Revenue-Based Financing for Tax Preparers
Revenue-based financing gives a tax preparation office a lump sum repaid as a share of revenue, so the remittance surges in filing season and nearly stops in summer. For a business whose deposits follow one of the steepest seasonal curves in BLS data, a payment that moves with revenue avoids the fixed debit that can swamp a lean off-season account.
Why does a revenue share fit a tax office's calendar?
Tax preparation revenue arrives mostly in a few months, then drops to a fraction of its peak. A fixed daily debit takes the same amount in August as in February. A revenue share takes a lot in the busy months and little in the quiet ones, which matches what the office can pay.
Good uses for a tax office
Opening a new seasonal location, adding preparers for more returns, marketing to grow return counts or building year-round bookkeeping services. Projects that add revenue help the share repay faster.
Revenue share math for August
A tax preparation office with $60,000 in monthly revenue gets $27,000; it repays $33,750 at 6% of what comes in.
| Month | Revenue | Remittance at 6% | Remittance as a share |
|---|---|---|---|
| An average month | $60,000 | $3,600 | 6.0% |
| August, the slowest | $40,600 | $2,440 | 6.0% |
| February, the busiest | $89,000 | $5,340 | 6.0% |
August costs $2,440 instead of a fixed sum; the cap is reached in something like 9 months. We picked August because BLS job counts for tax preparation services (NAICS 541213) sit lowest then, at 67.7 against 100, versus 148.4 in February.
How do funders measure a tax office's revenue?
They read bank statements, bank product settlement reports, processor reports and return counts from prior seasons. The remittance applies to revenue as the contract defines it, so the definition matters.
Refunds passed through to clients
Bank products deposit fees to the preparer, while the client's refund goes to the client. Make sure the contract counts only the preparer's fees, not any refund money that passes through the office's accounts.
Year-round revenue
Bookkeeping and payroll clients add steady revenue that keeps the remittance moving through summer. Funders like that consistency.
When is a line of credit better?
For routine fall preparation repaid in spring, a line of credit usually costs less, because the balance clears within months and interest stops.
Quick answers
How does revenue-based financing work for a tax preparer?
The funder advances a lump sum and takes an agreed share of revenue until a fixed total is repaid. Most of the remittance comes during filing season, when fees arrive, and very little in summer. Funders verify revenue with bank product and processor reports.
Should client refunds count as revenue for the remittance?
No. Only the preparer's fees belong to the office. Refunds passing through for clients belong to the clients. Ask that the contract define revenue as the office's own fees and service income, so the share isn't charged on money the office doesn't keep.
Is revenue-based financing good for opening a new tax office location?
It can be, since remittance follows the new location's revenue as it builds. Test the numbers against a conservative first season. If the location opens slower than hoped, the share falls with revenue, but the total still has to be repaid over time.
More for tax preparers
- Same-day merchant cash advance for tax preparers
- Business line of credit for tax preparers
- How funders read tax preparers
- Revenue-based financing: how it works
Run your own numbers with the factor rate calculator.
Want to see what fits a tax preparation office like yours?
Tell us your slow months and your open advances, and we'll shop the file with funders whose programs fit. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.