How to start a accounting firm Step by step

Starting an accounting firm is not a to-do list where order does not matter. It is a chain where the slow federal steps gate the fast local ones: you cannot e-file without an EFIN, the EFIN takes over a month, and it requires a registered entity and a PTIN before you can even apply. Get the sequence wrong and you will have a logo, a website, and a client in April but no legal way to file their return. This is the working order that gets you from zero to your first signed engagement letter without dead time, front-loading the steps with the longest clocks.

Step 1: Get your PTIN and confirm what you can legally sell

Before anything else, decide what you are legally allowed to do, because it sets your whole offer. Anyone can do bookkeeping. Anyone who prepares returns for pay needs a PTIN (Preparer Tax Identification Number) from the IRS, which is free and takes about 15 minutes online. To represent clients before the IRS or sign audited financials, you need to be a CPA or an Enrolled Agent; the EA exam is the faster path if you are not already a CPA. Do not overstate your credentials on your site, ever, because state boards restrict the word “CPA” and misuse invites fines.

Pull the PTIN first because it is instant and free, and it is a prerequisite for the EFIN in step 3. If you plan to prepare returns, this is your literal first click. The deeper breakdown of credentials and what each lets you charge lives in the ultimate guide to starting a firm.

Step 2: Form the entity and open the bank account

Now make it a real business. Form an LLC with your secretary of state ($50 to $500 depending on state), then apply for an EIN on irs.gov, which is free and takes ten minutes. The LLC separates your personal assets from firm liability, which matters more in accounting than most trades because a single filing error can trigger a client’s five-figure penalty. Once you clear about $60k to $80k in net profit, ask your own accountant about electing S-corp status to cut self-employment tax.

Immediately open a dedicated business bank account and a business credit card. You are about to counsel clients on clean books; running your own firm’s money through a personal account is both hypocritical and the fastest way to lose the liability protection you just paid for. Do this the same week you form the entity, before any money moves. The full registration walkthrough is in how to set up and register your firm.

Step 3: Apply for your EFIN now, because it is the bottleneck

This is the step that decides whether you can actually operate, and it is the slowest, so it goes early. To e-file more than a handful of returns, the IRS requires an EFIN (Electronic Filing Identification Number). You apply through IRS e-Services, submit to a suitability check (they review your tax compliance and criminal history), and get fingerprinted. Start to finish it takes about four to six weeks, and there is no rush option.

Get this moving in week one. Everything else on this list you can finish in days, but the EFIN clock is the one that ruins launches, because a firm that decides to “handle the IRS paperwork later” in January discovers it cannot e-file until March.

Step 4: Stand up the tech stack and your engagement letter

With the entity and EFIN in motion, build the toolkit. The lean stack: QuickBooks Online Accountant (free to you) or Xero for the books, professional tax software for filing (Drake and TaxSlayer Pro are the budget-friendly favorites at a few hundred to ~$1,500 a season; Lacerte and UltraTax are pricier), a secure client portal for documents (never plain email for tax records), and a password manager. You can run the whole firm for well under $200 a month to start. The full toolkit and cost breakdown is in buying equipment and supplies for your firm.

The single most important document is your engagement letter. It defines scope, fees, deadlines, and what happens if the client hands you records late or gives you bad data. Get a template from your state CPA society or a service like Ignition, and never start work without a signed one. This is what stands between you and a client who blames you for the penalty their own late paperwork caused.

Step 5: Set your pricing and land the first client

Decide how you charge before you quote anyone, because guessing on the first call sets a bad anchor forever. Three models: monthly retainer for bookkeeping and advisory (the goal, because it is recurring), per-return pricing for tax prep ($400 to $1,500+ for a business return, $200 to $600 for a personal one), and hourly for cleanup and one-off work ($75 to $200). Most firms blend them: a monthly bookkeeping retainer plus a per-return tax fee. The full method is in setting prices and billing for your firm.

Now get the first client, and it will almost certainly come from your network, not an ad. Tell every former colleague, small-business owner you know, and local contact that you are open. Your first three to five clients are usually people who already trust you; the marketing machine is for scaling after that. Set your rate at a real professional level from day one, because a firm that opens at bargain prices spends years unwinding that reputation.

The rule for a first-timer: start solo and lean, prove the model with recurring clients, then hire only when you are turning work away. The plan for when and how to hire your first staff comes after you have steady demand, not before.

Getting found is the part that decides everything

Once the paperwork chain is done, the firm lives or dies on whether new clients can find you after your network runs dry. Two free moves for this week: claim and fully complete your Google Business Profile so you show up in local “accountant near me” searches, and ask your first happy clients for a Google review the moment you deliver good work. Those early reviews pull more first-time calls than any ad you could buy.

The higher-stakes part is the website. A firm site is not a brochure; it is the thing that turns a searching business owner into a booked consult, and the gap between a page that converts and one that just looks fine is invisible until you compare the lead numbers. If you would rather have that built right the first time, get a free video walkthrough of your setup. For ongoing SEO, Google Ads, and lead generation, see our services. And if you have the drive but not the full business plan yet, start at expntl.com.