Start A Private Practice as an IRS Enrolled Agent

Practice as an Advocate for American Taxpayers

enrolled AgentAn Enrolled Agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service. An Enrolled Agent may negotiate with the IRS when representing a taxpayer during during an examination or an audit. And, with a power of attorney may may act in place of the taxpayer, signing documents and executing agreements on their behalf.

Enrolled Agents, like attorneys and certified public accountants (CPAs), are generally unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before. Their familiarity with the tax code and how to research tax issues makes them ideal candidates to start a private practice offering services aimed at helping taxpayers with tax audits, IRS appeals, where necessary, representation before the IRS, tax resolution issues, and even tax preparation.

Planning to offer your services to the public

Starting any business without a plan is a material mistake. Preparation of a business plan typically gives any  business a four (4) to five (5) greater probability of surviving in business. Thus, there is no reason a person planning to start a private practice, where his certification as an IRS Enrolled Agent will be the designation differentiating his business from other professionals providing tax services to the public.  Preparing a plan must include how you’ll finance your operation and the research material needed for reference; address presenting the right image to the clients you to plan to attract, and situations you should avoid; and  how you’ll market to get clients most in need of your services. There is substantial literature available on how to develop a personalized business plan, which should become a part of your library and be used as a first step before starting this or any type of business.

Having Developed Your Plan, take a serious look at your ability to finance it.

There are many ways to finance a tax practice. However, there are methods you should avoid. Borrowing from a financial institution is great once you get underway. However, it should not be used for startup. Because, the only assurance you’ll have is  you’ll need to make a regular loan repayments. This can be bad when you’re having a bad month which is a high probability when your firm is new. No matter how you offer tax related services, the lion’s share of your work will likely occur during tax season.

Investors seldom invest in professional services organizations due to their inability to scale beyond a certain point. Sometimes it’s better to be realistic about how you’ll raise money to get your business started. Few investors will invest in a business that fails to demonstrate their investment will grow many times. And, they’ll make a profit on their investment. Few tax practices will offer an investor that type of assurance.

Finally, grants can be great because you don’t have to repay them. However, seeking one puts you in competition with potentially tens of thousands if not hundreds of thousands of other grant seekers. Many of those people will have been through the process multiple times, some have professional writers, and other professionals increasing their chances of getting a particular grant, and if you think you can beat them, good luck. But the availability of startup grants is poor. And, I have never seen one directed at helping a tax practitioner get a business started. This is not to say they don’t exist, I’ve not seen one directed toward this profession. Finding a suitable one will require research on your part.

Determine Your Equipment and Research Needs

No matter how well you did on the SEE, I don’t think I have to remind you of your need to not only stay current but to have both research material and software allowing you the ability to review tax issues on which you need specific details. Plan to pay for it with your own saved money, and elbow grease. These methods will help prevent the possibility of you opening a business in debt. Documenting how you’ll meet your equipment and research needs must be an integral part of your business plan.

Preparing to open for business

It goes without saying, you must be certain you have all the proper registrations and where necessary licenses required to offer professional services to the public. Some states don’t require a special license to offer professional services. And, the licensing fee you pay to their bureau of licensing may fulfill your licensing requirements. You must research this issue and be certain you address the requirements of your state appropriately. Unfortunately, clients will not likely be beating down your door for tax help. Thus, its best if you distribute pre opening and post opening announcements of the existence of your business. As you moved near your grand opening, you would send out announcement cards. Begin to develop a content marketing strategy for your website, and perform other actions to begin to get clients online. The most important issue you must address offline is your location and your availability to service a client’s needs. Do not neglect networking as it may lead to client referrals and even clients seeking the help of a professional.

The Areas You Should be Working In

By the time you reach this point, you should have an idea of the areas of practice you intend to focus on. Many Enrolled Agents limit themselves to addressing the needs of individual taxpayers,  and single member LLCs. Others focus on the unique tax needs of corporations and partnerships. A smaller number of Enrolled Agents will do both. Software necessary to address the concerns of business clients can be very expensive. So, unless you plan to work with a significant number of business clients, it may be best to consider the wisdom of offering that line of service. You’ll find it’s easier to build a practice around a single core competency, rather than to try to master several.

If you decide to limit yourself to personal tax compliance issues, most of your work will occur during tax season. The amount of work you could get for extensions would not be enough to build a year round practice. However, if you choose to offer tax planning and tax resolution services, you’d be better prepared to operate year round. You simply must decide where you could most offer value to your clients.

Do everything you can to establish yourself as an expert in addressing tax related issues. Include tax calculators and other features helpful to clients as well as potential clients on your website. A feature which is growing in popularity is to allow tax payers to email you a photocopy of their W-2s, 1099s, and other important documents and conduct the interview by phone for compliance work. The completed return can then be transmitted to the taxpayer using PDF forms, local delivery services or by overnight or two (2) day mail.


There’s much more you could use to start earning money having earned the right to call yourself an IRS Enrolled Agent.  It would be impossible for us to include all of it in this post. But, it’s my hope this post will get you thinking about how you can turn this into a lucrative practice. Now, let’s look at another business you may consider, if you have some exposure to accounting and would like to add that to your skills to offer business support services. Many people are able to continue their love for numbers by starting an accounting business for non CPAs.

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