Are you a new taxpreneur? Wondering how you can generate more money in your business? Would you love to know about an easy way to make even more money without doing more work?
Consider using bank products!
What Are Bank Products?
Typically when engaging a new client, a tax preparer will ask for upfront payment. This can sometimes present an issue as a taxpayer may or may not have money to make the payment right then. At this point, either the tax preparer reduces their fee or assumes a credit risk by preparing the taxes upfront and collecting payment at a later date.
Both of these options end up being a liability to the tax preparer.
A bank product is a third option which allows a tax preparer to collect payment from a taxpayer’s refund with the assistance of a trusted financial services provider.
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How Does it Work?
Through use of a financial service provider, the tax preparer is able to process the client’s tax return without worrying about getting paid.
The Financial Service Provider or “Bank” takes on the primary responsibility of receiving and disbursing funds to the appropriate parties. In a nutshell, they pay your tax preparation fee from the client’s tax refund in a easy, convenient, and seamless process.
The client can choose to either be paid their tax refund by check, check-card or direct deposit. The bank does all the work to make the funds available through the desired channel and charges a small fee to do so.
The Long Explanation
Federally regulated banks offering this product set up a temporary bank account in the taxpayer’s name. In return for this convenience, the taxpayer pays the bank a modest one-time account set-up or handling fee (typically about $30). Refund transfers are usually facilitated by a tax preparer or the software used by taxpayers who prepare their own returns. The return is filed electronically and approximately 8 to 15 days after receiving the return, the IRS transmits the taxpayer’s refund to the temporary bank account. The disclosed account set-up fee, tax preparation or software fees are deducted from the refund amount, and the remainder is delivered to the taxpayer via their choice of disbursement methods.
Increasingly, the tax refund is being loaded onto a prepaid debit card, which provides unbanked taxpayers with an opportunity to establish a banking relationship by having their paychecks or government benefits deposited directly to the debit card account.
Why Do Taxpayers Choose a Refund Transfer?
In short, speed, ease and convenience.
If a taxpayer mails his or her income tax return through the U.S. Postal Service, he or she may not receive a refund for several weeks. If that same taxpayer does not have a bank account into which the IRS can electronically deposit the refund, he or she will not receive a refund for four to eight weeks.
Refund Transfers are extremely popular with Americans who like to budget a portion of their refund to pay for their tax preparation rather than pay the additional interest if placed on a credit car. It also keeps them from having to borrow money from a family member or friend, or post-date a check.
In addition, the RT is popular with taxpayers who, for one reason or another, are under-banked or unbanked. Think about those taxpayers whose account is overdrawn, or don’t have a bank account. For these taxpayers, a RT represents an affordable and convenient method of quickly accessing their tax refund, and enabling them to pay housing and child-care costs, living expenses or credit card debts in a timely manner.
There you have it! Another quick, convenient way to make more money in your business by using bank products. All the big box tax companies utilize bank products in their business to ensure they meet taxpayers where they are. You should too!
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