How Much Does It Cost to Start a Tax Preparation Business?
National Average
Low
$3,500
Medium
$10,000
High
$27,000
Start a seasonal or year-round tax preparation business serving individuals and small businesses with federal and state tax filing.
Time to Launch
1-3 months
Profit Margins
40-65%
Break-Even Timeline
1-2 tax seasons
Interactive Cost Calculator
Select a state below to see state-adjusted costs.
Startup Cost Calculator
Tax Preparation Business in Nationally
Budget:
$50
$1,800
$200
$1,500
$3,000
$1,500
$800
$800
$300
Options
Employees:
Startup Costs
$9,950
Monthly Costs
$1,500
First Year Total
$27,950
Form Your Business
A formation service files your paperwork and acts as your registered agent so you do not have to track deadlines yourself. The state filing fee still goes straight to the state either way, on top of any service fee.
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Startup Costs by State
| State | Low | Medium | High | LLC Fee | Sales Tax |
|---|---|---|---|---|---|
| Mississippi | $2,695 | $7,700 | $20,790 | $50 | 7.0% |
| West Virginia | $2,695 | $7,700 | $20,790 | $100 | 6.0% |
| Oklahoma | $2,800 | $8,000 | $21,600 | $100 | 4.5% |
| Alabama | $2,835 | $8,100 | $21,870 | $200 | 4.0% |
| Arkansas | $2,835 | $8,100 | $21,870 | $45 | 6.5% |
| North Dakota | $2,870 | $8,200 | $22,140 | $135 | 5.0% |
| Iowa | $2,905 | $8,300 | $22,410 | $50 | 6.0% |
| Kansas | $2,905 | $8,300 | $22,410 | $160 | 6.5% |
| Missouri | $2,905 | $8,300 | $22,410 | $50 | 4.2% |
| South Dakota | $2,905 | $8,300 | $22,410 | $150 | 4.2% |
| Kentucky | $2,940 | $8,400 | $22,680 | $40 | 6.0% |
| Louisiana | $2,940 | $8,400 | $22,680 | $100 | 5.0% |
| Wyoming | $2,940 | $8,400 | $22,680 | $100 | 4.0% |
| Nebraska | $2,975 | $8,500 | $22,950 | $105 | 5.5% |
| Indiana | $3,010 | $8,600 | $23,220 | $95 | 7.0% |
| Michigan | $3,080 | $8,800 | $23,760 | $50 | 6.0% |
| Ohio | $3,080 | $8,800 | $23,760 | $99 | 5.8% |
| New Mexico | $3,150 | $9,000 | $24,300 | $50 | 4.9% |
| South Carolina | $3,150 | $9,000 | $24,300 | $110 | 6.0% |
| Wisconsin | $3,185 | $9,100 | $24,570 | $130 | 5.0% |
| Tennessee | $3,220 | $9,200 | $24,840 | $300 | 7.0% |
| Texas | $3,220 | $9,200 | $24,840 | $300 | 6.3% |
| Georgia | $3,290 | $9,400 | $25,380 | $100 | 4.0% |
| Minnesota | $3,290 | $9,400 | $25,380 | $155 | 6.9% |
| Illinois | $3,325 | $9,500 | $25,650 | $150 | 6.3% |
| Idaho | $3,360 | $9,600 | $25,920 | $100 | 6.0% |
| North Carolina | $3,360 | $9,600 | $25,920 | $125 | 4.8% |
| Pennsylvania | $3,360 | $9,600 | $25,920 | $125 | 6.0% |
| Montana | $3,395 | $9,700 | $26,190 | $35 | 0.0% |
| Utah | $3,500 | $10,000 | $27,000 | $54 | 6.1% |
| Delaware | $3,640 | $10,400 | $28,080 | $110 | 0.0% |
| Nevada | $3,675 | $10,500 | $28,350 | $425 | 6.8% |
| Virginia | $3,745 | $10,700 | $28,890 | $100 | 5.3% |
| Vermont | $3,815 | $10,900 | $29,430 | $125 | 6.0% |
| Arizona | $3,850 | $11,000 | $29,700 | $50 | 5.6% |
| Colorado | $3,850 | $11,000 | $29,700 | $50 | 2.9% |
| Florida | $3,920 | $11,200 | $30,240 | $125 | 6.0% |
| Oregon | $3,920 | $11,200 | $30,240 | $100 | 0.0% |
| Rhode Island | $3,920 | $11,200 | $30,240 | $150 | 7.0% |
| Maine | $3,990 | $11,400 | $30,780 | $175 | 5.5% |
| New Hampshire | $4,095 | $11,700 | $31,590 | $102 | 0.0% |
| Washington | $4,130 | $11,800 | $31,860 | $200 | 6.5% |
| Connecticut | $4,165 | $11,900 | $32,130 | $120 | 6.3% |
| Maryland | $4,235 | $12,100 | $32,670 | $100 | 6.0% |
| New Jersey | $4,375 | $12,500 | $33,750 | $125 | 6.6% |
| Alaska | $4,445 | $12,700 | $34,290 | $250 | 0.0% |
| New York | $4,865 | $13,900 | $37,530 | $200 | 4.0% |
| California | $5,320 | $15,200 | $41,040 | $70 | 7.3% |
| Massachusetts | $5,390 | $15,400 | $41,580 | $500 | 6.3% |
| Hawaii | $6,755 | $19,300 | $52,110 | $50 | 4.0% |
Cheapest & Most Expensive States
5 Cheapest States
- Mississippi$7,700
- West Virginia$7,700
- Oklahoma$8,000
- Alabama$8,100
- Arkansas$8,100
5 Most Expensive States
- Hawaii$19,300
- Massachusetts$15,400
- California$15,200
- New York$13,900
- Alaska$12,700
Frequently Asked Questions
A tax preparation business can start for a low-to-mid four-figure investment, with the main costs being tax software, PTIN registration, office equipment, and marketing. Home-based operations eliminate office rent entirely.
No — anyone can prepare federal taxes for compensation if they register for a PTIN. However, CPAs, EAs, and attorneys can represent clients before the IRS, charge higher rates, and are subject to continuing education requirements. Oregon and California require state licensing for all paid preparers.
Average fees nationally are a low three-figure dollar charge for individual returns and a meaningful four-figure fee for business returns. Complex individual returns (rental income, self-employment, investments) command a higher three-figure fee. Your market and credential level determine acceptable pricing.
Tax season runs January 15 – April 15 with an extended September 15 deadline for extensions. Most revenue is earned in 3 months. Successful preparers build year-round income from amended returns, IRS notices, bookkeeping, and payroll services.