Tax Franchise vs. Tax Partnership

   

Tax Franchise vs Tax Partnership

So, you are now experienced in the Tax Preparation industry and have a customer base that you think will like to do their taxes with you. With all this in mind you want to start your own Tax preparation business. While researching your options for starting this business you come across various models from tax franchises, tax partnership to independent tax locations. In this article, we will help you decide between tax preparation franchise and tax preparation partnership.

Cost/Pricing - Any business that you will start, you will need to invest some capital. However, when you do your research you will find that most tax franchises like H&R Block, Jackson Hewitt etc., have a significant franchise fees which can range from $20k-$75k, which makes it very difficult for an average person to enter this business. And most of the franchises project a return on investment after 3 years. However, in Tax Partnerships, the investment is significantly low and you can get your return in your first tax season. Therefore, for a person with some experience in this industry it becomes easy to invest and run a successful tax preparation business without worrying about recovering his/her capital.

Business Operations  Flexibility - When you purchase a franchise, you have to operate the way the franchise wants you to. You loose the flexibility of choosing your own location you have to run your business based on their rules and regulations from timing, pricing etc. So, you feel you are no longer running YOUR OWN business but actually working for someone else’s business. When you sign up in a Tax Partnership you have more control of your business. Who knows the location and your customers better than you. So, why should you not be able to manage your business the way you know best and the way it can appeal to your customers.

Royalty and Splits - Tax franchises charge you not only initial start up capital investment but also a high royalty fee of your tax preparation fees. These fees eat into your profits and make it harder for you to recover your investment sooner. In Tax Partnerships, there is a split which is negotiable and not tied to gross revenue. Also, Tax partnerships do not ask an additional fees for their national marketing campaigns.

Contract Period - Most franchises have a contract period of 5 or more years and also do not allow you to add more services to your business. This limits your investment and recovery of investment longer. Tax partnership term is only 1 year and most tax partnerships also promote many other add on and ancillary services that allows you not only to to help you do taxes for your customers but also to sell other services to your customers. Tax Partnerships allow you to  recover your investment faster than any other franchises. For more info on starting your own tax prep business contact us for more details at www.maximtaxservices.com or Raj at raj@maximmultiservices.com