3 Areas Your Tax Preparer Income Is Vulnerable
A tax preparer’s income has always been based on variables like the size of one’s client list or the economy during tax season. However, new issues like more competition and better technology have added a new, more prominent element of uncertainty to the viability of this profession.
How is your income limited as a tax preparer, and what can you do to remove the cap on your success?
1. You Constantly Fight Competition
Thanks to technological advances, taxpayers have more options than ever when it comes to filing their returns. While traditional methods like hiring certified public accountants or tax preparers still account for about three-fifths of filer’s business, another 30% of filers used computer programs such as Turbotax and Quicken.
As a larger pool of filers become more comfortable with the technology, it’s likely that this percentage will grow. With more competition in the space, tax preparers must find ways to keep up with the simplicity and accessibility offered by computer programs in order to protect and grow their bottom line.
2. You Struggle to Keep Up With Less Expensive (or Free) Options
Not only are computer programs like TurboTax, Quicken, TaxAct and TaxSlayer increasingly accessible and easy to use, in most cases, they are also less expensive. (The IRS launching a Free File program for 2018 only adds insult to injury.)
Ease and cost are two factors each of your clients will consider before reaching out around tax season; especially clients who have simple returns that can be handled easily. If your clients can prepare their own taxes, for free, how can you compete? As more options pop up, you may be losing your market share. Finding a way to retain value for your existing and future clients is imperative.
3. You Experience Cyclical Exhaustion
As a tax preparer’s income is mostly cyclical, cramming as much work as you can into a few months out of the year is logical, but exhausting. No matter how well-prepared you are for tax season, there will always be a threshold for how much work you can handle.
Can a tax preparer make money doing more? By expanding your capabilities to reach more people, for more months of the year, you’re opening up room to grow your income.