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Nothing Is Certain Except Death and Taxes

April 15 is a dark day for many Americans, as it represents a time when income tax forms and payments are due to state and federal authorities.  As tax forms have become more complex – it seems that Congress rewrites various portions of the nation’s tax code every session – the need for tax preparation services has grown significantly.  In 1982, John Hewitt left a career at H&R Block to start his own tax service.  He named it “Jackson Hewitt” and ran that company until 1997.  After selling the business for close to half a billion dollars, he founded Liberty Tax Service later the same year.  It was his goal to become the most prominent tax preparation service around, which is a pretty tall order considering his former employer is his present company’s main competition.  Nonetheless, in the 12 years the company has been around, it has grown into the country’s third-largest tax franchise.

Liberty Tax Service Franchise Review

Boasting more than 2,800 U.S. locations, Liberty Tax Service also has another 240 franchises in Canada.  The fact that it offers its wide range of services for about half the price of the competition is a major selling point with consumers, as is the free consultation service.  A further benefit is the company’s work guarantee.  If an error is discovered, Liberty Tax Service pays any penalties and interest that may be levied against the client.  The employment of proprietary software helps speed the filing process to such an extent that it is not unusual for a trained preparer to file as many as four returns an hour.  That can generate a lot of profit.  Typical staffing requirements involve anywhere from five to ten employees per location.  Around half of the company’s franchisees own more than one store, and a whopping 98 percent are everyday operators as well as owners.

Liberty Tax Service Franchise Information & Costs

In order to become a Liberty Tax Service franchisee, the first cost you incur is a $40,000 franchise fee.  Unlike other companies that put a cap on the number of years you retain your franchise without having to pay a renewal, Liberty Tax Service has no such expiration date.  The franchise is yours until you decide to sell it.  Your total investment will range from $55,000 to about $70,000.  Much of the difference there is due to the location you may select, as property lease rates vary widely.  The remainder includes expenditures for advertising, signage, furniture and office equipment, and insurance.  The parent company also has very flexible financing options.  Unlike many franchisors that require you to come up with 100 percent of all up-front costs, Liberty Tax Service can provide financing on everything from payroll and equipment to the franchise fee itself.  Prospective franchisees are expected to have minimum cash reserves of $50,000 and also have had extensive customer-service experience, although past work in the financial sector is not a requirement. The annual royalty that franchisees pay is based on a sliding scale and can run as high as 14 percent of gross sales, although the parent company allows some exclusion.  There is an additional five percent royalty that goes toward national advertising campaigns.

Service, Training and Technology

The state-of-the-art tax preparation software used by Liberty Tax Service is one of the strongest selling points for prospective franchisees.  This is an even greater benefit to clients now that the federal government permits tax returns to be filed electronically.  Liberty Tax Service is sold as a turnkey operation, which means that all the elements are there for a franchisee to pay the upfront fees, receive training, and then open the doors and start doing business.  Because there are changes to the tax laws every year – with deductions coming and going, for example – the home office is especially focused on regular training sessions for its franchisees and their tax preparer employees.  In addition to a national ad campaign, franchisees can take advantage of regional and co-op advertising, a method whereby the parent company will absorb part of the cost to run ads in local markets for specific franchise locations.

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