This annual list of the best tax preparation franchises was revised and updated on March 10, 2021.
Tax returns are a necessary evil, a much-resented annual chore that working people go through so that we can have public services. This has created an $11 billion industry in tackling taxes, employing nearly 260,000 people, in which franchising plays a small but significant part.
While it’s possible to fill in tax forms without expert advice, getting the help of a professional is often far more cost effective, given the time that it takes to complete a return. It can also help in managing how much tax is paid, because these professionals understand the details of the system. They’re able to simplify complex paperwork and processes, and to maximize refunds by identifying rules that work in a client’s favor. Because of this, many Americans seek help with their returns – of the 91% of tax returns filed electronically in 2019, more than half were completed by tax professionals.
Though there’s a rush of tax returns at certain points in the year, franchises in this industry provide year-round tax services from consultation to assistance in preparing and filing tax returns. Customers who find themselves the subject of an IRS audit can get audit assistance from these companies. By getting the sums right, a tax professional can save their client more financially than their services cost, as well as remove the stress and uncertainty of dealing with returns. As long as taxes exist, so will tax professionals.
The COVID-19 pandemic caused problems for tax franchises during the 2020 tax filing season, as professionals were often unable to meet in person with clients. While this was disruptive, it was something that professionals found ways around, and a shift to more online meetings and electronic communication should allow business to continue relatively unscathed.
More damaging in the medium term is the economic downturn caused by the pandemic. The amount of work available to tax professionals is directly related to the state of the wider economy, and that means that things have been tougher over 2020-21, but that there’s light at the end of the tunnel. As vaccinations increase, restrictions ease, and government programs bolster the economy, the industry will benefit from an economic recovery over the next few years. It is expected to grow by 2.9% in 2021, leaving the industry stronger than in 2018, but not yet back to its pre-COVID peak.
In the long term, tax preparation services face competition from cheaper electronic filing options. Tax businesses need to find ways to add value beyond the basics of completing a return, or to expand tax work into other services, to keep attracting customers as online tax filing becomes easier.
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 with price reductions and promotions, as well as guarantees of various kinds. Franchises can also distinguish themselves by catering to particular communities or business sectors, developing a specific customer or knowledge base.
The Top Tax Preparation Franchises of 2021
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 has declined in recent years from 11,394 in 2011 to the current total of 10,171 (down from the previously reported total of 10,265), of which 6,590 are company-owned and 695 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 in recent years from 6,781 in 2013 to the current total of 5,781 (up from the previously reported total of 5,779), 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 declined in recent years from 4,520 in 2013 to the current total of 2,803 (down from the previously reported total of 3,006), of which 135 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 last known number of locations was 132 in 2018, of which none were company-owned and all were located in the US.
5. SiempreTax+
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 last known number of locations was 61 in 2018, of which 22 were company-owned and all were located in the US. (Note: The company website only lists 12 locations on its office directory page.)
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.
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