Chances are, if you want to know how much the average tax preparer makes, you aren’t satisfied with your own tax preparer salary this year. Working as an independent tax preparer leaves you competing for clients with large tax preparing companies and the fast-growing market of free online tax services.
Don’t get stuck wondering about how much employees at bigger businesses make or if your current earning have the hope of growing. Instead, get the facts straight about how much money can you make as a tax preparer working independently and use these tips to grow your company and make more money this year.
How Does My Salary Compare?
Based on collected information through surveys conducted by GlassDoor, the average salary of a tax preparer is $28,266 a year. Although this was cited as the average amount, most individuals surveyed made closer to $22,000 a year. This data covers independent workers and those that receive a traditional paycheck from an employer.
Looking deeper into the collected income shows that the maximum salary for a preparer at H&R Block is right in line with the average at just $25,000. That is hardly enough for a maximum!
The great thing about working independently is you don’t have to wait around for a raise. Move beyond the average salary by tapping into the entrepreneurial energy you started your business with and start growing now.
Independents vs. Institutional Employees
As an independent tax preparer, you have more flexibility in your schedule and the potential to earn an average of $47,000 income. This is nearly twice as much money as anyone working for an outside company.
Tax preparers are all affected by a cyclical income cycle with the busiest months occurring right before the tax deadline. Institution employees:
- Receive hourly pay drawn against a commission
- Get commissions that are determined based on the length of employment
This stands in a stark comparison to working for oneself. Independent tax preparers:
- Have the advantage of growing their business quickly
- Generate more income by finding more leads
- Can make more money regardless of how long they have been in business
How To Grow a Tax Preparer Business
If your income from last year is below the national average or is not meeting your needs, take steps to simplify, automate, and diversify.
Simplify
Get rid of all that paper. Electronic record keeping will help you save on physical space and the files are much easier to keep organized. Importing records from clients is a breeze with a digital system that helps categorize and backup each file you need.
What about all of the receipts and notes a client drops off? You can scan, label, store, and then throw the paper away by using these digital tools:
- Invest in an all-in-one copier, scanner, and fax to minimize the footprint taken by electronics on your desk while maximizing functionality
- Choose a cloud based storage service to that lets you access business data anywhere
Automate
During tax season you don’t have much time to spare and time is money! To remain competitive and boost your income, use technology to spend less time per return and be able to take on more clients.
Invest in tools that allow clients to fill out information online and autofill a return for you to edit, check, and file. This can save you time and allow your tax preparation business to take on more clients. Here are the easy two steps to take:
- Research and select an online program that will make managing client data faster and more efficient
- Use a system that will save you time with auto-populational of IRS forms
Diversify
Outside and inside the tax season, the best path to increasing your income is to diversify your services. Providing for clients all year is the key to driving up profits. It is a smart decision to have add-on services that will appeal to your current clients and attract new individuals.
Expand Service Offerings
Many successful independent tax preparers increase their tax preparer salary and stabilize income by offering additional financial services. Some of the most common ways to augment off-season tax preparer salaries are:
- Bookkeeping
- Payroll
- Financial Counseling
- ACA Insurance Navigator
- Credit Repair Services
Any service you decide to add on as a part of your tax preparer business needs to be a low investment and flexible during your busiest season. As a tax preparer, you already have clients’ financial well being in mind and should add another business that helps better serve those client needs.
Providing financial counseling or credit consultation are two services that serve clients all year and turn the average client into one with high lifetime value (LTV). High LTV clients bring your business more predictable and repeatable business and will help stabilize your income as a tax preparer.
Stay Afloat
As an entrepreneur, you already understand that thinking ahead can make the difference for a business. Don’t let market volatility and inherently seasonal work hold your business back from generating more income this year.
Customize your business by adding services that will buffer your income during the slow season. Adding credit repair services on your list gives you the opportunity to help clients improve their financial health and stay in touch with you all year.
Find more solutions here for maximizing your tax preparer salary.
