Tax Preparation Business Plan Template

Tax Preparation Business Plan Template

If you want to start a Tax Preparation business or expand your current Tax business, you need a business plan.

The following Tax Preparation business plan template gives you the key elements to include in a winning Tax Service business plan.

You can download our tax preparation business plan template (including a full, customizable financial model) to your computer here.

 

Sample Tax Preparation Business Plan Template

Below is a tax preparation business plan example with each of the key sections to help you write a tax preparation business plan for your own company.

I. Executive Summary

Business Overview

[Company Name], located in [insert location here], is a new tax preparation firm that serves individuals throughout the area. The Company will focus on offering affordable full-service tax preparation with a guarantee of accuracy.

Products Served

[Company Name] will offer the following services:

• Basic tax preparation services
• Standard tax preparation services
• Full-service tax preparation services
• Tax-related financial products

Customer Focus

[Company Name] will primarily serve individuals, as well as businesses and nonprofits. These clients are segmented by adjusted gross income, or tax bracket:

• Individuals with income between $30,000 and $75,000
• Individuals with income of $75,000 and up
• Businesses
• Nonprofit organizations, government agencies, and other

The following numbers of these customer types live/operate within 25 miles of our headquarters:

• 125,000 individuals
• 8,000 businesses
• 1,000 nonprofits

Management Team

[Company Name] is led by [Founder’s name], who has been in the tax preparation industry for [x] years. [Founder’s name] graduated from the University of ABC, where he majored in accounting. His first job out of college was with the IRS, where he acquired in-depth knowledge of the agency, and learned which filing mistakes cause red flags, and how to navigate tricky tax situations. From there, he worked in progressively responsible roles at a national tax prep franchise, learning how to manage and run a tax preparation business before starting [Company name].

Success Factors

[Company Name] is qualified to succeed due to the following reasons:

• There is a need for knowledgeable and affordable tax preparation services within the community. Currently, the area is served exclusively by national tax prep franchises, which cannot always accommodate those with more complex needs.
• We are centrally located in a high-traffic commercial area, with easy access from multiple thoroughfares.
• The owner has inside knowledge of the IRS, and has many years’ experience with tax preparation.
• Market trends such as changes to the tax code and filing process changes have spurred demand for tax preparation services.

Financial Highlights

[Company Name] is currently seeking $150,000 to start the tax preparation company. Specifically, these funds will be used as follows:

• Office design/build: $40,000
• Working capital: $110,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even

Top line projections over the next five years are as follows:

 

II. Company Overview

Who is [Company Name]?

[Company Name], located at [insert location here], is a new tax preparation firm that serves individuals throughout the area. The Company will focus on offering affordable full-service tax preparation with a guarantee of accuracy.

The Company’s primary service consists of consumer tax assistance, including preparation and filing. [Company Name] employs a well-trained staff, who are equipped to maximize the amount of money consumers save on taxes and receive from tax refunds.

[Company Name]’s History

[Founder’s Name] is an entrepreneur who has been in the tax preparation industry for [x] years. [Founder’s name] graduated from the University of ABC, where he majored in accounting. His first job out of college was with the IRS, where he acquired in-depth knowledge of the agency, and learned which filing mistakes cause red flags, and how to navigate tricky tax situations. From there, he worked in progressively responsible roles at a national tax prep franchise, learning how to manage and run a tax preparation business before starting [Company name].

Upon surveying the local customer base and finding an ideal office location, [Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation].

Since incorporation, the company has achieved the following milestones:

• Found office space and signed Letter of Intent to lease it
• Developed the company’s name, logo, and website
• Created the list of services to be offered
• Began recruiting key employees with experience in the tax preparation industry

[Company Name]’s Products/Services

[Company Name] offers the following services to its clientele:

• Basic tax preparation services
• Standard tax preparation services
• Full-service tax preparation services
• Tax-related financial products

 

III. Industry Analysis

Tax preparation services are all about helping individuals and small businesses minimize what they pay in both state and federal taxes.

Over the past five years, the tax preparation services industry has grown at an average annual rate of 1.4% to reach nearly $11 billion. The industry is expected to continue on this growth trajectory, increasing at an expected 1.9% over the next five years.

Per capita disposable income determines an individual’s ability to purchase goods or services. Increases in per capita disposable income suggest that employment is on the rise and that, potentially, more individuals will require services to file their taxes. Furthermore, as per capita disposable income rises, consumers will have the resources necessary to hire professional services for tax filing.

Corporate profit is another driver of the tax preparation services industry. Higher profits mean businesses can pay for tax preparation expertise when they need it the most.

 

IV. Customer Analysis

Demographic Profile of Target Market

[Company Name] will primarily serve individuals, as well as businesses and nonprofits. These clients are segmented by adjusted gross income, or tax bracket:

• Individuals with income between $30,000 and $75,000
• Individuals with income of $75,000 and up
• Businesses
• Nonprofit organizations, government agencies, and other

The following numbers of businesses operate within 25 miles of our headquarters:

Customer Segmentation

The Company will primarily target the following customer segments:

• Individuals with income from $30,000 to $74,999: this is the group most likely to use industry services. A high proportion of families in this range have the technical knowledge and education to do their own taxes, but many opt for industry services to guarantee accuracy and maximize their chances of a refund.
• Individuals with income of $74,999 or more: this segment is more likely to have complicated taxes, with factors such as homeownership and investment income.
• Businesses: small businesses are more likely to use tax preparation services than large corporations, as large corporations tend to use accounting services for tax prep along with a wider range of financial services.

 

V. Competitive Analysis

Direct & Indirect Competitors

Tax Preppers
Tax Preppers is a value CPA and consulting firm headquartered in [Location]. It offers audit, tax, accounting, and advisory solutions to nonprofit organizations, commercial companies, and wealthy individuals/estates. The Company has a sincere approach to business and service excellence, and has built a thriving 300 member firm.

Tax HD
As one of the largest local CPA firms in the US, Tax HD is consistently ranked among the top 25 accounting firms in the US. Tax HD provides services like corporate tax planning and compliance, assurance and accounting, estate and gift tax planning, litigation support, succession planning, and valuation.

Tax Pros
Founded in 1918, Tax Pros is a full-service certified public accounting firm based in [Location]. This well-established accounting practice offers an array of services across the state of [Location 2]. While the core practice areas of Tax Pros include auditing, planning, and compliance, the staff of professional accountants delivers a suite of more specialized accounting services.

Competitive Advantage

[Company Name] enjoys several advantages over its competitors. These advantages include:

• Location: [Company Name] is centrally-located in the town, which provides ease of access for customers. We are located between the retail and business districts, making us more accessible to a larger customer base.
• Competitive pricing: [Company Name]’s pricing is more affordable than its closest competitors, due to its streamlined service offerings.
• Management: Our management team has years of tax preparation experience that allows us to market to and serve customers in a much more sophisticated manner than our competitors.
• Relationships: Having lived in the community for 25 years, [Founder’s Name] knows all the local leaders, newspapers and other influencers. As such, it will be relatively easy for [Company Name] to build brand awareness and an initial customer base.

 

VI. Marketing Plan

You can download our tax preparation business plan template (including a full, customizable financial model) to your computer here.

The [Company Name] Brand

[Company name] seeks to position itself as a reliable tax preparer, with a 100% accuracy guarantee. Customers can expect value-added services at competitive prices.
The [Company Name] brand will focus on the company’s unique value proposition:

• Client-focused tax preparation services that maximize returns
• Service built on long-term relationships
• Thorough knowledge of the latest tax codes

Promotions Strategy

[Company Name] expects its target market to be households throughout [Location]. The Company’s promotions strategy to reach the audience includes:

Pre-Opening Events
Before opening the tax preparation company, [Company Name] will organize pre-opening events designed for prospective customers, local community, and press contacts. These events will create buzz and awareness for [Company Name] in the area.

Advertisement
Advertisements in print publications like newspapers, magazines, etc., are an excellent way for businesses to connect with their audience. The Company will advertise its company offerings in popular magazines and news dailies.

Social Media Marketing
Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. The Company will use social media to develop engaging content and post customer reviews that will increase audience awareness and loyalty.

Special Offers
Offers and incentives are an excellent approach to assisting businesses in replenishing the churn in their customer base that they lose each year. The Company will introduce special offers to attract new consumers and encourage repeat purchases.

Pricing Strategy

[Company Name]’s pricing will be moderate, so customers feel they receive great value when purchasing our services. The customer can expect to receive quality tax preparation services at a more affordable price than what they pay at a CPA firm.

 

VII. Operations Plan

Functional Roles

[Company Name] will carry out its operations at its headquarters in [Location]. To execute on [Company Name]’s business model, the company needs to perform several functions, including the following:

Service Functions

• Tax Preparation Services
• Customer service

Administrative Functions

• General & administrative functions including legal, marketing, bookkeeping, etc.
• Hiring and training staff

Milestones

[Company Name] expects to achieve the following milestones in the following [] months:

 

VIII. Management Team

Management Team Members

[Company Name] is led by [Founder’s Name], who has been in the tax preparation industry for [x] years. [Founder’s name] graduated from the University of ABC, where he majored in accounting. His first job out of college was with the IRS, where he acquired in-depth knowledge of the agency, and learned which filing mistakes cause red flags, and how to navigate tricky tax situations. From there, he worked in progressively responsible roles at a national tax prep franchise, learning how to manage and run a tax preparation business before starting [Company name].

Hiring Plan

[Founder] will serve as the CEO. To launch the tax consulting company, the company will need to hire the following personnel:

• Tax preparation experts [Number]
• Assistant Manager [Number]
• Relationship Manager [Number]

 

IX. Financial Plan

Revenue and Cost Drivers

[Company Name]’s revenues will come from tax preparation services. The major costs for the company will be salaries of the tax preparation staff, which are paid through a combination of salaries and commission. In the initial years, the company’s marketing spend will be high, as it establishes itself in the market. Moreover, rent for the prime location is also one of the notable cost drivers for the [Company Name].

Capital Requirements and Use of Funds

[Company Name] is currently seeking $150,000 to launch its company. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses, and working capital. Specifically, these funds will be used as follows:

• Office design/build: $40,000
• Working capital: $110,000 to pay for marketing, salaries, equipment, software and lease costs until [Company Name] reaches break-even

Key Assumptions

The following table reflects the key revenue and cost assumptions made in the financial model:

 
5 Year Annual Income Statement

 
5 Year Annual Balance Sheet

 
5 Year Annual Cash Flow Statement