Starting Your Own Tax Prep Business Vs. Franchising

by Christine Harrell

A tax preparation business allows entrepreneurs to take advantage of one of the most constant factors in life: the requirement to pay the government. The vast majority of Americans are required to pay and file a return in the early months of each year. They turn to many different sources to make that filing happen, including computer applications, online programs, and in-person assistance. Because filing is so central to American life, getting into the industry is almost always a smart decision. What is less clear is how you should start. There are two options: go it alone with a totally independent office, or choose to franchise with an existing company.

Going It Alone

At first glance, avoiding the fees associated with a franchise seems like a solid idea. For most contracts, the parent corporation takes a flat percentage of your gross in addition to an initial fee. If you start your own unaffiliated with any existing brands, then you can skip a lot of those costs. However, there is a reason why those charges exist. If you are starting from scratch, getting customers in the door can be difficult. A lot of people won't trust newer offices to handle their returns. You may have trouble developing the kind of brand identity that you need. In addition, if you are new to the industry, you may struggle to understand some of the key points that veterans could share with you. You would certainly be responsible for creating all marketing materials, plans, and other initiatives on your own.

A Franchised Tax Preparation Business

Although there may be more initial costs involved with a franchise, the big advantage is that you get the knowledge, experience, and advice of your parent brand. Many people trying to break into the business are surprised to discover just how much recognition matters to their target audience. Names like Liberty Tax Service, H&R Block, and Jackson Hewitt are widely recognized and trusted nationwide. Starting out in the market with one of these names provides a baseline that could take years for an independent, totally new brand to reach.

In addition, some marketing needs may be covered by the parent company. The extent of this coverage will depend on the individual circumstance, but it is usually standardized and centrally developed in order to ensure uniformity of the brand. In many cases it is beneficial to conduct some efforts above and beyond what is provided, but that depends on the area and the state of the individual office.

Both Require Planning

It is unwise to jump into any industry without substantial planning ahead of time. Even a trusted name like Liberty Tax Service, Jackson Hewitt, or H&R Block does not guarantee success if the individual operator has insufficient business experience or has not carefully considered whether ownership is the right choice for them. Always conduct a thorough review of personal finances and other assets before considering any kind of new venture, franchised or not.

Author is a freelance copywriter. For more information about the tax preparation business, please visit Liberty Tax.

Article submitted Monday, February 13, 2012 & read 1 times.

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