Can anyone provide guidance on starting a small tax practice?

Question

A colleague and I would like to start our own accounting/tax practice, but need to understand what it costs to get started. What are typical costs that you incur?

Answer 1

You are going to have 3 large expenditures-equipment (computers, fax machines, telephone systems, etc.), software (write up and tax) and the biggie-liability insurance. Computers aren't a huge cost these days, but the write up and tax software can be costly (MAS 90 is thousands of dollars, and Lacerte is upwards of a grand, too). As far as liability insurance, you'll need to check with an insurance agent on that one.

Other costs are office supplies (and do they ever add up!), advertising (once you hang your shingle, how will people know you're there), business licenses and rent (assuming you're not setting up shop at one of your homes).

I've been wanting to expand my tax practice from home for years, but I'm concerned about not being able to cover the costs of liability insurance against revenue. Nobody wants to run at a loss, but with so many people wanting to blame someone else for their business mismanagement, I just don't see a way of escaping the liability/malpractice insurance issue.

Good luck!

Answer 2

Software like Drakes & mandatory IRS/Drakes annual training can be up to $3-5k for 2 but not that bad. Extra secure computer set-up does not cost much more than normal. Key is building the client list up.