The Difference Between Your Tax Office and Service Bureau | Service Bureau Accelerator Podcast E5

by | Sep 29, 2023

Running a tax office is tough enough – but is it time to diversify your business and expand into recurring service bureau revenue? In this episode of the Service Bureau Accelerator podcast, industry veterans Baldeep, Ross and Tia the Tax Goddess dive deep into the key differences between operating a tax preparation office versus a thriving service bureau. From software details to retention strategies, they uncover how shifting your mindset is the first step to success.

Other subjects covered on the show:

  • How tax offices typically generate revenue vs. service bureaus.
  • Why the service bureau industry provides more opportunities for growth.
  • The importance of separating your tax preparation knowledge from your service bureau sales approach.
  • Developing long-term retention strategies through multi-stage ERO programs.
  • Moving past software specifics to focus on new customer acquisition.



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[00:00:00] Welcome to the Service Bureau Accelerator podcast. I’m here with Ross. Uncle Ross, Daddy Ross and Tia, the tax goddess. I don’t think I ever mentioned your last name. So we’re going to stick with Tia, the tax goddess.

Hey, y’all. That is my last name.

New government name, all right.

In today’s episode, we’re going to talk about the difference between your tax office and service bureau. Especially if you’re a service bureau and kind of keeping those couple of things in mind. So who wants to kick it off and kind of set the agenda for the day? Ross. Tia?

Tia, do you want to dive into it?

Yes, yes.

I know you have a loaded bag of information on this one.

Yeah the biggest, I guess, thing we’re going to cover today is Taking off the tax professional hat and putting on the service bureau hat and everything that comes with that, because y’all, I know how we [00:01:00] are. This is me speaking. Don’t ignore them. This is me, you.

Were very analytical, we love things to be exact. And trying to take those skills as a tax professional and roll them over into a bureau owner that does not always translate. So today we’re going to talk how to like disseminate that, dissect it, so that you can be successful as a service bureau.

All right.

Love it. Love it. Yeah. Awesome. Let’s dive into, I guess, let’s get the clear definition, the separation, right? Like you said, we’ll dissect it. Let’s start off with like really separating the two. So the tax office, right? How does a tax office grow? How does a tax office generate revenue?

Beldeep with you know, your massive years of experience. Maybe you want to dive into it. Start off with that, talking about tax offices. How does the tax office grow? How do they generate revenue? And then we’ll dive into the service bureau side.

So tax offices, I mean, plain and simple. They generate revenue by preparing tax returns, right? Depending on what type of tax office you are if you’re early season focused, you’re working with bank product [00:02:00] clients. If you’re mid to late season focused, you’re probably working with more cash payers or higher net worth individuals.

If you’re business focused, you’re working with companies, right? But essentially you are for the most part, a B to C operation, B to C meaning business, you being the business to consumer operation, and you kind of pretty much work with anybody and everybody. Right. That’s essentially how a tax offices make money. They’ll do the tax return and get paid a fee. And that’s it.

Now the service bureaus really only make money from bank products, right? So we’ve gone into other episodes and details on where they make revenue, but bottom line, long story short, the majority of your income is going to come from bank product type returns.

So service bureaus, your main focus is probably going to be offices that do bank products, right? That’s obviously your bread and butter, but you’re now essentially more of a B2B business, right? You’re not a B2C business. You’re not going after every consumer out there.

You’re targeting other [00:03:00] tax professionals, other tax business owners to use your software and services versus their current provider. So I would say that’s probably the easiest way to separate the two. And how that works. Is that a good example there, Tia, Ross?

Great example.

Yeah, I think that’s that’s clear. One thing that that we will definitely dive into here because it’s something that comes up quite often on our, if we’re doing our webinars and stuff, and we’re talking about people becoming service Bureau. A lot of times people get kind of hung up on the tax software, right?

They’re like, well, you know, I use this in my office. Does the software do this? Does it does it have individual returns? Does it have corporate returns? Does it do all that stuff? And long story short for everyone wondering what kind of software you’d use as Service Bureau? Long story short you know, for anyone wondering what kind of software they’d be using at the end of the day, all the tech softwares basically do the same thing. The only real difference is how you’re going to navigate it, how you’re going to be entering the data, but they all do the same thing.

[00:04:00] And what we always like to tell people. Tia said this at the beginning, right? It’s like taking your tax preparer hat off and putting your service bureau hat on. It may seem counterintuitive, but you don’t really have to know how to go and do tax returns within that software. And you can still go out and sell it, right?

There’s training, there’s tech support. There’s all kinds of things that are going to be available to you, that you can provide your customers. And at the end of the day, you are simply selling software to individuals. And for the by and large, a lot of the softwares that we offer on our program or other softwares that you can become a service bureaus.

They’re the mainstream tax softwares that everyone is somewhat familiar with. They’ve probably used at some point in their life. And so, it’s actually a very easy scale that I found out a lot of people get a little bit too much in their way, where they feel like they have to know exactly how to use the software in order for them to be able to go out and sell it.

I know, for example, I’ve closed a lot of deals on this service bureau program and the software, I don’t even know how to go and use it and do tax returns. That’s not what my role and responsibility is with this company, but I can still go out and sell the software because I know what I don’t [00:05:00] just enough that I need to know in order to generate a sale.

And I think there’s a lot of people that do get held up on there where they’re looking at the software and we really want to kind of isolate that and separate the difference between your business as a tax professional and with your tax preparation business is completely separate to your service bureau business, right? Now, it is definitely going to be beneficial for you to use your service bureau software in your tax preparation business.

Because if you’re doing a lot of volume as a service bureau, you’re going to be making a lot more dollars per product. If you’re using your own software from your service bureau, but there is that clear separation where your tax company is a customer of your service bureau because your service bureau at the end of the day, it is just selling software to other tax professionals, to other EROs, to other offices and your existing business for those of you who are currently in the industry, and operating a tax office every single year.

You would simply be a customer of your service bureau. And that’s where we always want to kind of create [00:06:00] that separation. Cause a lot of people come in and they just start, as soon as the software gets brought up, they’re just like, all right, well, what am I going to use in my office? And it’s like, Hey, you could definitely use it in your office, but learning the software is not as hard as you may think it to be at the end of the day.

Like we said, it all does the same thing. It’s just navigating and entering in different softwares. Tia, do you want to share on that a little bit? Cause I know we talked on, episode or before this, your, you transitioned to a different software and you had that whole like personal blockade, like just those barriers set up and you’re like, Oh, I can’t do it.

Yeah one of the biggest things as a service Bureau let’s be clear, the Service Bureau owner. Now, in the space that I’m in, I’m looking for the best deal. I’m looking for the best deal so that I can give the best deal. I’m looking for the best deal to get the best deal to get the most money in my pocket.

That literally is my only goal. So if this software is no longer working for me and it’s not giving me or it’s costing me more, then I’m going to go to a software that’s costing me less. And that’s [00:07:00] going to be the new brand. That’s going to be new software that I’m getting branded for my service bureau.

Like, I don’t care about the interface, I don’t care about, you know, the apps, I don’t care about any of those things because I have set up my tax office and I’ve helped my other EROs set up their tax office where it doesn’t matter what software they’re using, their workflow is going to be the same.

That’s not going to change. And it may seem like it’s important, like these little nuances, but let’s just be honest, like half the stuff is automated. My knowledge as a tax professional is never going to change. So if I know how to do, a small business return on one software. I know how to do another.

The software doesn’t change my knowledge. It just automates the process. And when I initially was doing the kickoff calls, I used to always tell people like, you know, I have this software, you know, but I sell this software under my service where I [00:08:00] use this for my own personal office. I use this under my service bureau and I don’t know anything about it.

I literally have never taken a tech support call. I have never navigated anyone through anything. The only thing I know how to do is set up a hook. Go on my hook, set up an office. But, you know, then they do everything. I have no idea. And one thing I do love about you guys is like, the tech support is amazing.

The tech support is amazing. They don’t say, Hey, this is Service Bureau tech support. They were like, Hello, tech support. You know, it’s really like white label. You don’t know who it is. And what people forget to understand is sometimes it’s not that the person needs to be walked through how to do something.

It’s like, for example, oh, I don’t know anything about child care credits. No, they know about child care credits, where they need to put it. And so the tech support shows you this is where you put it. As long as they tell them, hey, I can’t find where to put the child support credit. We’ll show you how to do here.

I can’t figure out how to [00:09:00] add this form. We’ll show you how to do that. They literally, I’m three years. I’ve never answered a tech support call. Like the most I’ve done is say, Hey, here’s…

I think a lot of times what people need to do, especially like, you know, we get a lot of people in the webinar saying, Oh, but I use this software and I don’t want to learn another, you know, it’s not hard to learn something. Like you said, Tia, if you have the knowledge, you have the knowledge, right? What people just need to start doing.

And I think we’re going to do more for the group to make this a point is take like your 10, 15, 20 most common types of clients. Grab their files and just do them again in the other software. Cause once you know how to navigate it and do the most common ones you’re doing, you’re just going to be that much more comfortable in that much more efficient.

Right. So I think a lot of people overlook that, Hey, it’s not difficult. You just got to take the time and practice, right? Do 10, 20 practice problems. You’re good.



And you’ll prepare us not to be funny. I’m really not trying to offend anyone, but they kind of [00:10:00] like toddlers, like, you know, they’re so into it. And then as soon as you say, oh, and they’re like, hold on, where’d the person go? Like, literally, I’m telling my staff, just one year, I told one of my staff members, Hey, go back in the other software and pull this.

How do I log in that again? What did I do? Like, it’s gone. It’s really just an emotional attachment. And in business, one of the biggest things, just letting go of that attachment. Like, the quicker you let go of attachment, and you look towards your bigger goal, like, at the end of the day, $15, it may not sound like a lot, but it’s costing me.

I can take two more seconds, use DocuSign, and I’ll be just fine. Like, that 15 per person, that’s my money. Like, I see everything as my money now.


My money, the ERO’s money, okay, that’s costing them, it’s costing me, it’s just costing too much. Look, I’m ranting, I’m sorry guys.

No, no. That’s all good. Cause that’s very much it. And I want to dive in as well. A little bit [00:11:00] more into kind of like the differences of the businesses, because again, with I mean, this is all great with software, cause it comes up a lot and that’s kind of why we wanted to address that head on is, like, look, when you’re becoming a service bureau, it may be a different software, but it’s not, it’s like, It really doesn’t matter.

It’s something that a lot of people struggle with overcoming. But it doesn’t matter really, at the end of the day, there’s plenty of tools and resources and everything to as well to learn it. And it takes a couple of weeks. We talked about this earlier where it’s like, Hey, all you got to do is spend like maybe a handful like a week, you know, a couple hours a day, just go through the software, do a couple of those returns and you’ll be brushed up and you’ll know how to navigate it.

If you really need to know that if you’re demoing or whatever it is, when you’re selling, but when it comes to the two businesses I kind of want to, I know we’re going to talk about this a little bit in one of our later episodes, we’ve got, it’s kind of one of the topics, but I think it’s also really relevant to this is kind of like the business models between the two.

Because, Baldeep, if you kind of did a brief explanation of like what is, you know, how does a tax office grow versus how does a service bureau grow? And one thing, we bring this up on our webinar, I think is really important to [00:12:00] kind of talk about this again here is the shift in the industry is there are so many people, so many more people that are joining the tax industry, right?

There’s a lot of, sure, everyone has seen like a tax academy programs and things like that. You know, where a lot of new people are being introduced into the industry and now it’s a lot more common to have, you know, 10 prepares doing a hundred returns each versus one big office doing a thousand returns.

And so there’s more and more people joining the industry, which means there’s more and more competition for your tax office, which means again, there’s a, now the nice thing with, with the tax industry, right? Is that there’s an endless supply of customers essentially. Cause every year there’s a whole new batch of people that turned the age and now they got to do their taxes.

Right. So it’s like ever, you know, cycling supply of customers, but there’s more and more prepares and more and more EROs joining which is causing more competition. Whereas the service bureau industry, it opens like a whole new revenue model for people who are in the tax industry to add an entire new revenue stream to their business, because they [00:13:00] have the ability now to go after, because all of those new preparers, all the new, those virtual offices and everything that’s popping up, they all need tax software.

Right. They all need tax offer at the end of the day. And so it’s like, there’s a whole new supply and a larger growing customer base over on the software side of the industry that it’s really the best spot to be in right now in the industry is to be working in the service bureau space because all these new preparers and everyone joining, they own tax offer, right?

I could dive in.

And so that is, yeah, that I just wanted, I wanted to kind of illustrate that.

That client cycle.

Going to dive in and give a more, not as political answer I could say. Again, it’s a.

I wanted to process that.

Ross sitting here all fucking nice. And this look, I’m going to give you a story. Right? Cause yeah, that’s a common thing.

Like, you know, that’s actually in the presentation we talk about, Hey, there’s, you know, the average office, I don’t think we talk about that in the presentation, [00:14:00] but over the years. It’s something that we’ve seen is that, you know, offices lose preparers, their preparers, go do their own thing. They take 50 clients, a hundred clients, right?

So all these offices, these bigger offices are losing clientele. And actually one of our, one of my clients in my service bureau now is he’s in the program now, but years ago. He asked me, he’s like, how is business for you? He’s like, I’m down 20% this year versus last year.

And I spoke to other big ERO who has a lot of offices, 4, 000 products. And he’s going down every year. Well, for my nonpolitical answer here, my comment was look for me as a service bureau, right? This is me as a service bureau. I don’t have tax offices. I don’t care to have tax office. I don’t want tax offices.

Right. Me as a service bureau say it for me, it doesn’t matter. And I’m not saying like, I don’t care, but I’m just saying like in the service bureau hat, you could only do so much. Right. So, if my offices [00:15:00] are going down 20% a year, right. Shouldn’t that necessarily affect me as a service bureau?

Cause if they’re doing less business, I’m making less money. That that’s what they would think. Like, aren’t you making like less money? But that’s actually wrong because if you’re a real, if you’re a good service, but you only actually have your shit together, you’re selling a lot more fucking people, right?

You’re making sales all the time. So even if, Hey, these 10 offices drop 20%, well, guess what? We signed up another 50, right? And they’re all doing.

You may even sign up for that 20%.

You know what I mean.

I was thinking

People are thinking, Oh, my tax office, or the tax offices, they’re doing less, but you as a service bureau, your opportunity is much bigger because you’re just signing up tax offices, right?

Whether one does 20 returns less one year, the other shouldn’t really affect your dollar amount, or your money, at all, because you should have a system. And if you’re a service, we are watching this and you don’t, maybe you should consider joining our [00:16:00] program, but you should have a system to consistently acquire customers every single year.

Just like you should. If you had a tax office, have a system to acquire customers, right? Like those things are important in any business. Right. So I think a lot of people. Kind of look at that. It’s like, Oh, Yale, it’s in a negative light. No, look for a service bureau, your business is to acquire more offices and provide your service and your software, right?

Some take it a little bit extra. I want to help them more. Some help them less, but at the end of the day, you’re not responsible for their productivity. Right? You’re providing that service and some will, some won’t. Right. But you know, if you’re actively growing, you have an acquisition process, then, you know, you won’t be affected by losing a customer here and there because you’re acquiring more customers all the time.

And unless you’re just like a shitty service bureau, no one in the SBA community is a shitty service bureau.[00:17:00]

I mean.

I’ve mapped, out a path actually like a life cycle for my service bureaus. I mean, for my EROs, a six year life cycle. And I feel like the life cycle of an ERO, me being a service bureau, is much longer than the life cycle of a client.

And you would think at the tax office, I’ve done your taxes for years, but soon as Uncle Joe, you know, decides he wants to try to be a tax office, you’re gone. Versus my EROs, you know, we’re already for the ones that I have already three years in, okay, now we’re at the next stage where now that you’ve done this for three years, I’m showing you then for another three years where you all can take your offices because me, I’ve been a tax office myself independently for eight years, so I at least have eight years of knowledge, which is, what is that three to five more than what you have.

And I can kind of show you, you [00:18:00] know, the way, and I just like the commitment is there. I feel like the commitment is there. The clients, I mean, no shade there. They’re just after the best price.

Yeah. And look, you have to also be conscious of that as a service bureau. Right. So like, you mentioned a couple of things like, all right, you go down all the way down to the very, to the ERO, their tax customers, not especially the early season customer. They’re not that loyal. Right. Some people say, Oh, my clients will remain with me forever.

Once you really start growing your business and you’re not the only person that they’re dealing with, you’ll see how that changes. Right. But that’s a whole other conversation and a whole other topic, a whole other side of the industry, but on the service bureau side, outside of the SBA, like I look at, I speak to people and I know what kind of the numbers look like, and I’ll ask some of the colleagues that I have in the industry, like, Hey, your service bureaus.

How much are they growing every year? And surprisingly, and not so surprisingly, the response I would get is they’re pretty much flat every year. And I’m like, oh, let me guess this was a conversation. I’m like ad libbing it. Cause I don’t want to give divulge too much, but I’m like, let me guess.[00:19:00]

They’re just replacing what they lost. Right. Cause all they’re doing is they’re just slapping their software logo on there, marking up fees. And every two years, they’re churning customers because they’re going somewhere else because their service bureaus and providing them shit. Right.

So as a service bureau, if you don’t have an acquisition process and you’re just replacing what you lost, you’re not really going to make much money. You need to just like any business have processes in place to grow. Right? And retention, what’s the next thing?

Like, like what you’re saying to you, what’s the next thing?

Are you have a six year plan for them? Right? Some EROs, we’re going to love it. Like you give them milestones, you give them stuff to attain. Right? Now we have some people in the group selling EROs on service bureaus, right? Selling them subservice bureaus, co branding, things like that. Right? So those are things that, Hey, you identify somebody that may be a good fit for that, put them on it, you know, my rant’s over.

No, that’s it though. Cause like, there isn’t like what like what he was saying, right in the [00:20:00] tax office, but they’re not loyal. It’s like, as soon as, if there’s a better deal or like you said, the uncle Joe is suddenly doing taxes, they’re just going to go over.

Yeah, and it’s a much bigger pool of tax offices, so they’re always price shopping versus service bureaus. Again, you kind of stick with what you know, like me, I knew I didn’t have the best deal. I was getting charged $113 more, you know, for each client than my client was paying. But because there wasn’t many other places to shop, I would rather stick with that than to not have anything.

So some of it is loyalty, and then some of it’s just kind of like, yeah.

Some of it’s just.

It’s two evils.


being an idiot.

Because I need it.

Like, I don’t know.

Unpack that, Baldeep.

Yes, please.

I don’t know. It just boggles my mind how some people will stick with one solution because they just like the way one thing [00:21:00] like, oh, I just like it what it does for this one way I does for my tax software my tax office when literally they’re leaving a fucking 30,000 40,000 dollars on the table, but I don’t know teach their own.

Yeah, yeah. But, I want to just before we kind of wrap up, I did want to dive in again on like on the retention because that’s a big part that we teach as well. And what we’re starting to show, so like last year we rolled out like the prepared development strategy, right?

Where we kind of, we, I think the, the most important thing that we illustrated in that was painting the picture of like, what Tia is like, you talk, you got like the life cycle now of your EROs. You’re like, all right, when they joined my service bureau, when I get them set up on the initial package, I’ve got a roadmap to provide them.

I’ve got depth in this program that they’re going to be going through this step and then moving into this step and that step and that step, you’re gonna be moving them through the industry. And I think that’s a big part that can massive that can help people see some mass retention in their service Bureau.

Is by giving that path to ownership, the path to success for their EROs, because whether you’re working with people who are brand [00:22:00] new, like an academy where you’re teaching people how to get in the industry, well, cool, you’re starting them from ground zero. So you’ve got a lot of like road roadway to move them through.

But maybe if you’re working with an ERO, who’s, you know, who is a little bit more advanced, and they’re already well established and they have good volume. You need to figure out what are those next steps? Maybe it’s going to be better for you longterm as a service bureau to show them the path to becoming a service bureau and set them up under you.

Right. And share some of the money. It’s not always about trying to, you know, make the most money possible off of someone, because if you’re just gouging people with fees, as soon as they figure it out, like Baldeep said, they’re just churning their customers year over year because they’re hitting them with the fees.

But if you can give them that path and you can. You know, elevate them through the different stages of the industry, or even if they’re almost at the end, show them the very last step that they can take. And yeah, sure. You may be making less money off of them per product, but you’re going to be able to retain them for many, many years down the road.

And that’s kind of how we decide to kind of look at our service Bureau and our [00:23:00] approach is that we’re not here for like, you know, 1, 2 years of just hitting people overhead with fees and making a bunch of money and then them leaving. We’d rather make less money off of them, but have them work with us year after year after year and not really have to worry about retaining them because they’re just getting such a great deal.

So, that’s another huge thing about the Service Bureau is, really focusing on retention and what kind of strategies you can put in there versus the tax office where it’s like, try as you might, referrals, whatever is great, but at some point in time, they’re just going to bail. They might move or whatever, they’re gone and they don’t want to do it virtual.

They want to go in office. All right, you lost them. There’s not much you can do. But with service Bureau, you have a lot more control of how you can really kind of develop some strategies to increase that retention long term for the business.

And one of the other things with I guess whoever’s on here, if you’re a first year Service Bureau, the first thing I would kind of tell you is to just get out of your head. Like you literally, you don’t need to know anything besides how much you’re going to charge. And how to set up your [00:24:00] software.

That is literally it. Like, you have to like, let go to things that don’t serve you because it’s wasting time. Like learning all three softwares. I could never, it’s just a waste

of Oh we have a whole other episode planned on that.


I’m skipping ahead.

Yeah. See, that is a can of worms on using multiple softwares.

Jack of all trades, master of none. Let’s stick to the separating your tax office and service bureau. I think it was a good episode. You know, remember, take the tax preparer hat off when you’re going to be a service bureau, you know, I’m not telling you to stop doing.

I think a lot of the goal for a lot of people in our program is to stop doing taxes. There’s quite a few that have started to will have stopped doing taxes as they have achieved that. But that doesn’t necessarily mean you stop your revenue source year one, but you need to be conscious of the difference.

Because if your real goal is to stop doing taxes, stop dealing with those client headaches, all that stuff, and you want to build a service Bureau, you got to build a service Bureau up to the point where you can walk away or [00:25:00] start selling off your business, right? However, you want to do that and focusing on, you know, all the features of the software and your clients or this or that, or that.

It’s not serving that purpose, right? Your focus should be, how do I acquire more customers for my service bureau? Not worry about the tax office so much. And that’s the whole other conversation, but yeah.

Whole other story. Awesome. Yeah. Tons of great stuff discussed here. If you guys enjoy this again another, you know, shameless plug. If you guys, you know, wherever you’re watching this, if you’re on Spotify or on iTunes or YouTube, wherever like, comment, subscribe, let us know what your thoughts are.

If you guys are interested in becoming a service bureau, we have tons of more information as well. If you guys do want to find out a little bit more about our program and how you can jump into the service bureau industry. We’ll have all the links in the show notes and stuff. Go check it out.

Book in, attend one of our webinars. We’ll have a lot more information there and then talk to one of the team members. We’ll help you get started.

All right, cool.

Wrap it up for the episode.

[00:26:00] Okay.

Then we hit a couple of nerves. This is enough.

All right. We’ll catch you on the next one. Thanks.

All right, guys.