Taking advantage of a franchise opportunity can be a great way for individuals to own and manage their own business without building a company and its product base from the ground up. However, the costs of purchasing a franchise can be significant, and many individuals may not be able to cover all the costs out of pocket. Individuals who have little credit built up may face challenges securing the funding they need from a traditional institution, and if this is the case, there are several alternative sources of funding adults may turn to. However, it's important to know and understand the implications of each funding decision before signing an agreement.

One of the first places individuals may turn toward is private lending. This type of funding typically requires less documentation and more flexible credit scores from borrowers than traditional banks and lenders will impose. However, private lenders also take on more risk, which will be passed on to borrowers in the form of higher interest rates and fees for loans. For this reason, it's important that franchise owners understand their loan contract and are equipped to make their monthly payments to avoid falling into business debt.

Second, many veterans who are interested in opening franchises may be eligible for VetFran programs, which provide monetary incentives, training, financial assistance and other types of aid. This program can be a great resource for veterans who are running their first franchise or have little experience or capital to begin operating a company.

In some cases, adults may also turn toward their retirement accounts to help fund their purchase. However, doing so can have serious tax implications if adults under age 59 ½  take distributions from a 401(k) account. Not only will early withdrawals carry a 10 percent tax penalty, but distributions are taxed as ordinary income and may push owners into a higher tax bracket. Individuals might also be considering taking out a loan from their 401(k) accounts to fund their purchase, but this will also carry tax consequences. For example, adults who take out a 401(k) loan and them leave their current position may be required to pay back their full balance immediately. In addition, interest paid on retirement account loans is not considered tax deductible. For these reasons, individuals should consult with a tax preparer before they make any decisions about funding their franchise through their retirement accounts. Speaking with a professional can help individuals explore other retirement account funding options that may not result in penalties or fees.

The Liberty Tax Service franchise opportunity is appealing to a diverse America, ranking highly for its affordability and potential. Entrepreneur magazine has ranked Liberty Tax Service on its “Franchise 500” list of best franchise opportunities since 1998.  Liberty Tax Service is the only tax franchise on the Forbes magazine’s “Top 20 Franchises for the Buck (2012)." Our tax franchise is an affordable and viable business choice. Each office provides thorough, computerized tax preparation coupled with superior customer service. For the best small business opportunity in the income tax franchise industry, choose Liberty!