55,052 offices of certified public accountants with paid employees (604,209 employees, $60.84 billion in payroll), 28,762 tax preparation services (133,868 employees) and 47,699 other accounting services, which includes bookkeepers. Most are small: 69.1% of tax preparation establishments and 78.5% of other accounting establishments had fewer than 5 employees. The one-person end is bigger still. The 2023 Nonemployer Statistics show 102,543 tax preparation businesses with no employees and 254,312 in other accounting, so a solo preparer is the typical shape of this business, not the exception.

The outlook, and how seasonal the work is

Bureau of Labor Statistics figures published on O*NET put accountants and auditors at 1,579,800 employed in 2024 with a 2025 median wage of $40.23 an hour, or $83,680 a year, and growth from 2024 to 2034 rated “Faster than average (5% to 6%)” with 124,200 projected openings. Tax preparers number 90,600, with a $26.40 median hourly wage ($54,920 a year), the same growth rating and 10,400 projected openings.

Demand is large and concentrated. “The IRS expects to receive about 164 million individual income tax returns this year,” it said when it opened the 2026 season on January 26 (IR-2026-02). Through May 8, 2026, 75,316,000 of 141,046,000 e-filed returns came from tax professionals (IRS filing statistics), or 53.4%. The BLS series for tax preparation services shows how sharply staffing follows the deadline: 70.1 thousand employees in August 2025, 154.6 thousand in February 2026, and back to 70.5 thousand in August 2026. A tax-only practice has to earn the year in about four months; bookkeeping and representation work are what fill the other eight.

IRS registrations every paid preparer needs

PTIN. Required for anyone paid to prepare or help prepare federal returns, enrolled agents included. As of October 2026 “The fee is $18.75 and is non-refundable,” and “Most first-time PTIN applicants can obtain a PTIN online in about 15 minutes.” It renews every year, and every seasonal preparer you hire needs one of their own.

EFIN. To e-file for clients you apply through IRS e-services to become an Authorized e-file Provider, and “it can take up to 45 days from the date of submission for the IRS to approve your e-file application.” Principals and responsible officials who are not attorneys, CPAs or enrolled agents “need to be fingerprinted using the IRS authorized vendor,” and the IRS suitability check “may involve: a credit check; a tax compliance check; a criminal background check; and a check for prior non-compliance with IRS e-file requirements.” Approval brings an acceptance letter with your Electronic Filing Identification Number. In our experience the safe time to apply is summer, so a delay never lands in January.

The e-file mandate. Paper filing is not an option for long. Under 26 CFR 301.6011-7, a preparer is a “specified tax return preparer”, and must e-file, “unless that person reasonably expects to file 10 or fewer individual income tax returns in a calendar year,” and the count is made for the whole firm “in the aggregate.”

Credentials: enrolled agent, the Annual Filing Season Program and the CPA

Enrolled agent. The IRS sets out the steps: get a PTIN, schedule the Special Enrollment Examination, “Achieve passing scores on all three parts of the SEE within three years,” apply on Form 23 and pass a suitability check including tax compliance and a criminal background check. The exam changed hands this year: “Effective March 1, 2026, the IRS Enrolled Agent Special Enrollment Exam (EA-SEE) is no longer developed and administered by Prometric, LLC. A new vendor, PSI Services, has been selected.” Once enrolled, an agent “may practice before the Internal Revenue Service” under Circular 230 section 10.3, while a CPA practices before it by filing “a written declaration that the certified public accountant is currently qualified.” In our experience it is what turns a seasonal preparer into a year-round practice.

Annual Filing Season Program. “Do I have to get an Annual Filing Season Program - Record of Completion? No, it’s voluntary.” It takes “18 hours of continuing education, including a six hour federal tax law refresher course with test,” a renewed PTIN and consent to Circular 230’s practice rules. Participants “can represent clients whose returns they prepared and signed, but only before revenue agents, customer service representatives, and similar IRS employees,” and are included in the IRS’s public directory of preparers. “PTIN holders without an Annual Filing Season Program - Record of Completion or other professional credential will only be permitted to prepare tax returns.”

CPA licensing is changing in two of the three largest states. The table gives each board’s terms as of October 2026. Requirements change, so confirm with the board before you plan your education or experience around them.

State	Agency	Route to the CPA license	Firm license and titles
Texas	Texas State Board of Public Accountancy	From August 1, 2026, two routes. Pathway A: bachelor’s or graduate degree, 150 semester hours and one year of work experience. Pathway B: bachelor’s degree, 120 semester hours and two years of work experience	A firm license to provide attest services or use “CPA” style titles, if the firm has a Texas office. “Accountant” and “auditor” restricted to licensees practicing through a licensed firm
Florida	Board of Accountancy	At least 150 semester hours including a bachelor’s degree with a concentration in accounting and business, one year of work experience verified by a licensed CPA, and good moral character. No alternative route in the 2026 statute text	A firm license for an office performing attest services or using “CPA” or a similar title. An online account with the department, contact changes reported within 30 days
California	California Board of Accountancy	Under AB 1175, a bachelor’s degree with an accounting concentration and more experience, with no 150-unit requirement, from January 1, 2027. Both routes valid in 2027 and 2028; only the new one from 2029	Accountancy corporations and partnerships, not LLCs. A sole practitioner’s fictitious name needs CBA approval first

Texas. Pathway B requires “at least 24 semester hours of upper-level accounting coursework,” “at least 21 semester hours of upper-level business coursework” and an ethics course before the exam. The certificate also requires a background investigation, the uniform CPA exam and “an examination on the rules of professional conduct” (Occupations Code 901.252). Under section 901.351, “A firm may not provide attest services or use the title ‘CPA’s,’ ‘CPA Firm,’ ‘Certified Public Accountants,’ ‘Certified Public Accounting Firm,’ or ‘Auditing Firm’” without a firm license. The rule that catches bookkeepers is section 901.453: a person “may hold the person out to the public as an ‘accountant,’ ‘auditor,’ or any combination of those terms … only if” licensed and practicing through a licensed firm. A Texas bookkeeper or preparer without a CPA license should not put “accounting” in the business name. Exemptions elsewhere in chapter 901 were not checked, so confirm the wording with the board.

Florida. Section 473.308 requires that “An applicant for licensure must have at least 150 semester hours of college education.” A firm license is required under section 473.3101 for “Any firm with an office in this state which uses the title ‘CPA,’ ‘CPA firm,’ or any other title … tending to indicate that it is a CPA firm.”

California. The CBA says AB 1175 “Establishes the minimum educational requirements as a bachelor’s degree with an accounting concentration of courses, and eliminates the total unit requirement of 150 semester units,” and “Increases the experience requirement.” Until then, section 5093 asks for “a minimum of 24 semester units in accounting subjects and 24 semester units in business-related subjects.” The CBA’s Quick Facts list accountancy partnerships and corporations among what it regulates, because the Corporations Code does not “permit a domestic or foreign limited liability company to render professional services.” A sole proprietor using a trade name “must register with, and be approved by, the California Board of Accountancy (CBA) before practicing and holding out to the public”; “There is no fee to apply,” and the registration lasts five years (CBA fictitious name permit). California’s title list in section 5058 bars “certified accountant,” “licensed accountant” and similar, but lets an enrolled agent use “E.A.”

State registration for preparers who are not CPAs

California. “Any non-exempt person who prepares tax returns for compensation is required to register with CTEC,” the California Tax Education Council says. A new preparer completes a “60-Hour Qualifying Education (QE) Course”, of which section 22255 assigns “45 hours” to federal and “15 hours” to state tax, holds a PTIN and “must purchase a $5,000 Tax Preparer Surety Bond from a surety company before you can register.” Registered preparers had “until October 31, 2026 to renew” this year (CTEC), and a lapsed registrant “must re-take the 60-hour qualifying education course.” CPAs and licensed firms, active State Bar members and enrolled agents are exempt under section 22258, as are a licensed firm’s partners, owners and employees.

New York. Preparers who “prepare a substantial portion of 10 or more New York State tax returns or reports for compensation in a calendar year, are considered a commercial tax return preparer and must: register as a tax return preparer, pay the $100 registration fee, and complete CPE coursework” (New York Tax Department). Attorneys, CPAs, public accountants, enrolled agents and the employees they supervise are excluded.

Texas and Florida. No state registration for non-credentialed preparers appeared in the sources checked for this guide. The PTIN still applies, and the Texas title rule above still limits what you call the business.

Data security: the Safeguards Rule and Publication 4557

A tax office holds Social Security numbers, bank accounts and income for every client, and federal law treats it accordingly. The FTC Safeguards Rule names “tax preparation firms” as covered businesses. Its program requires a “Qualified Individual”, who “can be an employee of your company or can work for an affiliate or service provider,” and says to “Implement multi-factor authentication for anyone accessing customer information on your system.” A breach involving “at least 500 consumers’ unencrypted information” must be reported to the FTC “no later than 30 days after discovery.”

The IRS restates the duty in Publication 4557: “The ‘financial institutions’ definition includes professional tax preparers,” and “tax return preparers must create and enact security plans to protect client data,” with Publication 5708 as the template. “Failure to do so may result in an FTC investigation.” Its checklist includes encrypting “all sensitive files/emails.” In August the IRS and its Security Summit partners repeated that “Federal law requires tax and accounting professionals to create and maintain a Written Information Security Plan” (IR-2026-92). Write the plan before the first client file arrives, and list every vendor that touches client data in it.

Setting up the practice

• Entity. Outside California, the SBA says an LLC’s owners’ personal assets “won’t be at risk in case your LLC faces bankruptcy or lawsuits.” California CPA firms use an accountancy corporation or partnership instead.
• EIN. Apply directly with the IRS, which charges nothing for it, once the entity exists. It is a separate number from your PTIN and EFIN.
• Firm license and name. Needed in Texas and Florida once the name says CPA or the firm does attest work; CBA approval in California for a sole practitioner’s trade name.
• Insurance and bonds. The SBA lists professional liability for “Businesses that provide services to customers,” and Google’s Local Services Ads screening for tax specialists asks for professional liability insurance where local law requires it. Cyber coverage is worth pricing alongside it, given the breach duties above. California preparers carry the $5,000 CTEC bond. Workers’ comp: California requires it of every employer (Labor Code 3700), Florida from four employees outside construction (Florida Statutes 440.02), and Texas lets most private employers go without (TDI).

Software, office and systems

The core kit is professional tax software, licensed per preparer or per return; a client portal with multi-factor authentication for document exchange; encrypted email; practice management with e-signature; and backups. Publication 4557 wants backups “not connected fulltime to a network,” which in practice means one copy that ransomware cannot reach. Bookkeeping practices add a cloud accounting platform and its partner program, and usually payroll software.

A home office works for many preparers, but Google will not list a virtual office, and a coworking desk qualifies only with signage, staff and customer hours. In our experience the first-season mistake is collecting documents by plain email because the portal was not ready; set the portal up before you advertise.

Pricing and cash flow

Tax preparation is usually priced per return or per form, bookkeeping and client accounting as a fixed monthly fee, and cleanups and IRS representation as projects. The one sourced ticket figure is for client accounting: practices with a formal written plan for that service reported “$27,761 in median average annual client revenue,” and firms earning more than half their revenue from industry niches reported “38% higher median CAS revenue” (Journal of Accountancy). No per-return fee survey could be opened, and no sourced startup cost exists, so build both from your own software, insurance and office quotes.

Two federal lines touch pricing. Circular 230 holds a practitioner to a published fee “for at least 30 calendar days after the last date on which the schedule of fees was published.” And the IRS warns taxpayers about preparers who “base their fees on a percentage of the taxpayer’s refund” (IR-2024-96), so refund-based pricing marks you as the kind of preparer it tells people to avoid.

Hiring for the season

• Every paid preparer needs a PTIN, including staff who only assist.
• EFIN responsible officials without a professional credential are fingerprinted.
• California staff must register with CTEC unless exempt or employed by a licensed CPA firm.
• Pay. The O*NET medians are $26.40 an hour for tax preparers and $40.23 for accountants and auditors.
• Timing. The BLS series shows tax preparation employment climbing from 93.3 thousand in November 2025 to 140.4 thousand in January 2026, so seasonal hiring starts in the fall.
• Access. Each new hire gets multi-factor authentication and only the client data they need, under your security plan.
• Experience for future CPAs. Texas Pathway B asks for two years of experience and Florida one year verified by a CPA, so a small CPA firm can recruit candidates who need those years.

Finding the first clients

Google Business Profile. Google defines an individual practitioner as “a public-facing professional, typically with their own customer base,” and many sole preparers are exactly that. A practitioner “shouldn’t have multiple Business Profiles to cover all of their specializations,” a virtual office “isn’t eligible,” and a coworking office needs “clear signage,” customer hours and staff (Google Business Profile guidelines). If you open only in season, list the hours you actually keep.

Local Services Ads. Google’s requirements page lists “Tax specialist” with “License checks for each tax specialist in the firm” and professional liability insurance where required. The category is thin: “Message leads aren’t available for health care verticals or tax specialists” (Google lead types), and Google’s help pages also exclude tax specialists from call recordings, direct booking and lead credits. There is no bookkeeping or CPA category.

The IRS directory and the credential check. The IRS tells taxpayers that “tax return preparers have differing levels of skills, education and expertise,” and credentialed preparers and AFSP participants appear in its public directory. Name the credential and who signs the return on the profile and site.

Returning clients and referrals. The relationship renews each year by design, and the rules on tax return information let you use the client list for “soliciting additional tax return preparation services” but not “any service or product other than tax return preparation services” without consent (26 CFR 301.7216-2). Build a consent step into onboarding before you plan to offer bookkeeping to tax clients.

Reviews. BrightLocal’s 2026 survey found “47% of consumers won’t use a business that has fewer than 20 reviews.” Ask every client after delivery, and never mention anything from a return in a reply.

Words to avoid. Enrolled agents may not use “certified” under Circular 230, and the 7216 rules bar advertising refund amounts. Our accountant and tax preparer marketing page covers the state board rules and the season calendar in detail. For setup, see how we handle Google Business Profile for practitioners and review requests that never touch client data.

Where new practices get caught out

• Advertising services the credential does not cover. A PTIN-only preparer cannot represent clients beyond what the AFSP allows.
• “Accounting” in a Texas business name without a CPA license. Section 901.453 limits the word.
• Applying for the EFIN in December. It can take 45 days, with fingerprints and a suitability check.
• Treating the security plan as optional. The FTC and IRS both say it is required.
• Preparing in California before CTEC registration. Sixty hours and a bond come first.
• Emailing the tax list about bookkeeping. That needs client consent first.

Questions about starting an accounting or tax practice

Do I need to be a CPA to start a tax preparation business?

No. Anyone paid to prepare federal returns needs a PTIN, and California and New York add state registration for non-credentialed preparers. A CPA license, an enrolled agent credential or a law license is what adds unlimited IRS representation, and only licensed CPA firms may do attest work.

How much does a PTIN cost?

$18.75, as of October 2026, and it renews every year. Most first-time applicants get one online in about 15 minutes.

How long does it take to get an EFIN?

Up to 45 days from submission, according to the IRS. Expect a suitability check, and fingerprinting for principals who are not attorneys, CPAs or enrolled agents.

Should I become an enrolled agent?

If you want to represent clients beyond the returns you prepare, yes. You pass all three parts of the Special Enrollment Examination within three years, now administered by PSI Services, apply on Form 23 and pass a suitability check.

What is the new Texas CPA pathway?

Pathway B, effective August 1, 2026: a bachelor’s degree, 120 semester hours and two years of work experience, alongside the existing 150-hour route with one year of experience.

When does California’s new CPA route start?

January 1, 2027. A bachelor’s degree with an accounting concentration replaces the 150-unit requirement, both routes are valid in 2027 and 2028, and only the new one applies from 2029.

What security rules apply to a one-person tax office?

The FTC Safeguards Rule applies regardless of size: a written information security plan, a Qualified Individual, multi-factor authentication, encryption and FTC notice within 30 days of a breach affecting 500 or more consumers.

Sources

Checked on October 3, 2026. Rules and fees change, and many are set state by state or city by city: confirm the current requirements with the agency that issues them before you apply.

• IRS, PTIN requirements for tax return preparers
• IRS, Annual Filing Season Program
• IRS, choosing a tax professional
• US Census Bureau, County Business Patterns 2023, national file
• US Census Bureau, Nonemployer Statistics 2023, national file
• O*NET OnLine, Accountants and Auditors (13-2011.00)
• O*NET OnLine, Tax Preparers (13-2082.00)
• IRS, first day of the 2026 filing season (IR-2026-02)
• IRS, filing season statistics for the week ending May 8, 2026
• Bureau of Labor Statistics, tax preparation services employment, series CEU6054121301
• IRS, become an authorized e-file provider
• 26 CFR 301.6011-7, specified tax return preparers (eCFR)
• IRS, become an enrolled agent
• 31 CFR 10.3, Circular 230, who may practice (eCFR)
• Texas State Board of Public Accountancy, new pathway for CPA exam and certification (March 2026)
• Texas Occupations Code 901.252 (certificate requirements)
• Texas Occupations Code 901.351 (firm license)
• Texas Occupations Code 901.453 (titles)
• Florida Statutes 473.308 (licensure), 2026
• Florida Statutes 473.3101 (firm license), 2026
• California Board of Accountancy, legislation (AB 1175)
• California Business and Professions Code 5093
• California Board of Accountancy, Quick Facts (September 2026)
• California Board of Accountancy, fictitious name permit
• California Corporations Code 17701.04
• California Business and Professions Code 5058 (titles)
• California Tax Education Council, new preparer application
• California Tax Education Council, home page (renewal deadline)
• California Business and Professions Code 22255 (qualifying education)
• California Business and Professions Code 22258 (CTEC exemptions)
• New York State Department of Taxation and Finance, tax preparer registration
• FTC, Safeguards Rule: what your business needs to know
• IRS, Publication 4557, Safeguarding Taxpayer Data (Rev. 6-2024)
• IRS, Security Summit reminder on written information security plans (IR-2026-92)
• SBA, choose a business structure
• IRS, get an employer identification number
• SBA, get business insurance
• California Labor Code 3700 (workers' compensation)
• Florida Statutes 440.02 (workers' compensation definitions)
• Texas Department of Insurance, workers' compensation for employers
• Journal of Accountancy, client advisory services benchmark (December 2024)
• 31 CFR 10.30, Circular 230 solicitation rules (eCFR)
• IRS, Dirty Dozen warning on untrustworthy preparers (IR-2024-96)
• 26 CFR 301.7216-2, permitted uses of tax return information (eCFR)
• Google Business Profile guidelines (individual practitioners, coworking and virtual offices)
• Google, Local Services Ads requirements (US)
• Google, Local Services Ads lead types
• BrightLocal, Local Consumer Review Survey 2026