4 things I wish I’d known before buying an accounting firm

Accounting firms are one of my favorite types of businesses to buy.

I bought my first for $0 out of pocket. Now, it pays me $45k every year, and I barely spend any time on it (just a biweekly meeting).

In fact...

Accounting firms have been such a great investment, I’m almost exclusively focusing on building a huge portfolio of them over the next few years.

But there are a few things about this industry that I wish I’d known beforehand:

1. Brokers will give you a hard time if you’re not a CPA

Because when I say “accounting firms,” that also includes CPA firms.

These are specialized firms, where by law 51% of the ownership must belong to a licensed CPA (in most states).

The good news is, regular accounting firms don’t have that requirement.

So if you do buy a CPA firm, you can simply rebrand as a regular accounting firm and offer the same services — taxes, bookkeeping, payroll, etc.

Or you can buy a regular accounting firm outright, like my student Zach Jensen did.

Neither Zach nor I are CPAs, so don’t let credentials hold you back!

2. You won’t be doing much top-down management

Smaller firms typically have a flat management structure.

Each accountant usually has their own office. And during tax season, everyone’s going to be working head-down, doing their own thing, working in their own little world.

Implementing a complicated chain of command won’t end well. So bear that in mind post-acquisition.

3. Accounting firms are extremely profitable... and the banks know this

It’s easier to get loans for accounting firms, because they’re viewed as low-risk and recession-resistant, and they make a ton of recurring profit.

Overall, this is a great thing for you as a buyer.

But...

4. It can be difficult to find CPAs to hire

Fewer people are graduating with accounting degrees, which means there’s fierce competition to snag the best employees.

You’ll need to put together juicy incentive packages and recruit consistently to make sure you’re attracting top talent.

(A sneaky hiring tip for you: buy a firm near a college that produces these CPAs, so you can scoop up graduates as soon as they hit the job market.)

If you’re thinking of buying an accounting firm, there’s never been a better time

The Silver Tsunami is here, and retiring boomers are desperately looking for buyers to sell their small businesses to.

If you want to learn my full strategy for finding and buying profitable businesses for $0 out of pocket (in every industry, including accounting firms), check out this video:

[Video]: How I Find Profitable Businesses To Buy (That Cost Me Nothing)

We’ve also got a very special deal breakdown coming up in Thursday’s issue. Keep an eye out!

— Ben Kelly

P.S.

If you’d like me to find you deals that match your goals and budget, fill out this form.

Or, if you’re looking to sell a business and want me to send you buyers, tell me the details here.