If you’re thinking of launching a tax preparation service and are looking to attract new clients, you’re probably wondering who your ideal customer is.

Many people need tax preparation services for many reasons. Some people do not understand the tax code and prefer to use a professional. Others have complex financial situations and need help navigating the tax code.

Some people have tax exposure in multiple countries and need someone who understands laws in both countries and any tax treaties that might exist.

And some people simply want peace of mind.

In this blog post, we will discuss the ideal target market for tax preparation services.

Keep in mind that this target market may vary depending on your location and the services that you offer.

That being said, there are some general characteristics that describe the perfect customer for a tax prep business.

Let’s find out what they are!


Who Is the Target Market For Tax Preparation Services?

To best understand the target market for tax preparation services, we need to first study the reasons why someone decides to outsource tax preparation to a professional instead of doing it themselves.

By understanding people’s motivations for externalizing this service, we can divide this market into customer segments and study each one on its own.

This needs-based segmentation allows tax preparation companies to create products and services, as well as marketing strategies, specifically designed for each segment.

Here are the main customer segments of the target market for tax preparation services:

  1. People who do not understand the tax code
  2. People who have complex financial situations
  3. People who do not have the time to prepare their taxes
  4. People who want peace of mind
  5. People who have tax exposure to multiple countries
  6. Businesses

Let’s look closely at each of these market segments.

1. People who do not understand the tax code

The most obvious target market for tax preparation services includes people who do not understand the tax code or know how to file taxes.

This is likely the largest target market for most tax prep companies.

People in this segment generally have no idea how to file their taxes and need someone to walk them through the process step-by-step.

If you’re targeting this segment, your tax preparation services should be designed to be as simple and straightforward as possible.

Expect some beginner questions from this segment of people and be prepared to answer them calmly and in easy-to-understand language.

2. People who have complex financial situations

Another target market for tax preparation services includes people who have complex financial situations.

This segment includes people with multiple streams of income, property owners, and those who have recently gone through a major life event like a divorce or the death of a spouse.

People in this segment often need help sorting through their finances and ensuring that they are taking advantage of all the deductions and credits they are entitled to.

If you’re targeting this segment, your tax preparation services should be designed to be comprehensive and customizable.

3. People who do not have the time to prepare their taxes

Many people turn to tax preparation services because they simply do not have the time to prepare their own taxes.

This segment includes busy professionals, parents, and students.

People in this segment are often willing to pay a premium for convenience and peace of mind.

If you’re targeting this segment, your tax preparation services should be designed to be fast, efficient and comprehensive. Remember, that these people have come to you so that they save time. So be sure that your processes and procedures are optimized to minimize the time spent by your clients helping you do their taxes.

But note that, unlike the first segment we discussed above, this segment of people understands their taxes and so expect smart questions from them for the choices you propose.

4. People who want peace of mind

This segment of the target market for tax preparation services is looking for one simple thing – peace of mind!

Many people are worried about making a mistake on their taxes. Or they lack confidence in their own abilities to prepare their taxes. Or they simply want to avoid an audit.

Regardless of the reason, people in this market segment are willing to pay for the reassurance that comes with knowing their taxes are being handled by a professional.

For this segment of the market, it is important to emphasize the importance of using a professional tax preparation service. You should also highlight the experience and credentials of your team.

5. People who have tax exposure to multiple countries

A small but growing number of people, often expats, have tax exposure to multiple countries. This target market is often overlooked by tax preparation companies but can be extremely profitable.

People in this segment might have their primary income in one country but have a second secondary income, like rental income or investment income, in another country.

These people need help to sort through their finances and ensure that they are compliant with the tax laws in multiple countries.

They may need help avoiding double taxation wherever possible. This usually depends on the tax treaties that exist between the countries in question.

6. Businesses

Finally, businesses are also a target market for tax preparation services.

Businesses have to file taxes, just like individuals do, but the process is usually much more complex.

Businesses often have multiple employees, multiple streams of income, subsidiaries in multiple countries, and complex financial situations. They may also be required to file quarterly or monthly tax returns in addition to their annual return.

Businesses, especially small businesses, can be a great target market for tax preparation services. They often don’t have in-house resources to prepare their taxes and are forced to outsource this function to a professional service.

Tax preparation companies can also provide them with other services like bookkeeping, payroll, and audit protection.


Conclusion

The target market for tax preparation services generally includes people who do not want to do their own taxes for various reasons.

The most common of these reasons is that they cannot. So people who cannot understand the tax code or are not capable of filing their own taxes will often turn to a tax preparation service for help.

Likewise, people who have complex financial situations may need the help of a professional to navigate the various tax laws and ensure that their taxes are filed appropriately.

Sometimes, this financial complexity comes from having income (and tax exposure) in multiple countries.

Those who do not have the time to prepare their taxes or those who want peace of mind will also turn to a tax preparation service as do businesses who have more complex tax requirements than most individuals.