No one avoids Death or Taxes and Accounting Practices are active with both. The Tax Practice industry has always been "recession resistant businesses" and new tax franchise operations are attracting absentee business owners. There are many bookkeepers and CPAs in both private and public firms that dream of having their own practice. Being able to purchase an existing tax or accounting practice for sale has proven to be much safer than starting from scratch.
Approximately 65% of accounting practices are owned by baby boomers and older. This aging population will cause almost half of all existing practices to seek a change in ownership over the next two decades. As more accounting, bookkeeping and tax practices are for sale, a buyer's market will evolve. Some very good Texas Accounting practices will have a difficult time selling as time goes on.
Listings of Businesses For Sale in Texas
Texas Business Opportunities Bulletin
Industry Overview
The accounting and tax practice industry includes companies that primarily provide accounting, tax preparation, auditing, and bookkeeping services. However, many firms have expanded their offerings to include related areas such as payroll preparation, part-time onsite general bookkeeping, plus tax and general business consulting. Larger firms have an advantage in being able to offer a wider scope of services, while smaller firms are generally less costly and able to provide superior individual service. Tax preparation, whether performed by a CPA, Enrolled Agent, or unenrolled preparer, accounts for about 25% of the industry revenues. This is closely followed by payroll services which account for an additional 25%. Liability issues have made audits very expanses; however, it has also created a Sarbanes-Oxley consulting market for larger firms.
To issue a professional opinion in Texas, an individual must be certified as a CPA with the Texas State Board of Public Accountancy. The firm itself must be controlled by such individuals to assure compliance with their standards. Tax preparation businesses by themselves are not subject to this requirement and can be owned and operated by anyone; however, using IRS Enrolled Agents in a Federal Tax preparation practice provides a similar level of professionalism.
Technology is making continual advances in the industry. CPA practices frequently assist their clients in choosing and supporting accounting software. Tax practices are almost always tied to a specific tax preparation program and services are often limited to the types of taxes supported by that software package. Providing consulting support for Quickbooks has become very popular among the smaller firms in Texas; however, niche support for other accounting software can be a profitable extension of services as well. A tax preparation franchise will generally include a license for the franchisor's supported tax preparation software.
Accountants, auditors, and enrolled agents are certified individuals and receive compensation somewhat higher than the national average. Firms will often seek to use non-certified personnel in areas where it is not required by law, such as bookkeeping and tax preparation, and then have the work reviewed by a certified senior. Partners in an accounting practice are generally need to bring in $100,000 in revenues per year or more to be profitable.
Marketing and promotional programs can include advertising, direct mail and telephone campaigns, seminars, and internet sites. Many accounting practices ally with related professional practices to expand their markets. Ongoing customer relationships are vital to retaining a firm's client base.
Industry Benchmarks
Cash flow in a Texas accounting, tax, or bookkeeping practice is often seasonal and follows tax and other compliance due dates. Tax extensions are becoming much more prevalent as regulations are continuing to become more complex, which tends to help spread out revenues.
Reasonable expense profiles as a percentage of sales for an accounting practice business opportunity are:
Cost of Goods Sold: none
Labor Costs: 30% to 35%
Occupancy Costs: 6% to 12%
Pretax Profit: 40% to 50%
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