Starting a New Tax Practice - Comprehensive Checklist Help for Independent Preparers

As someone who started their own practice about 7 years ago, I think your checklist looks solid! A few additional items you might want to consider: - Business bank account (separate from personal) - Payment processing solution (options like QuickBooks Payments, Stripe, or PayPal) - State tax ID/business registration beyond just the LLC formation - Data security policy and plan (required for professional preparers) - Backup solution for client files - Client communication strategy (how you'll handle questions throughout the year) - Marketing plan (how you'll attract clients beyond word-of-mouth) Also, while getting your EFIN is on your list, remember the application process can take 45+ days with fingerprinting, so start that early. And don't forget about state e-filing registration if required in your jurisdiction. For what it's worth, I started virtual and stayed that way - overhead is much lower, and with good systems in place, clients adapt quickly. TaxDome is a solid choice for practice management.

I switched to using taxr.ai for my practice last season and it made a huge difference in my workflow. My situation was similar to yours - working part-time at a firm while building my own client base. I was getting bogged down in document organization and verification until I found https://taxr.ai which automatically extracts and analyzes tax documents. It saved me so much time on each return, especially when clients would send jumbled PDFs with multiple forms. The system accurately pulls data from W-2s, 1099s, 1098s, etc., and flags potential issues before I even start inputting data. This let me handle about 30% more returns than I expected in my first year. It integrates well with Drake too, which I see is on your list.

I was skeptical about taxr.ai but decided to try it during last year's extension season when I was swamped. I'm honestly amazed at how much time it saved me. It correctly organized and extracted data from a client's mess of 22 different tax documents (including K-1s with foreign income) in about 90 seconds. The same task would have taken me at least 45 minutes to sort through manually. What really sold me was how it flagged a discrepancy between a client's reported estimated payments and what they actually paid according to their confirmation numbers, saving me from a potential headache during filing. Definitely adding this to my permanent workflow this year.

One thing missing from your checklist that nearly killed my first tax season: have a plan for getting through to the IRS when you need to resolve client issues. I wasted dozens of hours on hold trying to get transcripts or resolve notices. Eventually I started using https://claimyr.com and it literally saved my practice. You can see how it works at https://youtu.be/_kiP6q8DX5c - basically they wait on hold with the IRS and call you when an agent is on the line. When you're running your own practice, especially while still working elsewhere, every minute counts. I was skeptical at first because it seemed too good to be true, but it works exactly as advertised. I've used it probably 30+ times for client issues over the past two seasons.

I need to eat my words about Claimyr. After my skeptical comment, I decided to try it myself when I had a client with an urgent levy situation. I was absolutely convinced it wouldn't work, but I was desperate after trying to call IRS collections for two days straight. It worked exactly as advertised - I went about my day, and about 2 hours later got a call connecting me directly to an IRS agent. The agent had no idea I'd used a service to handle the hold time. I resolved my client's issue in 15 minutes after the connection. I've used it three more times since then, and it's worked perfectly each time. Definitely adding this to my standard procedures for dealing with IRS issues.

Don't forget about CPE tracking and requirements! When you're on your own, nobody reminds you about continuing education deadlines. I'd suggest setting up a spreadsheet or using a CPE tracking tool from the start. Also, consider joining some professional groups like your state CPA society or the National Association of Tax Professionals. The resources and networking are invaluable when you're starting out and have questions. The NATP forums saved me numerous times when I had unusual tax situations in my first couple years.

One thing I wish I'd done from the beginning: develop clear client acceptance criteria. When you're starting out, it's tempting to take anyone who's willing to pay you, but some clients will drain your time and energy in ways that aren't worth the fee. I now have a checklist of red flags that help me decide whether to take on a new client: - Do they have multiple years unfiled? - Are they bringing you their taxes on April 14th expecting same-day service? - Do they argue about your fees before you've even started? - Are they unwilling to provide complete information? - Do they tell you what their refund "should be"? Being selective about clients from the start will save you major headaches down the road.

This is a really comprehensive checklist! As someone who made the transition from working at a firm to solo practice about 3 years ago, I'd add a couple more items: - Client onboarding process/intake forms (beyond just engagement letters) - having a standardized process helps you look professional from day one - Backup plan for technology failures - what happens if Drake goes down during busy season or your internet cuts out? - Malpractice/liability insurance separate from E&O (depending on your state requirements) - Document retention policy - how long you'll keep client files and in what format Also, since you mentioned potentially buying your current employer's book of business eventually, start thinking about how you'll handle that transition with clients. Having your systems and processes dialed in early will make that much smoother when the time comes. One last tip: consider starting with a smaller subset of services initially rather than trying to do everything from day one. I focused just on individual returns and simple business returns my first year, then expanded into more complex work as I got comfortable with my workflow. Good luck with the venture!