Tax Related Opportunities The tax preparation industry is big business. According to IRS data, 138,893,908 individual tax returns were filed in 2007. Of those individual filers, roughly 60% of them use paid preparers to file their returns. According to the American Institute of Certified Public Accountants, which represents more than 350,000 CPA members, more than 81 million taxpayers hire professional assistance each year. With fees ranging up to several hundred dollars per return, one can quickly see that the industry is very large in terms of annual revenue. Several tax preparation franchises have a number of locations throughout the United States and Canada. The following are some companies in the industry: H&R Block Inc. (NYSE:HRB) has served more than 400 million clients since 1955 and generated annual revenues of $4.4 billion in fiscal year 2008. H&R Block provides income tax return preparation and related services and products via a nationwide network of approximately 13,000 company-owned and franchised offices. It also offers TaxCut® online and other software solutions. Jackson Hewitt Tax Service Inc. (NYSE:JTX), with approximately 6,800 franchised and company-owned offices throughout the United States during the 2008 tax season, provides individual federal and state income tax return preparation. Most offices are independently owned and operated. The Company is based in Parsippany, New Jersey. Liberty Tax Service is a retail tax preparation company, with over 3,200 offices in the United States and Canada. The company says that it plans to open up to 500 new offices in January 2010. Liberty Tax was founded in 1997 by CEO John T. Hewitt, who also founded Jackson Hewitt Tax Service. Liberty Tax Service has prepared over 6 million individual income tax returns. Instant Tax Service is an income tax preparation firm specializing in tax preparation services including federal and state tax preparation, electronic filing, and refund anticipation loans. During tax season 2008, the company says it operated approximately 1,800 locations across the country. The company was established in 2000 and has been franchising since 2004. EagleTax Services Group, LLC., co-managed with United Financial Services Group, Inc., which operates the United Check Cashing franchise and has been franchising since 1992, opened tax franchise operations in 2008. By the year end, it had 13 franchise contracts and 8 stores open. The company says it expects 25 to 30 stores and more contracts for the 2010 season. As readers will see, a unique challenge to the tax preparation industry is its seasonality. The peak season is from January through April each year. Such seasonality presents both opportunity and challenge. On the one hand, successful entrepreneurs can enjoy many months of down time between tax seasons. On the other hand, financing a business, paying for a storefront, and many other traditional business tasks are more complicated when one’s revenue is almost wholly earned in just a few months of the year. Franchising and tax preparation may be a strong combination. As a fragmented industry, many tax preparers are solo practitioners that lack large marketing budgets. That makes the cooperative advertising and marketing, along with the imputed advertising effect of many physical storefronts operated by the franchisor, all the more relevant for commercial success. After all, as many others have noted, whether the economy is growing or contracting, every year just about everyone must file their taxes. --Mark Adkins |
||
Articles |
News Headlines |
|
|
||
 EagleTax: A Financial Services Franchisor Launches a New Tax Preparation Franchise | An interview with Jack Leonard and Richard MorrisMany people interested in acquiring a franchise face a dilemma: they can choose a new franchise with many markets available but limited franchisor experience, or choose a well established franchise and benefit from the experience, support, and advertising that a successful franchisor offers. The trade-off is that all too often there is a poor selection of available markets. EagleTax Services Group, LLC., which is affiliated with United Financial Services Group, Inc., may offer an alternative to the dilemma with the launch of its new tax preparation franchise. EagleTax has market availability, while its management team provides franchisees with seasoned franchise leadership. <READ ARTICLE> |
||
| Bookkeeping Express expands as small businesses attempt to control accounting costs A newly franchised bookkeeping business, Bookkeeping Express, is signing new franchise agreements. The new franchise is positioning its services as the perfect answer for small business clients who wish to control the traditionally large expense of accounting services. <READ ARTICLE> |
||
Resources The American Institute of Certified Public Accountants is the national, professional organization for all Certified Public Accountants. The National Association of Enrolled Agents (NAEA) is the professional society representing Enrolled Agents (EAs), which number some 40,000 nationwide. Its 11,000 members are licensed by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service (IRS), including examination, collection and appeals functions. |
||
Instant Tax: An Interview with CEO Fez Ogbazion
