Filling out financials for my college ready daughter and wondering what value I should put on my tax business if any. Work out of my home; about 300 loyal clients; no fancy equipment. Been doing this for 17 years. Is there some formula? Have been looking on-line and just find long winded legal stuff. If we went to a flat tax it might not be worth anything. Thanks!
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I think it all depends on your area
A good place to start is AccountingPracticeSales.com. I saw a few listings in our area and another large city in TX (Houston). I have heard from other firms that have purchased other firms and the listings I viewed have a consensus of approx 1 times Gross Revenue to as high as 1.5 times GR or higher. Again, it depends on the area. A rural area or smaller town may command a lower multiple of GR.
Then again, if a broker is involved, the prices on the website I mentioned will have a bit of markup to cover the sales commission.
Working out of your home, type of client base, gross revenue, geographical area, I would say you could get 1.03645276357 times Gross Revenue. That's a joke of course. Look in your local listings, see if there are tax practices for sale, start there.Circular 230 Disclosure:
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When asked
I used one times three years trailing gross.Comment
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I had HRB regional big wigs and a couple of local franchise owners set up a meeting with me with regards to purchasing my practice and the numbers that was un-officially offered was a multiplier of 1 of the annual gross revenue. But I think 1-1.5 would be a good start.Comment
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Unless it's for your estate
then it's 25% of the annual gross.
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