Let’s talk real numbers.
The Non-Negotiables
PTIN: $19.75. This is your IRS registration. Every paid preparer needs one.
EFIN: Free. The IRS doesn’t charge for your Electronic Filing Identification Number, but the fingerprinting for the background check costs about $30 to $50.
Business Formation
LLC filing fee: $50 to $500, depending on your state. Texas is $300. Many states are under $150. If you hire an attorney to handle the formation, expect to pay $500 to $800 total.
EIN from the IRS: Free. Takes five minutes online.
Business bank account: Free to $25 per month.
Software
Professional tax preparation software ranges from about $350 to $2,700 per year, depending on the platform and plan. Pay-per-return options (TaxAct, Drake pay-per-return, TaxSlayer Pro) let you start with lower upfront costs and scale as your volume grows. If you’re preparing fewer than 50 returns in your first season, a pay-per-return plan is usually the most economical choice.
Insurance
Errors and omissions insurance runs $300 to $800 per year for a new preparer. This is professional liability coverage that protects you if a client claims your work caused them financial harm. It’s not required by the IRS or most states, but it’s a mandatory business expense in my view. One claim without coverage can cost more than a decade of premiums.
Office Setup
If you’re working from home, you probably already have a computer and internet connection. Add a scanner with a document feeder ($100 to $300), a shredder ($30 to $75), and a printer if you don’t have one. Call it $200 to $500 for equipment.
Training
This is where the range gets wide. H&R Block charges $149, but that course trains you to work in their offices, not to run your own business. Community college programs run $325 to $1,780. Independent professional programs range from $1,950 to $4,300. MuseSpring’s Tax Prep Business Academy is $2,497 and includes business formation support, legal compliance training, AI tools instruction, and six months of ongoing coaching through the Scale Membership.
The Total
On the low end (self-study, pay-per-return software, home office): $1,400 to $2,500.
On the higher end (professional training, better software, full setup): $4,000 to $7,000.
Compare that to a tax franchise: $50,000 to $100,000 upfront, plus 14% to 18% of your gross revenue every year in royalties.
The Payback
At 50 clients and a $250 average fee, your first-season gross revenue is $12,500. Even on the higher-end startup budget, you’re in the black after your first season. Very few businesses can say that.
For a complete walkthrough of every startup cost and how to keep them smart, visit musespring.com.