December through April your work as a tax preparer flourishes. As with any seasonal or project-based job, however, the work dwindles during the remainder of the year. How do tax preparers make money in the off-season and create a sustainable income in the gig economy?
What is the “Gig Economy”?
The “gig economy” is a loose term with no official definition. It is accepted that the gig economy is a labor market that is dominated by short-term contracts and freelance workers as opposed to a permanent job.
According to the U.S. Bureau of Labor Statistics, the gig economy is a type of self-employment where workers are hired for a short-term project or task. Gig work is not new nor is it confined to a few industries. Some occupations within the gig economy are:
- Tax preparers
- Web designers
- Technical writers
- Credit repair specialists
People drawn to the gig economy want control over their lives and schedule. When you work for yourself, you have more flexibility, variety, and freedom than in a traditional job. As a tax preparer, you may experience this during tax season, yet struggle to find work the rest of the year.
An article on LinkedIn explains that, “The gig economy has taken hold and we can only expect this shift in the workforce to become more pronounced with time.” The world of work is changing, and the gig economy is here to stay.
Tax Preparation and Side-Gigs
Whether you work for a tax company or you work for yourself, you can increase your tax preparer salary by adding more gigs to your professional tool belt. There are many side-jobs you can work along with your tax business to keep you afloat during the slow season. As a tax professional, you already have experience with project-based work, and--most importantly--you already have a client base.
The gig economy is just what you need to increase your tax preparer salary. Financial services is a natural fit for those who offer tax preparation services - you are used to crunching numbers. Here are ideas of other financial services that pair perfectly with a tax business:
- Bookkeeping and payroll services
- Financial advising
- Data entry
- Credit repair services
Client relationships are the future of the financial service industry. When you can offer your clients more than just one service, you become their go-to resource. Check out this article for tips on building a positive client relationship.
When Side Gigs Outgrow Themselves
Many entrepreneurs start doing jobs on the side as a way to bring in more revenue or to try out a new career. Sometimes that side job starts to bring in the most income.
How much money can you make as a tax preparer, versus a tax preparer who ALSO does credit repair? When you work for a tax or financial company, or you work for yourself, you are likely making a set hourly rate or charging per completed return. The average costs of having a professional prepare a basic 1040 tax return with itemized deductions is $261. This amount is different for each type of tax filing. Regardless of the amount you charge, it’s a one-time shot - just once a year. You file your client’s tax returns, get paid for that one service, and that's-that until next tax season.
The Benefits of Recurring Revenue
The fee for credit repair may seem low compared to your tax preparation income, but keep in mind that this is a recurring fee. While you work to repair your client’s credit, you will be receiving a monthly amount from them. It only takes an average of 5 minutes per client per month and a typical fee for credit repair is $80-$100 per month per client.
By leveraging your time effectively and utilizing recurring monthly fees, you increase your yearly salary, and you add value to your client’s lives. When you repair your client’s credit and help teach them healthy financial habits, you change their lives. An increased credit score can save them money or help them get a loan for that home they have been dreaming about. Then when tax season rolls around again, you will be their go-to trusted tax preparer.
Your tax preparer salary may be substantive, but if you could double or triple your income, you might consider a career shift. As your side business gains momentum and you gain more clients, it can make financial sense to focus on it full time.
That’s what happened with Stephanie Black, a loan officer who started repairing her client’s credit on the side and ended up with a lucrative credit repair business. As with other loan officers, Stephanie hated seeing her clients walk away because they had credit troubles. Once Stephanie started working with clients to repair their credit so they could get a home loan, she quickly realized the income potential for a credit repair business. Now she makes more than she ever did as a loan officer! Read more about her story here.
Credit repair services are the perfect side job for your tax preparation business. After you prepare your client’s taxes, you can work with them the rest of the year to increase their credit score. Once you see how much your income increases, you may be like Stephanie and choose to run your credit repair business full time!
Learn why tax preparers start a credit repair business here.