How to Start a Tax Practice From Zero: LLC, Software, Pricing, and First Clients

2026-07-09

You passed the EA exam. You have your enrollment card. You're authorized to represent any taxpayer before the IRS. Now you need clients.

Starting a tax practice is simpler than most people think. You don't need office space. You don't need employees. You don't need a website (though it helps). You need a PTIN, an EFIN, software, and a way to find clients. Here's the sequence.

Step 1: Form Your Entity (or Don't)

You can operate as a sole proprietor. No LLC. No S-Corp. Just your name, your PTIN, and your EA credential. This is the fastest way to start. You report income on Schedule C.

If you want liability protection, form an LLC. A single-member LLC takes an afternoon and costs $50-500 depending on your state. The LLC does not change your tax filing — you still file Schedule C as a disregarded entity. But it separates your practice assets from personal assets, which matters if a client ever sues.

Do not form an S-Corp in year one. The payroll and compliance overhead exceeds the tax benefit until you're netting $60,000+. Wait until you have revenue before optimizing the entity structure.

Step 2: Get Your EFIN

The Electronic Filing Identification Number (EFIN) is required to e-file returns for clients. Apply through the IRS e-Services portal. The application requires:

Your PTIN
Your SSN or EIN
Fingerprinting (if you're a first-time applicant)
A suitability check (tax compliance, criminal background)

Processing takes 45-60 days. Apply before tax season. If your EFIN isn't approved in time, you can paper-file returns — but clients want e-file. Get it early.

Step 3: Choose Your Software

Professional tax software:

Drake Tax — The standard for solo EAs. Pay-per-return pricing ($300-1,500 depending on volume). Covers all states, all forms. Mature, stable, industry-standard for small practices.
Intuit ProConnect (Lacerte) — Better UI, more expensive ($2,000-5,000/year). Good if you're doing complex returns.
TaxSlayer Pro — Budget option ($1,000-1,500 for unlimited). Fewer features but adequate for straightforward 1040s.
UltraTax CS — Premium option for high-volume practices. $3,000-6,000/year. Used by mid-size firms.

Practice management:

TaxDome — Client portal, document requests, e-signatures, invoicing, workflow management. $50/month. Standard for solo EAs.
Canopy — Similar to TaxDome. Slightly more expensive. Better for teams.
Google Workspace + Dubsado — DIY stack. Cheaper but more manual work.

Other tools:

QuickBooks Online for client bookkeeping ($30/month)
Calendly for scheduling ($10/month)
Zoom for client meetings ($15/month)
Google Voice for a business phone number (free)

Total startup cost: $500-2,000 for software + filing fees.

Step 4: Set Your Pricing

New EAs typically undercharge. Here are benchmark rates for a solo practice:

Simple 1040 (W-2 only, standard deduction): $200-400
Itemized 1040 (Schedule A, some investment income): $400-750
Schedule C (self-employed): $500-1,200
Multi-state return: $750-1,500
Expat return (FEIE/FTC, FBAR): $750-2,000
Streamlined compliance (3 years, 6 FBARs): $1,500-5,000
IRS representation (audit response): $150-350/hour
Tax planning consultation: $200-400/hour

Price by the return, not by the hour. Clients want to know what it costs before they commit. If you price hourly and the return takes longer than expected, the client is unhappy. Price by the return and your efficiency becomes your profit.

Year-one target: 50-100 clients at an average of $400-500 per return = $20,000-50,000. Part-time, side-hustle scale.

Year-three target: 200-300 clients at $500-750 average = $100,000-225,000. Full-time.

Step 5: Find Your First 10 Clients

Friends and family. Everyone you know files taxes. Tell them you're an EA. Offer to do their return. Do a good job. They'll refer you.

Your current network. Former coworkers. Neighbors. Parents at your kid's school. Anyone who knows you and has income. The first 10 clients come from people who already trust you.

Local businesses. Walk into small businesses in your area. Introduce yourself. "I'm an Enrolled Agent — a federally-licensed tax professional. I prepare returns and represent taxpayers before the IRS. If you're looking for a new preparer, here's my card." Most will say no. Two will say yes. That's 20% — a great conversion rate for cold outreach.

Referral from other professionals. Meet a financial advisor. Meet a real estate agent. Meet a divorce attorney. Tell them what you do. Offer to take their most complicated client for free. Do a perfect job. They'll send you every client they have.

Online directories. Register with the IRS Directory of Federal Tax Return Preparers. List your practice on Google Business Profile. Create an NAEA profile if you join. Clients find preparers through these directories.

Content marketing. Write a blog post about a tax topic you know well. Share it on LinkedIn. Answer a question on Reddit's r/tax. The internet is full of people asking tax questions. Answer them publicly and clients find you.

Step 6: The Tax Season Rhythm

Tax season is January through April. You'll do 60-80% of your annual work in four months. Plan for it:

October-December: Client onboarding, engagement letters, pricing quotes
January-April: Grind. 60-70 hour weeks. This is when you make your money.
May-September: Extension work, amended returns, IRS representation, continuing education, planning for next season

The first tax season is chaos. The second is organized chaos. By the third, you'll have systems and know what to expect.

What Not to Do

Don't take every client. If someone's pushing you to take aggressive positions, walk away. Your EA credential is worth more than their fee.
Don't underprice. Charging $100 for a return you spent 3 hours on is a hobby, not a business. Charge market rates from day one.
Don't skip engagement letters. Every client signs one. Scope of work, fee estimate, your responsibilities, their responsibilities. Without it, a fee dispute becomes unwinnable.
Don't give tax advice without seeing the documents first. "My buddy said I can deduct my dog as a security expense" — don't answer until you've seen the actual receipts and the relevant IRS publication.

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