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Some of the more important factors in any valuation include location, overhead, average fee per return, and whether the seller is able or willing to provide financing. Other factors can also include any compliance issues, the age and demographics of the clients, and the growth of the practice.

Its hard to imagine not being able to promote your CPA firm today. However, advertising wasnt allowed in the accounting industry until 1977 when a Supreme Court decision about professional service firms made it legal. Now there are so many CPA marketers we have our own national association!

A key metric used to size up accountancy firms is Gross Recurring Fees (GRF). GRF represents the total fees that the firm can expect to receive from its clients on a recurring basis. When valuing accountancy firms, buyers often apply a multiple to the GRF, typically ranging from just below 1x to over 1.5x.

Average REV Multiple Range: 0.71x 1.09x ing to Peaks data, accounting firms sell an average of 0.71x 1.09x of revenue. A valuation expert can derive the implied value of the business by multiplying the amount of revenue or sales an accounting firm makes by the valuation multiple. Refer to the equation below.

Some CPA practice valuations start at 150% of a firms total revenue and deduct for any negative aspects. Whichever method you end up using to value your practice, the average firm will sell for approximately 70-130% of revenues. Another method includes starting at net profit and multiplying by 2-2.5%.

Starting an accounting firm is like starting any small business it requires a lot of work. However, industry and consulting firms list accounting firms as one of the single most profitable small businesses a person can start right now.

CPA firms typically bill on an hourly basis or per project, but that may not always be the most effective method. Depending on the services offered, you can consider offering fixed fees, also sometimes called value-based pricing.

Hourly rates can range from $100 to $500 or more, depending on the CPAs qualifications and location. Flat Fees: In certain cases, CPAs may offer flat fees for specific services, such as tax return preparation or monthly bookkeeping.