Revised and updated January 8, 2020.
Few things in life are more dreaded than the annual ritual related to filing federal and state tax returns. This why nearly 60% of the millions of returns filed each year are prepared by tax professionals. Entrepreneurs who want to benefit from this annual chore have a small but solid list with these top 5 tax franchises of 2020.
The five companies on this list all provide year-round tax services from consultation to assistance in preparing and filing tax returns on behalf of taxpayers. Customers who find themselves the subject of an IRS audit can also get free audit assistance.
The range of services offered by each company on this list is essentially the same. What sets them apart is how far they’re each willing to go around price reductions and promotions, as well as guarantees of various kinds. One company on this list further distinguishes itself by focusing its services to the growing Hispanic or Latino community.
Here are the 5 best tax franchises of 2020:
1. H&R Block
H&R Block is the undisputed king of tax preparation franchises. It seems like there’s at least one in even the smallest cities and towns. Customers can get tax help from the company in person at any of their storefront locations, or online with an H&R Block Tax Pro.
Those who want to fill out their tax return themselves can have it checked by H&R Block before filing to make sure everything is in order. The company will also handle the electronic filing of anyone’s return. People can also purchase the company’s tax software that guides them through preparing and filing their taxes on their own.
The company has come under perennial criticism for aggressively marketing its refund anticipation loan (RAL) as if it’s some kind of early refund when in reality it is a loan that comes with fees and interest charges. Generally, the company guarantees you’ll get the maximum refund possible.
Founded by brothers Henry and Richard Bloch in Kansas City in 1955 and franchising since 1956, the number of locations currently stands at 10,265 (down by 564 from the previous year’s total of 10,829), of which 6,388 are company-owned and 741 are located outside the US.
2. Jackson Hewitt Tax Service
Jackson Hewitt Tax Service made a smart move when it started placing many of its locations inside Walmart stores. People can walk in any time the locations are open to get tax help, and many locations offer late hours and weekend options for greater accessibility than their competitors.
The chain is known for running great specials, such as offering people $100 to switch to Jackson Hewitt, or checking a customer’s most recent filing to see if they should have gotten a higher refund and perhaps file an amended return. It offers zero-fee, 0% APR refund advances of certain amounts, or a larger refund advance loan with a 2% fee through MetaBank.
Founded by Jackson Hewitt in 1985 and franchising since 1986, the number of locations has declined only slightly in recent years to the current total of 5,779 (although this is 33 more than the previous year’s total of 5,746), of which 1,857 are company-owned and all are located in the US.
3. Liberty Tax Service
Liberty Tax Service is another creation of Jackson Hewitt, who purchased the Canadian chain called U&R Tax Depot and changed its name to Liberty. The chain often incentivizes referrals by giving customers $50 for every referral who becomes a customer. At other times, the company tempts people to switch to Liberty and only pay 50% of what they paid a competitor last year to prepare their taxes.
Liberty’s two guarantees include the industry standard of maximum refund with a slight twist where if the customer can get a bigger refund with a competitor, then Liberty will refund the preparation fees. The second is that if their math was off and resulted in penalties or interest, the customer will be reimbursed those fees.
The company is currently settling a legal dispute with the US Department of Justice around its tax compliance program under the company’s previous management (John T. Hewitt).
Liberty Tax is owned by parent company Franchise Group, Inc. Founded in 1972 and franchising since 1973, the number of locations has been declining since 2013 and currently stands at 3,006 (down from 3,352 in the previous year), of which 84 are company-owned and 261 are located outside the US.
4. Happy Tax
Happy Tax distinguishes itself from the competition by only allowing certified public accountants (CPAs) to do the actual preparation of people’s taxes, as opposed to the competitors who will train anyone to do it. The chain also sets itself apart with very clear, transparent, upfront flat-rate pricing based on four basic types of returns along with a range of add-ons that might be desired (or needed).
Customers don’t interact with the CPAs doing the number-crunching, instead they speak with a company representative who acts like a tax concierge. The whole process can even be done through the company’s mobile app.
Founded by Mario Costanz in 2014 and franchising since 2015, the number of locations currently stands at 132, none of which are company-owned and all of which are located in the US. (Note: This company has not updated its location data since 2018.)
SiempreTax+ is squarely focused on the growing Hispanic and Latino market, and especially newer immigrants. Like Liberty Tax, this chain incentivizes referrals by giving customers $50 for any referral who ends up filing a return through Siempre. Staff hired to work at Siempre locations are always bilingual to make sure language is never a barrier.
Additional services for newer immigrants include getting an ITIN (Individual Taxpayer Identification Number), assistance with drivers’ licenses, notary services, and advice on health insurance through the Affordable Care Act (Obamacare).
Siempre is owned by Franchise Group, Inc., which also owns Liberty Tax Service. Founded in 2014 and franchising since then, the number of locations currently stands at 61 (a sharp drop from the previous year’s figure of 117), of which 22 are company-owned and all are located in the US. (Note: This company has not updated its location data since 2018.)
An Important Note About Our Methodology
The franchises on this list were ranked according to the number of units in the franchise system. If you are a prospective franchisee searching for franchise opportunities that meet or exceed certain performance benchmarks for sales, profits, and return on investment, please check out this list of America’s Most Lucrative Franchises.