It’s a sign of the season: people on street corners waving signs about taxes or words on marquees reminding us to get our taxes done. For some, it’s also a reminder about a great franchise business opportunity — tax services.
A tax service can be a booming part-time business, perfect for accountants and managers who want to earn extra income for a few busy months out of the year while they work their regular jobs or entrepreneurs who want to focus their work hours in one season.
What if you want to be in business year ’round?
There are actually two business models available for people who love accounting, one that offers tax preparation service in conjunction to other small business and individual accounting tasks and one that focuses solely on tax preparation.
Many income tax preparation franchises, like Liberty Tax, are seasonal businesses that close their doors after tax season has ended. Others, like 1040TaxBiz, are a mix of seasonal and year-round locations. Since these franchises specialize in name and business model specifically for income tax, even though they might do other activities, income tax preparation is the bread and butter. If the business is year-round, it’s likely that most customers first make contact with the business during tax season and then decide to continue services once tax season is over. Keeping the business going with other services — getting the jam to spread throughout the year — requires targeted marketing efforts. Even with diligent upselling, a tax-focused business relies on a good tax season for survival.
Tax preparation franchise owners might not be especially interested in accounting, and might own other franchises with different peak times, providing a high level of variety in their work lives over the course of the year.
Bookkeeping Express and Padgett Business Services, on the other hand, base their business on year-round accounting services without specializing in the lucrative income tax trade. Instead, these accounting services target business customers rather than individuals looking for income tax help. For these types of year-round accounting franchises, the long-term relationships are more important than doing one activity quickly and efficiently to get the largest volume in a short time. Instead, these franchisees want to develop strong, trusting relationships with their customers so the businesses continue to use their services. If they do provide income tax services, their tax customers primarily come from these relationships rather than from seasonal advertising.
You might think that one business model or the other is limited in what it can do—which should give you clues about what you value in a business. If you like to focus on intense amounts of work for a short period of time and the rush of making a lot of money at once, seasonal income tax franchises might be better. For those who want to enjoy long-standing relationships with their customers so they can better serve them, year-round general accounting service franchises might be a better choice. It’s all about perspective.