How to Start a Virtual Tax Preparation Business (2027)

The credentials are the same as any tax office

Working from home or fully online doesn't change the federal requirements. You need a PTIN to prepare returns for pay, and your firm needs an EFIN to e-file them. The IRS e-file application asks for your business location, and each location where e-file transmissions happen needs its own application, which for most virtual preparers means their home office. Check your state too: some states require preparer registration, education or a bond. See tax preparer requirements by state.

Remote signatures: what the IRS requires

Clients authorize you to e-file with Form 8879. They can sign it electronically if your software supports it. Under IRS Publication 1345, a signature is a remote transaction when you're not physically with the client, and then you must:

• Record the client's name, Social Security number, address and date of birth.
• Verify that information through record checks, which e-signature software usually does with knowledge-based authentication questions drawn from credit records. This can show up as a soft inquiry on the client's credit report, and the software should tell them so.
• Fall back to a handwritten signature if the client fails the questions three times.
• Keep Form 8879 for three years from the return due date or the IRS received date, whichever is later.

Set up a secure way to collect documents

Don't collect tax documents by regular email or text. Use a client portal with encryption and multi-factor authentication, most often the one built into your tax software. The FTC Safeguards Rule covers tax preparation firms and requires a written information security program: a Qualified Individual, a risk assessment, encryption, multi-factor authentication, staff training, oversight of service providers and a written incident response plan. A breach involving unencrypted information of 500 or more consumers must be reported to the FTC within 30 days of discovery. The IRS's Publication 5708 has a sample written information security plan (WISP) for small practices.

What a virtual tax office needs

Your remote client workflow

• Booking: the client books online and gets your intake form and document checklist. See our tax client intake form template.
• Upload: documents arrive through the secure portal.
• Interview: a short phone or video call to go over changes and questions.
• Preparation and review: you prepare the return and, for credits like the Earned Income Credit, complete the due diligence questions.
• Review and sign: the client reviews the return online and signs Form 8879 electronically.
• E-file and follow-up: you transmit, watch the acknowledgment and send the client a complete copy of the return.

How virtual tax businesses find clients

Without a storefront, people decide whether to trust you online. That makes a few things essential: a website with your services, prices or pricing approach, languages and a tap-to-call number; a verified Google Business Profile (as a service-area business you can hide your home address); reviews from real clients; and a referral program. A clear niche helps even more online: gig workers, a language community, or clients in one profession. Our full guide: how to get tax clients.

Start virtual with a partner behind you

Partner offices with us, including fully remote ones, get professional software with remote signing and secure upload, setup, training and season support with $0 upfront. We also do your marketing launch in your name: a website, your Google, Apple and Bing listings, a Google Ads account and a referral program. We don't guarantee clients or income. Apply to join.