Starting a tax software Service Bureau can create an entirely different way to grow within the tax industry. However, common Service Bureau mistakes can make that growth much harder than it needs to be. Understanding those mistakes early can help you build a stronger network, support your offices, and avoid costly problems as your business grows.
At first, the business model can sound simple. Get the software, add your branding, recruit offices, and start growing. However, successful Service Bureaus require much more than access to professional tax software. Pricing, support, recruiting, operations, customer relationships, and office production all play an important role.
As a result, understanding the challenges before you start can save you from expensive mistakes later. Here are five common mistakes new tax software Service Bureaus make and what you can do differently.
Mistake #1: Competing Only on Price
When you’re trying to recruit your first offices, lowering your software price can seem like an easy way to get attention. Your competitors want the same offices, so it can quickly become a race to see who can offer the lowest price.
For example, one company offers software for $499, another drops to $299, and someone else eventually offers it for free. Before long, everyone is competing on price instead of value.
However, there’s a major problem with this strategy: someone can almost always offer a lower price.
Instead of building your Service Bureau around being the cheapest option, focus on what makes your company worth choosing. That could include training, marketing resources, onboarding assistance, responsive support, business development tools, or a better overall customer experience.
Ultimately, tax professionals need a reason to stay with your Service Bureau after the initial software purchase. If price is the only reason they joined, a cheaper offer can become the reason they leave.
Mistake #2: Focusing on Signups Instead of Production
Signing up new offices feels good. Seeing 10, 20, or 50 offices inside your network can make it look like your Service Bureau is growing quickly. However, the number of offices you have doesn’t tell you how productive your network actually is.
Production matters.
For example, imagine one Service Bureau has 50 offices that average 50 funded returns each. That network produces 2,500 funded returns. In comparison, another Service Bureau has only 20 offices, but each office averages 300 funded returns. That smaller network produces 6,000 funded returns.
Therefore, having more offices doesn’t automatically mean having a stronger Service Bureau.
Instead of measuring success only by the number of offices you recruit, pay attention to what happens after an office joins. Track active offices, transmitted returns, funded bank-product returns, production per office, year-over-year growth, and office retention.
More importantly, look for ways to help the businesses in your network become more productive. Training, marketing resources, business development, and consistent communication can help offices grow. As their production increases, your Service Bureau has an opportunity to grow with them.
Mistake #3: Not Understanding the Fees Behind the Software
New Service Bureau owners sometimes focus heavily on what they’ll charge their offices. However, understanding the fees behind the software is just as important.
Depending on your provider and program structure, you may need to understand technology fees, transmitter fees, Service Bureau fees, ancillary products, volume requirements, rebates, and payout schedules. These numbers can directly affect your pricing and revenue.
For example, a difference of only $10 per funded return may not seem significant at first. Across 5,000 funded returns, however, that difference becomes $50,000.
That’s why you need to understand the numbers before building your pricing structure.
In addition, don’t focus only on the highest possible rebate or payout advertised by a provider. Look at the requirements attached to it. Ask how many funded returns you need, which returns qualify, when payouts occur, and whether other conditions apply.
As a result, you’ll have a much clearer picture of how your Service Bureau can actually generate revenue. You’ll also be able to create pricing that works for both your company and the offices within your network. Understanding your complete fee structure is one of the most important ways to avoid costly Service Bureau mistakes as your network grows.
Mistake #4: Underestimating How Much Support Offices Need
It’s January. It’s 10:47 p.m. And suddenly your phone looks like it’s trying to win an award for the most notifications in human history.
Welcome to tax season.
As your Service Bureau grows, you’re no longer thinking only about your own tax office. You may have multiple businesses using your software, and each one can have questions.
Some offices may need help with software setup. Others may have questions about bank enrollment, preparer access, reports, fees, rejected returns, or general procedures. During tax season, several of those questions can arrive at the same time.
Therefore, you need a support structure before your network becomes busy.
That doesn’t mean you personally need to answer every question. Instead, build a system that helps offices find answers quickly. Your system may include training, a knowledge base, webinars, onboarding resources, support staff, or access to assistance from your upstream provider.
Most importantly, don’t wait until January to figure out how support will work. Establish your process before filing season begins so both your team and your offices know where to go when they need help.
Mistake #5: Selling Software Instead of Building a Brand
Professional tax software is an important part of your Service Bureau. However, software alone doesn’t create a strong Service Bureau brand.
Tax professionals have choices. Therefore, you need to give them a reason to choose your company and a reason to remain with you after they sign up.
Your website and social media contribute to that decision. In addition, your onboarding, training, communication, support, marketing resources, and overall customer experience shape how offices view your company.
Think about what you want people to say when someone asks about your Service Bureau. Do you want to be known for excellent support? Great training? Strong marketing resources? Transparent pricing? Helping offices grow?
Your brand is more than your logo.
Over time, the experience you provide becomes your reputation. The software may initially bring someone through the door, but the value surrounding that software can determine whether they stay.
Bonus Mistake: Trying to Do Everything Yourself
New Service Bureau owners often believe they need to create every part of the business themselves. They start thinking about software, training, onboarding documents, marketing materials, support systems, reporting tools, websites, and technology all at once.
However, building everything from scratch can consume time that could be spent growing your network.
Instead, consider what infrastructure already exists through your upstream provider. The right relationship can give you access to technology, training, resources, support, and systems that would take significant time to build independently.
In addition, having established resources can help you create a more consistent experience for your offices from the beginning. You can then focus more of your energy on recruiting, relationships, business development, and helping your offices grow.
That’s why choosing a Service Bureau provider should involve more than comparing software features. You should also look at what exists behind the software.
How Successful Service Bureaus Avoid These Common Mistakes
Successful Service Bureaus understand that they’re building more than a software distribution business. They’re building relationships with other tax professionals.
First, they understand their numbers. They know their fees, costs, revenue opportunities, and production goals.
Next, they create systems that make it easier to onboard and support offices. Instead of reinventing the process for every new customer, they develop a repeatable experience.
In addition, they focus on the success of the offices within their network. Recruiting an office is only the beginning. Helping that office become productive can create more value for both businesses.
Finally, they build a recognizable brand. Their customers know what the company represents and why they should continue working with it.
Build Your Service Bureau on the Right Foundation
National Tax Office helps tax professionals build Service Bureaus with more than just professional tax software. Our Service Bureau Program provides the infrastructure and resources needed to build and manage a growing network.
Service Bureau partners receive branded professional tax software, unlimited licenses, company-level access, reporting tools, fee-setting capabilities, training, resources, and ongoing support. In addition, partners receive access to our Service Bureau Success Platform.
The platform provides resources for branding, packaging, marketing, sales, onboarding, operations, and other areas involved in building a Service Bureau. This gives partners a stronger foundation without requiring them to create every system from scratch.
Ultimately, successful tax software Service Bureaus aren’t built by simply purchasing software. They grow through strong systems, relationships, support, smart pricing, productive offices, and consistent execution.
Having the right infrastructure from the beginning can help you avoid many of the Service Bureau mistakes that create problems for new providers.
Before you focus on building the biggest network possible, focus on building the right foundation. Because when your offices have the tools to grow, your Service Bureau has the opportunity to grow with them.