Q&A with Mariette Martinez, EA: How to Start Your Own Tax Practice

Grow your practice, Practice Management Start Your Own Tax Practice

Whether you have attended my recent “How to Start Your Own Practice” webinars and want to see the Q&A, or are simply interested in learning more about starting your own tax practice, this Q&A may help! Throughout the webinar series, I’ll update this article in collaboration with my partners at Intuit® ProConnect™ to help give you the answers to common questions I received during the series.

Q: What do you recommend for someone who is rusty, who, for example, has not done a return in 20 years? What is the best way to get up to speed to feel confident as a tax professional?

A: I have found “practice really does make perfect.” I have done the following to create confidence in my tax preparation: (1) contract with one or more CPA firms to prepare extra tax returns during business season (2) partner up with a tax professional colleague who you can bounce case studies back and forth (3) focus on a specific niche of tax clients (e.g. individual, business, real estate investors and/or dealers).

Q: What’s the biggest challenge you had starting out as a new business?

A: A challenge for all newbies is trying to take on ALL types of tax clients. I took on every tax client possible to get as much practice as possible. I have decided recently where my true passion lies, and now I have targeted a specific market, based on this more niche model of tax clients.

Q: I have no desire to “tweet” or post anything. However, I know I have to. What do you suggest to get up to speed? How do you find and hire someone to manage your social profiles?

A: We are not all natural social media experts, but there is definitely a demand for help in this area. Consider outsourcing a social media consultant to teach you how to better love and take advantage of social media, or just hire this person to do it for you.

Q: Regarding social media, do you use your personal accounts, or do you recommend creating separate business accounts on Facebook, Twitter and other social media?

A: Social media strategies can be personal, business or both, in regards to how you decide to share your content with the online community. Based on your strategy, you will choose the best platform to share with your target communities.

Q: Tell me more about using Buffer to manage social media. What social media platforms does it work with?

A: The beauty of Buffer is that you can post in many places at once (like I showed in the webinar). It’s like being at more than two places at once and looks very magical to your followers. For more on Buffer, check out their awesome learning center.

Q: While social media is the target, what are your thoughts on direct mail to target businesses?

A: I am still a believer that people check their mail, but not paper mail. Email marketing is the way to go.

Q: Do you maintain your own website, or do you have someone do it? How easy or difficult it is to post videos to a website?

A: I am a BIG believer in “do what you do best, and outsource the rest” (Peter Drucker). My website is on WordPress, but I have my website wiz, http://www.israelcollazo.com, handle the magic on my website.

Q: What are your recommendations around hiring a seasonal tax preparer? How will I know I can trust them?

A: Trust is earned, so let them earn it. Ask them to get certified in tax preparation, either through the IRS or state, if available. There are also great programs through the local colleges and the IRS VITA program. Start them slowly on tax returns and check their work.

Q: What does it mean that you are 100% cloud-based, but use desktop ProSeries®?

A: I decided when I started my practice that I would work with my clients strictly in the cloud. For this reason, I have targeted cloud-based solutions for my firm. However, I also believe we should use what we love and I am very happy with the desktop tax prep solution ProSeries.

Q: Since listening to your webinar and the Firm of the Future webinar, I am interested in moving in that direction. Do you have an actual location, or are you more home based, and do you keep hard copies of all tax returns?

A: I have both a physical location and home office. Regarding paper documents, mostly all documents are in electronic format and saved securely in my cloud storage, provided by Citrix ShareFile.

Q: You mention you are 100 percent cloud based. How can I learn about becoming cloud-based business?

A: According to Intuit, their Firm of the Future website is a great resource for moving to the cloud, among other future focused topics, including value pricing and digital marketing. Peter Cullen has another great webinar series about how to transition your firm to a Firm of the Future. You can register here.

Q: Do I need to file for a Company Name (DBA) if I want to file for an EIN (Employer Identification Number)?

A: Obtaining a Doing Business As (DBA) is optional and completely separate from obtaining an EIN. Many companies choose a DBA so they can use another name other than their own for their company. However, if you are a sole proprietor, you ultimately file under your taxpayer name and Social Security number. The IRS uses the EIN to identify the taxpayer and related tax report filings. Most sole proprietors don’t need to obtain an EIN and can use their Social Security numbers instead. Even so, many prefer to obtain an EIN so they can utilize that number on all tax forms instead of their Social Security number.

Q: How does pass-through entity election help SMLLC?

A: When a sole proprietor chooses to set up a limited liability company (LLC), this entity is called a single-member LLC (SMLLC). There are some key advantages of this type of pass-through entity, and I have listed a few below:

  • An LLC structure better protects the business owner’s personal assets against lawsuits directed related to the company; however, I always recommend a strong liability insurance plan for full protection.
  • Setup and registration is less cumbersome than most other legal entity protected structures.
  • Most popular: SMLLCs do not pay taxes at the business FEDERAL level. (Check individual state rules for state tax liabilities.) Any business income or loss is “passed-through” to owners and reported on their personal income tax returns. Therefore, tax balances are paid at the individual level, NOT the business level. Business owners pay taxes ONCE and avoid double taxation.

Q: Do you have to be a CPA to become a tax preparer?

A: Absolutely not. Check out this very cool IRS chart that gives an Overview of Tax Return Preparer Requirements.

Q: Are CPE credits only for CPAs and EAs?

A: Check out the IRS chart Overview of Tax Return Preparer Requirements for CPE requirements.

Q: Is there a yearly continuing education requirement for the PTIN?

A: According to Intuit, there aren’t any annual continuing education requirements for the PTIN alone. However, CPAs, EAs and Annual Filing Season Program members are held to certain CE requirements. You can find out more about these requirements in the links above. You can find out about PTIN requirements here.

Q: What are the requirements to become an e-filer?

A: Effective in tax year 2011, unless exempted or waived, the IRS requires that all tax providers or firms filing 11 or more returns must electronically file. Before you can electronically file tax returns, you or your firm must apply to become an Authorized e-File Provider with the IRS and obtain an electronic filing identification number (EFIN). Once you have submitted your application to become an Authorized e-File Provider, you will need to send a fingerprint set to the IRS so they can administer a suitability check. This may include a credit check, a criminal background check, a tax compliance check and a check for previous non-compliance with IRS e-File requirements. This process may take up to 45 days. Currently, there is no fee to obtain an EFIN. To begin the application process, create an IRS e-services account, and then fill out your e-File application online. The application is comprehensive, but you can save the information, take a break and continue to fill out the application when convenient. When your application has been approved, the IRS will send an acceptance letter and your EFIN. It’s important to note that some states require e-File providers to submit a separate enrollment application for authorization to e-File individual or business tax returns. Check with relevant state tax agencies to understand state-level e-file requirements.

Q: If you are not a CPA or EA in California, you have to register with CTEC. Is there a “CTEC” type of organization in Ohio, and can you transfer the credential?

A: You are correct – some states, including California, Oregon, Maryland and New York, have their own certification, or registration requirements, for professional tax preparers. It’s best to check with your state to find out if they have any additional regulations.

Q: What is a good document management system (DMS) that is on the cloud?

A: I use Citrix Sharefile and absolutely love it and all its add-on features like e-signature and client portal options. A fellow webinar attendee also mentioned PinPoint and Laserfiche, so those might also be worth looking into.

Q: How do I get started on ProConnect Tax Online?

A: The Intuit ProConnect Tax Online Welcome Webinar is a great resource for all of the steps to get up and running on ProConnect Tax Online. It covers how to create an account, how to purchase returns, how to verify your EFIN, how to update preparer and firm information, and more.

Q: I have used Intuit ProConnect Lacerte® for years … never ProSeries. How do you think they are different, or how is one better than the other?

A: According to Intuit, ProSeries offers a form-based system and flexible packages to meet you and your clients’ needs, while Lacerte offers the most comprehensive premium desktop solution for tax and accounting firms, with complex individual and business clients. Another option is ProConnect Tax Online, which is Intuit’s cloud-based software, dedicated to helping you innovate and streamline tax preparation from anywhere. You can find more details about each of these solutions here.

Q: You mentioned that you can use QuickBooks® Online Accountant for your own books for free? What does free mean?

A: According to Intuit, free really means free! Tax professionals and accountants can use QuickBooks Online Accountant free for their own firm’s books.

Q: I’ve heard that QuickBooks ProAdvisors get free returns! Tell me more. 

A:Yes, QuickBooks ProAdvisors can get 25 free returns within ProConnect Tax Online for a limited time. You can find more about this offer here.

Q: If clients send documents to Intuit Link, how is this kept secure and encrypted?

A: According to Intuit, the Link portal utilizes 256-bit encryption and stores all data on U.S. servers to help keep data secure. Learn more about Intuit’s security measures here.

Q: With Intuit software, can you send last year’s tax organizer to your client to complete current year tax information?
A: According to Intuit, with the Intuit Link portal, you can quickly create and send personalized digital client checklists to clients based on their prior year tax return.

More information
You can view a recording of the webinar,  download the slides, or check out Intuit ProConnect’s guide to starting  your own practice. You can also check out my blog for more resources here.

If you’re looking for webinars on Intuit ProConnect software instead, please visit these pages for more information: