Three Important Considerations when Buying a CPA Practice

Buying into a new business can be an exciting time in your life. Often, just the thought of owning and operating a business and being your own boss can keep you up at night (in a good way). Often times, the emotional aspect of a business acquisition can cloud a person’s judgment and cause them to make a poor choice. Even though accountants are numbers people, this can happen with CPA’s as well.

To simplify matters, here are three things to think about when considering the purchase of a CPA practice:

You are buying more than just assets: The value of the CPA practice you are buying is measured in conventional terms such as equipment, inventory, client base, etc. However, there is more to it than that. You also need to look at the lifestyle you want and whether this practice will offer this to you. In other words, how many hours per week are you willing to put into your business? What kind of salary do you expect to take for your time worked? How much profit do you hope to earn beyond the salary you draw? Finally, does this practice offer the level of income and the lifestyle you are seeking?

Additional help needed to become acclimated to your new practice: Even if you have been a CPA for several years, there will be specifics about your new practice that will take some getting used to. For example, you will inherit new employees and a new client base. You will need to build relationships with these people and determine the best way to work together with your staff and service your new clients. Toward this end, it is very helpful if the seller is willing to stay on as a consultant or even continue working for the practice while you take over.

Provide the seller an incentive to help you retain clients: The bottom line in your CPA practice is growing clientele. While building your business, you want to ensure you don’t lose too many existing clients along the way. If you are receiving training and support from the current seller, this will be a big help in keeping clients. You may also want to insist on a certain level of client retention over a certain period written into the sale price. This way, your seller will have a financial incentive to make sure you retain and expand your client base.

Consulting with a professional business broker will help make the best decision for you and your family.

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