liberty tax ebook 2011 - download

Presented by:

GROWINGYOUR ACCOUNTING PRACTICE WITH FRANCHISING

INTRODUCTION IN THE NEWS MANY FACETS RESOURCES ABOUT US

Sponsored by:


INTRODUCTION

IN THE NEWS2 Financing Challenges Remain for Franchises2 Tax Preparation Industry Report 2011: Tax Preparation Industry at a

Glance2 Accountants, Small Businesses Finally See Growth2 Top 10 Tax Firms: From our ranking of the Top 100 Firms, here are top

fi rms and companies in the tax profession

THE MANY FACETS OF LIBERTY TAX®

2 Facts and Figures 2 Diversity and Minority Friendly 2 Frequently Asked Questions

RESOURCES 2 Articles from John T. Hewitt, Founder and CEO of Liberty Tax Service®

2 Video Testimonials: Faces of Franchisees 2 Next Steps

ABOUT US

Going into a new business venture is a major life decision, as well as a major ongoing commitment. Yet, it’s one that tugs at the soul of many CPAs and accountants who are

tired of laboring for a large corporation or an owner who reaps a good chunk of the benefi ts they generate—and for others who are looking to accelerate growth of their existing accounting practice.

Fortunately, tax preparation is a unique business with a lot of opportunity due to the underlying fact that every adult American, regardless of income or stature, is legally obligated to fi le an income tax return every year—that’s a lot of potential customers for the taking.

If you’re in the accounting or tax business, you’re probably someone who likes numbers. Well, here are a few (compliments of FranchiseHelp Holdings LLC) that might interest you:

What franchising has to offerDespite calls to simplify the tax code, it most likely will remain more complicated than the average taxpayer is willing to tackle on their own. The trick is getting them to come to you for preparation services.

One of the greatest benefi ts of becoming a franchisee is brand recognition. A familiar name has a way of drawing customers more quickly because they already have a sense of comfort that they will receive a certain standard of service. The franchise, quite honestly, has already done a lot of the hard work in creating their reputation, and they’re not going to allow their name to be used unless they’re also comfortable that the franchisee is going to deliver the promise that goes along with their name.

So how does the franchise guarantee a certain level of service? Entrepreneurs who become part of a franchise family receive a proven “plug-and-play” system with established rules and standards as well as a pre-developed shopping list of everything needed to open and successfully operate a tax preparation business. This should include help with site selection, hiring and training of employees, marketing and promotion, technical and software issues, income tax preparation, and any other problem that might arise.

In addition, being associated with a reputable franchise often helps secure the necessary capital needed to start a new business—a

INTRODUCTION: Opportunities for those with an entrepreneurial spirit

2 Approximately 144 million individuals and 2.4 million corporations fi led returns last year

2 82 million returns are prepared by paid professionals, 23% of which are handled by franchises

2 32,000 tax preparation fi rms generate approximately 7.7 billion in revenue

2 The majority of the fi rms that prepare tax returns are small, with less than 10 employees

2 The tax prep industry is expected to grow by 4% compounded annually from 2010 to 2015


major consideration, especially in today’s economic climate. On-going continuing education is important too in the constantly-changing tax industry. For example, starting this year, all tax preparers must have an identifi cation number called a PTIN and an electronic fi ling identifi cation number called an EFIN if they plan to e-fi le returns. Preparers—whether it’s yourself or an employee—also now need to pass two upcoming IRS competency tests before the end of 2013.

A long-term relationshipEntering into a franchise agreement is much like entering into a marriage. It’s important to make sure there is a good fi t on a personal level—and there needs to be plenty of passion.

Every company, franchises included, have their own culture and style but even the strongest of franchise names cannot guarantee success unless the owner is passionate about what they are doing. This enthusiasm is not only appreciated by customers but is also absorbed by employees and refl ected in the quality of work they produce and present to potential clients.


Over 80,000 new jobs and over $10 billion in economic output could be lost in 2011 unless credit fl ow to franchised small businesses increases, according to a new report.

The report, The Small Business Lending Matrix and Analysis, Vol. 3, prepared by FRANdata for the International Franchise Association Educational Foundation, shows demand for franchise business growth in 2011 far outpaces the ability of franchise businesses to access fi nancing, despite a more positive business climate and increased investor interest for franchise expansion.

“Franchising, due to its structure and demonstrable track record of 40 percent growth over the last decade, offers the most promising vehicle to accelerate widespread job creation in this country,” said International Franchise Association president and CEO Steve Caldeira, in a statement. “Yet without suffi cient fi nancing, franchise businesses will continue to struggle to become a true locomotive for job creation, which it has been historically.”

The report says franchise businesses will require $10.4 billion in new lending capital to fulfi ll 100 percent of the forecasted demand for new and transfer units in 2011, but credit fl ow may fall short by 20 percent. The gap is a slight improvement over the estimated gap of 23 percent in 2010 due to increased investor demand for franchises, unconstrained franchisor capacity for growth, increased lending by banks to franchises due to increases in the Small Business Administration loan guarantees passed last year, and the estimated pace of economic recovery through 2011 and beyond.

Even with the estimated shortfall in lending, the report estimates that more than 33,000 franchises, both new units and transfers, will create or maintain more than 250,800 jobs and generate $32.5 billion of annual economic output in 2011.

Lenders are faced with sharp declines in the value of borrower’s collateral, a strict regulatory environment and long-lasting record-high unemployment rates. Many businesses have also faced

IN THE NEWS The economy has yet to fully recover, but franchising is showing signifi cant opportunities that don’t exist in many other business segments.

Financing Challenges Remain for FranchisesBY ACCOUNTING TODAY STAFF, WASHINGTON, D.C. (MARCH 23, 2011)


declines in sales volume, forcing them to operate at less profi table margins.

To address these challenges, the IFA has partnered with the Consumer Bankers Association, CIT Group, the National Association of Government Guaranteed Lenders, the National Restaurant Association and others to develop solutions that increase credit fl ow to small franchise businesses. The organizations co-hosted a Small Business Lending Summit Thursday, April 7, 2011, in Washington, D.C., to identify solutions to enable increased lending to small franchised businesses and speed up the economic recovery.

http://www.accountingtoday.com/news/Financing-Challenges-Remain-Franchises-57743-1.html


Franchising, due to its structure and demonstrable track record of 40

percent growth over the last decade, offers the most promising vehicle to accelerate widespread job creation in this country.

Tax preparation is unusual in that more so than any other industry, it provides a service which assists with a process that legally every adult American is required to do—submit an

income tax return. Because of that, tax preparation is big business. 38,287 fi rms operated in the fi eld last year, generating 7.7 billion in annual revenue. Because it is required, tax preparation tends to be recession resistant. Of the 82 million returns prepared by paid preparers, franchises handled 23 percent of them.

Tax Preparation Industry BackgroundThe vast, vast majority or tax preparers are small—37% were run by a single person, while 53% were operated by less than ten. There were 128,393 total employees in the fi eld last year. There were plenty of tax returns to go around. Approximately, 144 million individuals fi led returns as did 2.4 million corporations.

One of the most notable aspects of the tax preparation industry is how seasonal it is. The industry only comes into being for essentially the four months before April 15, the day on which income tax returns are due for individuals. Because of this reality, those interested in a tax preparation franchise such as Liberty should be those looking for a part-time opportunity. It will not provide year round business, and this can be a unique benefi t for those looking for extra work for a couple of months, but a detriment to those looking for more of a full time franchise. One approach some tax preparation businesses take to avoid the stark seasonality of the tax preparation business

is to diversify and enter other related fi elds. Some such as Listo provide additional accounting and payroll services.

Others, like FedUSA are involved in the insurance industry as well as tax preparation. RALs, or refund anticipation loans, have been a recent controversial issue in the tax preparation business. These loans, which have been around since the 1980s, but have become increasingly popular with electronic fi ling, give a short-term loan to consumers secured by their eventual tax refund. Generally this is done through the tax preparer, and the bank who issues the loan and hosts the account in which the loan is deposited charges a fee. In 2008, 7.2 million people received RALs. This practice has become controversial because these are high interest, low risk loans which are geared toward poorer people, and there have been several lawsuits brought by government entities charging tax preparer fi rms with predatory lending practices regarding these loans. To address this, the IRS in 2011 decided to stop providing tax preparers with the information they needed to issue these loans, at least temporarily ending RALs, and putting some smaller tax preparation fi rms, which relied on RALs for much of their revenue, out of business.

New Licensing RulesAnother aspect of tax preparation that is not present in many other franchises in the need for licensing. Until this year, only Oregon and California required tax preparers to be registered and licensed.

Tax Preparation Industry Report 2011: Tax Preparation Industry at a Glance


However, the IRS very recently passed new regulations. Starting in 2011, all tax preparers must provide a PTIN, or preparer tax identifi cation number, with every return. Preparers must submit an online or paper application and pay a fee to acquire a PTIN, and they must take one of two competency exams offered by the IRS, either in person or online, and pass it, before the end of 2013; the tests are just coming available now. They must also keep up with continuing education classes. In addition, those wishing to electronically fi le must also apply for an EFIN, or an electronic fi ling identifi cation number. Preparers who reasonably expect to fi le 100 or more returns are required to e-fi le and thus apply for an EFIN.

The new regulations were put into place to prevent both fraud and preparers who simply make errors too frequently, particularly in regard to smaller fi rms and individuals. Between 2006 and 2008, the IRS began 600 investigations into the fraudulent actions of tax preparers, which led to 356 convictions, many of these resulting in prison sentences. In 2006, the Government Accountability Offi ce investigated tax preparers by posing as taxpayers needing returns fi led, and out of nineteen cases, found that fi ve made signifi cant errors. These new procedures have the potential danger to lead to higher costs, as it could be more diffi cult and costly to pay licensed preparers.

The Future of the Tax Preparation IndustryThe main competitor for tax preparation industry is personal fi nance software, such as Quicken and TurboTax, which allows people to fi le tax returns by themselves from their homes. Fifty million people used these products in 2010—Intuit, the company which makes these leading software programs, made over $3 billion last year

and remains poised as a serious competitor to professional tax preparers for years. It is also now possible to fi le taxes through the websites for Turbo Tax and other programs. In order to counter that, tax preparers have begun to operate their own websites. These generally contain web forms which consumers fi ll out and the preparer fi les electronically, and they offer a middle ground between paying a tax preparer to fi le by hand, and computing their own taxes at home. Liberty Tax Service® provides computerized income tax preparation, electronic fi ling, and online fi ling through eSmart Tax.

In order to accommodate this growing online practice, tax preparers must focus on data security, which is extremely important, by making sure their computer and network security is appropriately beefed up. In addition, because of constant changes to the tax code and regulations, tax preparers must make sure their software is up to date. Also, many taxpapers have complex returns which often lead to their being more likely to go to professionals. The other


Tax preparation is unusual in that more so than any other industry,

it provides a service which assists with a process that legally every adult American is required to do—submit an income tax return. Because of that, tax preparation is big business…and tends to be recession resistant.

potential competition for seasonal tax fi rms is from full-service accounting fi rms which might provide other services in addition to fi ling tax returns, though most individuals are unlikely to need other services throughout the year, so this is more of an issue regarding businesses and higher net worth individuals.

Despite vociferous politicians occasionally clamoring for a fl at tax, income taxes remain as complicated as ever. Because of this complication, there will always be a demand for tax preparers, even as computer software becomes more complex and sophisticated. The industry, including other accounting services, is expected to grow by 4 percent compounded annually from 2010 to 2015.

Andrew Weber is an Analyst for FranchiseHelp.com and is a graduate of New York University and New York University School of Law.

http://www.franchisehelp.com/industry-reports/tax-preparation-industry-report



Accountants, Small Businesses Finally See GrowthBY MICHAEL COHN, MOUNTAIN VIEW, CALIF. | FEBRUARY 23, 2011

Accounting professionals and small businesses are poised for progress as long as they continue to invest in new technologies, marketing and advertising, and face-to-face

time with clients, according to a new survey.

The survey, by Intuit, asked accounting professionals and entrepreneurs about the challenges they face in growing their businesses, maintaining the accountant-client relationship and remaining competitive in the marketplace. The fi ndings also include a snapshot of both groups’ economic outlook and their thoughts on the use of new technologies, online applications and engaging with customers.

In a considerable showing of resilience, 65 percent of accounting professionals and 54 percent of small business owners said their companies grew in the last 12 months. Despite this growth, however, 75 percent of the accounting professionals and 80 percent of the small business owners surveyed rate today’s economic climate as “just fair” or “poor.”

Both groups expressed optimism for the future, with 94 percent of accounting professionals and 87 percent of small business owners seeing opportunities to grow their businesses in today’s economy.

In ranking the major factors behind growth, 77 percent of the accounting professionals who were surveyed said “access to

industry news and/or trends” is the most important, while “investing in new technology” ranked second. Seventy-three percent of small business owners placed “marketing and/or advertising” as the most important; 57 percent said they plan to focus on “expanding their range of offerings.”

When asked what keeps them up at night, 32 percent of accounting professionals said “keeping clients happy.” For 26 percent of small businesses, “paying bills” is their number one concern.

In a considerable showing of resilience, 65 percent of accounting

professionals and 54 percent of small business owners said their companies grew in the last 12 months… Both groups expressed optimism for the future, with 94 percent of accounting professionals and 87 percent of small business owners seeing opportunities to grow their businesses in today’s economy.


“Accounting professionals and small business owners are extremely adaptable and fl exible individuals,” said Shawn McMorrough, lead research manager of Intuit’s Accounting Professionals Division. “Despite feeling the pinch in this challenging economic environment, they are optimistic and continue to weather the rapidly shifting business environment. Their unrelenting passion for serving their customers helps accounting professionals and small businesses succeed in the face of any challenge the market presents them.”

In 2010, a total of 39 percent of accounting professionals and 35 percent of small businesses invested in new technology to help maintain their success and grow their businesses. In addition, 84 percent of accounting professionals used technology to reduce operating costs and expand their client base, while 79 percent of small businesses used technology to market their business and expand their customer base.

Accounting professionals are more open to using online applications than small business owners.

Some 74 percent of accounting professionals believe online applications will be integral to accounting fi rms in the future, and 38 percent already use them to access accounting and fi nancial information through the Web.

Among small business owners, 60 percent see the use of mobile phone applications to communicate with customers or accounting professionals as important to future success, with 29 percent currently using online applications to access their accounting or fi nancial information.

The survey also asked accounting professionals and small businesses how they communicate with each other.

While e-mail (60 percent) and telephone (54 percent) were cited as the most common ways the two groups communicate, 64 percent of small business owners value face-to-face check-ins with their accounting or fi nancial professional. In addition, 75 percent of small businesses owners say their accountant or fi nancial professional shares information with them in person.

http://www.accountingtoday.com/news/Accountants-Small-Businesses-Finally-See-Growth-57380-1.html


The Top 10 Tax Firms: From our ranking of the Top 100 Firms, here are the top fi rms and companies in the tax profession.ACCOUNTING TODAY STAFF | MARCH 24, 2011

By and large, it was not a great year for tax fi rms. Two of the three biggest tax prep chains, H&R Block

and Jackson Hewitt, reported noteworthy declines in revenue, citing problems with refund anticipation loans and sustained unemployment among their core client bases. (That said, the other major chain, Liberty Tax, continued its relentless growth, and surpassed Jackson Hewitt

for the fi rst time to become the No. 2 chain in the country.) For fi rms that provide a wider range of tax services, the results were mixed, a combination of mostly minor declines in revenue and the odd slight uptick—with the notable exception of Texas-based tax services fi rm Ryan, which managed growth of over 10 percent, aided, in part, by its expertise in international tax issues.

Liberty Tax Service®, based in Virginia Beach, Va., realized $291.69 million in revenue from tax. The company earns 100 percent of its revenue from tax. Liberty, under CEO John Hewitt, achieved a 20.29 percent increase in revenue over the previous year. The tax prep chain has 3,359 offi ces.

http://www.accountingtoday.com/photo_gallery/2_3/photo/Top-Tax-Firms-57751-1.html

Liberty, under CEO John Hewitt, achieved a 20.29 percent increase in

revenue over the previous year. The tax prep chain has 3,359 offi ces.


Facts and FiguresLiberty Tax is consistently rated one of the top franchises in the country by industry experts such as Forbes and Entrepreneur magazines.

http://www.libertytaxfranchise.com/top-franchise.html

Diversity and Military FriendlyThe business model used by Liberty Tax is appealing to a diverse group of go-getters, many who are looking for more control of their destinies during a tough economy, and has been recognized by many publications including Black Enterprise, Poder (formally known as Hispanic Enterprise), GI Jobs Magazine and others.

http://www.libertytaxfranchise.com/top-franchise.html

THE MANY FACETS OF LIBERTY TAXA wise entrepreneur once said, “Choose your business partner more carefully than your husband or wife.” Heeding those words of wisdom, the fi rst step with any new venture is getting to know who the people that stand behind the business you are considering. To make this due diligence step simpler, information about tax prep franchising and the opportunities afforded by Liberty Tax are highlighted below.

FOR THE BUSINESS OWNER:What would happen to my current clients if I open a franchise? We charge a $5 per fi le grandfathered client fee per existing account. You will not be charged royalties on these people. Other than that you would continue to service them as before

I already own a CPA fi rm, can I keep my personal accounts or business clients? Yes if you open a Liberty in another territory or grandfather them into the system (see above)

FOR POTENTIAL EMPLOYEES:I’ve never prepared taxes. Can I still take the class? Yes. No previous tax experience is required. Anyone and everyone can take our classes. The main requirement is the willingness to learn individual tax preparation and apply the tax code to many situations.

What will I learn in Liberty Tax classes? Instructors cover all schedules, credits and forms associated with individual tax fi ling. Students apply their tax knowledge to prepare returns on paper and on the computer. Liberty’s basic income tax preparation classes educate consumers about the latest tax changes and more.

How long are the classes? Class schedules are fl exible with day or evening classes available twice a week for ten weeks. Most classes are 6-9 at night or 9-noon

in the day. Liberty Tax will offer other classes later in the fall.

How much does it cost to take the classes? There’s a minimal charge for books.

Am I obligated to work for Liberty Tax after taking the class? There is no obligation. While we do hire many students from the class, others take the class to learn more about tax preparation. We don’t promise a job, and you don’t have to sign anything obligating you.

What are the advantages of taking a tax class? The company’s ten-week tax school can help students learn personal tax-savings advantages and strategies as well as a new skill that may lead to certifi cation and employment. Liberty Tax is hiring 40,000 tax preparers and does recruit from the pool of tax school students. Students may uncover mistakes they have made for several years and uncover overlooked deductions and credits. They may then amend their returns up to three years back and claim any refunds due for those years.

Are there advanced classes? Yes! We offer intermediate and advanced training both in our offi ces and online for anyone that is interested in pursuing additional tax knowledge.

Will this class qualify me to pass the IRS Competency Exam? We fully expect our Basic Income Tax Course to prepare you for the IRS exam.


Frequently Asked Questions

Articles from John T. HewittFOUNDER AND CEO OF LIBERTY TAX SERVICE®

2 DAVID and GOLIATH: The Power of Organizational Tuning2 Surviving in a Hypercompetitive Environment Without Having to Cross Your Fingers!2 Transforming From Within: A Simple Survival Guide2 From Melting Pot to Salad Bowl: Diversity at its Best2 Fanaticism Equals Success!: Creating an Extraordinary Company

Video Testimonials: Faces of Franchisees Liberty franchisees are come from all walks of life and with a wide range of backgrounds, educations and experiences. But they all share common passions—the need to help others, be their own boss, take control of the destiny, and have fun. Meet a few of them yourself by watching these video recordings: http://www.libertytaxfranchise.com/faces

Next StepsGolden opportunities don’t have to be diffi cult to grab. In fact, at Liberty Title, pursuing the dream of fi nancial independence is only a four step process. To learn more today, visit http://www.libertytaxfranchise.com/franchise-opportunities.html


RESOURCESAnyone, regardless of their fi nancial means or level of education, needs support. Herein are resources specifi cally designed to help a business owner be successful.

Liberty Tax Service® is the fastest growing international income tax service ever, and is supported by an experienced management team and headquarters staff with over 600 combined years of tax, franchise, technical, marketing, and management experience. Many have worked previously for other competing tax franchisors, and the company has demonstrated its fl exibility by continually adapting to the constant changes in the tax industry.

Liberty’s founder and CEO, John Hewitt, is a nationally recognized name in the tax and accounting world. He is a veteran of 42 tax seasons, the founder of two top tax preparation fi rms, and a former H&R Block regional director. In 1982, Hewitt founded Jackson Hewitt, the second largest tax preparation company, and started its franchise operations in 1986. Under Hewitt’s tutelage, Jackson Hewitt grew from a local six-offi ce operation to 1,345 offi ces when it sold in 1997 for $483,000,000.

Hewitt established Liberty Tax Service® in Canada in September of 1997 when he acquired a Canadian tax franchisor. In tax season 1999, Liberty operated 35 offi ces in the U.S. Liberty continues to focus on the future, with over 3,800 offi ces in 2011. Liberty is currently the third largest tax franchise company in the world. Liberty has been recognized as the fastest growing retail tax preparation company in the industry’s history having fi led over 5,000,000 individual income tax returns and currently operating over 2,700 offi ces throughout the United States and Canada.

Accounting Today magazine named him one of the accounting profession’s top 100 most infl uential people for last ten years. The International Franchise Association (IFA) recognized Hewitt as Entrepreneur of the Year, an honor presented to “an individual currently building a successful business venture who exemplifi es the entrepreneurial spirit that franchising represents.” And Entrepreneurmagazine ranked Liberty Tax in the top 20 of their Franchise 500 and listed it in Inc. 500 Top privately-held companies. Hewitt is also the only CEO in the tax industry history who has made the Top 100 List for most infl uential people while heading two different companies, Jackson Hewitt Tax Service and Liberty Tax Service.

Hewitt is a highly regarded national speaker, writer and expert in the tax industry, as well as entrepreneurship and management growth strategies.

John HewittFounder & CEO of Liberty Tax Service®

ABOUT US


liberty tax ebook 2011 - download

Documents

demonstrable track record

groups expressed optimism

small business owners

refund anticipation loans

tax prep chain

income tax return

tax preparation business

small businesses finally