Let's talk turkey, firm owners - how much are you making?

Interested to learn what's achievable in this profession of ours:

- Gross revenue
- Expenses
- Number of employees
- Services offered
- Location
- Years in business

I'm shooting for 200-300k gross as a sole prop with no employees.
Expenses I am shooting for 25-30% overhead.
0 employees
no bookkeeping, sales tax or payroll
location is "upstate" NY - non-metro

Prior firm with 2 professionals was doing $400-450k
Overhead estimated at 120-140k not counting either professional salary
2 part time staff
in house payroll service, some in house bookkeeping/write up
location NY

Industry average is said to be $150k per full time employee, so a single CPA plus one staff would be expected to do $300k.
I think 250k-500k gross is probably more common for a book of business for a small firm CPA

The business model of having reception or non-certified staff doing data entry, so the CPA is in more of a review position seems to be interesting to me.

Not revealing actuals or where I currently stand relative to goals since some people I know are on here and it is not any of their business, so I will only reveal my targets:

Target net cash flow to me: $300-350k

That is attainable with one CPA and support staff where I take the very level position and do not deal with nitty gritty. Realistically, 2-3 support staff at $150-180k range. No offices, virtual services only and thus required equipment/assets to facilitate remote work. To allow for a cushion, I'll toss out target gross revenue of $600k.

This is living and working in affluent but small towns in two states.

I'm shooting for 200-300k gross as a sole prop with no employees.
Expenses I am shooting for 25-30% overhead.
0 employees
no bookkeeping, sales tax or payroll
location is "upstate" NY - non-metro

Prior firm with 2 professionals was doing $400-450k
Overhead estimated at 120-140k not counting either professional salary
2 part time staff
in house payroll service, some in house bookkeeping/write up
location NY

Industry average is said to be $150k per full time employee, so a single CPA plus one staff would be expected to do $300k.
I think 250k-500k gross is probably more common for a book of business for a small firm CPA

The business model of having reception or non-certified staff doing data entry, so the CPA is in more of a review position seems to be interesting to me.

Thanks for the reply. I have a couple follow ups for you:
- What is driving most of your expenses?
- How long have you been in business
- How many returns (and types) are you pumping out per year?

I am just starting on this journey - I am curious how many years of tax prep experience you had prior to venturing out on your own.

My prior story is on this site so I'll just give a quick breakdown. I was with a small firm earning in "sweat equity", but when it came time to put it in writing the deal went up in smoke. I've got about 20 years in the tax business now, started my business in 2019, 2020 was my first full year (but also still employed).

Biggest single current expense is software. The rest is all the normal small business stuff, internet, phone, rent, mileage, etc.
Current list is probably 150ish total clients with about 50% of revenue from personal and 50% from partnerships and corps, roughly. I am not currently at my target gross yet.

So when I was a more traditional CPA firm in say 2000 to 2012, it was me and another solid assistant and at times a per diem. We did between 400 and 450K in 2010 to 2012 for example and that netted me around 250K, plus revenue from money management. I now manage money as my main income as a CFP but do the tax work for clients with money under my management.

So when I was a more traditional CPA firm in say 2000 to 2012, it was me and another solid assistant and at times a per diem. We did between 400 and 450K in 2010 to 2012 for example and that netted me around 250K, plus revenue from money management. I now manage money as my main income as a CFP but do the tax work for clients with money under my management.

Interesting! I am thinking about the CFP designation to complement the CPA. Seems like a great combo for a sole prop.

Interested to learn what's achievable in this profession of ours:

I'm not going to put the specifics in a public subforum, but I'll give a basic picture. After years of working stupid numbers of hours including one or two side gigs at any given time, I have a level of financial freedom that allows me to cut back to a very balanced life. And I value that increasingly, so my personal targets are significantly lower than others here.

My long-term goal is around 800 hours at my target hourly rate. So, to be conservative let's say my goal is 900 client-attributable hours per year plus admin work/CPE. Overhead target is about 20% of revenues and my largest expense is software. I have a 12% maximum growth per year target, at least until I get nearer to the goals, and I measure growth as the increase in billings less the effect of price increases.

I am a solo CPA with a part-time admin. I'm at $285,000 gross, $180-185,000 net. We have been virtual since Fall 2019. We are almost exclusively tax prep and planning, with a bit of bookkeeping. Started in Illinois in 2002, moved to Colorado in 2015, and now just relocated to Virginia. I tried the financial planning route 7-10 years ago and could not get it to work. Too much compliance and keeping up for me to do both.

I tried the financial planning route 7-10 years ago and could not get it to work. Too much compliance and keeping up for me to do both.

For CPAs who can do it successfully, more power to them, but the recruiting firms don't paint a true picture of the compliance elements. You will be spending more time and resources on that aspect than actually looking and pitching sales.

I gave up my securities registration.

Series 65 is a good bridge between what CPAs typically do and what I prefer CFPs to handle. I was going to get it last year but then COVID hit and screwed up scheduling. I need to focus on obtaining it within the next year so I can evolve my firm and add value to clients that seem to prefer running everything through me.

I added an RIA to my EA firm of 5 employees 2 years ago and so far I have about 2 million AUM.

It doesn't make much yet but I like the idea of being diversified and IA work is easier than tax work.

I concur, however, that compliance and the extra time to keep it going is relentless. I was just audited by the state too, and I had to throw several hours at that DURING tax time.

I am a solo CPA with a part-time admin. I'm at $285,000 gross, $180-185,000 net. We have been virtual since Fall 2019. We are almost exclusively tax prep and planning, with a bit of bookkeeping. Started in Illinois in 2002, moved to Colorado in 2015, and now just relocated to Virginia. I tried the financial planning route 7-10 years ago and could not get it to work. Too much compliance and keeping up for me to do both.

Thank you for your openness about this.
This seems like a good target range. I was thinking 260k ish would be about my max with no admin.

One way to get a gauge on the gross and profit margins of other firms is to go through the listings of those looking to sell.

SMTCPA you’ve been at it for 20 years. Has your growth been steady or did you have a couple great years or a memorable event that catapulted your practice?

I added an RIA to my EA firm of 5 employees 2 years ago and so far I have about 2 million AUM.

It doesn't make much yet but I like the idea of being diversified and IA work is easier than tax work.

I concur, however, that compliance and the extra time to keep it going is relentless. I was just audited by the state too, and I had to throw several hours at that DURING tax time.

I was stuck at 10 mil for a long while until I decided that I was a CFP with a CPA license and NOT the reverse.

I stopped taking on tax clients unless they had assets. I am now well near 60 mil and the transition is difficult.

What I like most is I can sell my financial practice for more that one million. I am NOT my own RIA, I joined an independent RIA group and I pay a fee.

For me it was timing. In 2002, I wasn't even going to be a tax practice. I started out as outsourced CFO services. Then a client asked if I could prepare a corporate return. I figured it out and then the tax work snowballed. I used to joke in those days I could stand out on a corner in a lounge chair and clients would come to me. It was easy then. I built a website and did a lot of SEO back when it wasn't a thing and I built my practice off of people finding me on the internet.

I just built it organically with one small acquisition in 2005. At one point I had 4-5 staff. Then the financial crisis of 2009 hit and I paired down to just me. I struggled to rebuild, but I did. In 2015 I decided to move to CO so I bought two small books of business in CO and transitioned/sold my Illinois clients to a CPA I just brought on.

If I could find tax/bookkeeping staff, I would no doubt be much larger. But having an admin is critical. I could not do it without her.

SMTCPA you’ve been at it for 20 years. Has your growth been steady or did you have a couple great years or a memorable event that catapulted your practice?

I decided that I was a CFP with a CPA license and NOT the reverse.

You may have told me at one point but cannot recall--how did you gain the required experience to become a CFP?

- Gross revenue = $365,000
- Expenses = $154,000
- Number of employees = 1 F/T. But ready for another hire to be able to grow.
- Services offered = Tax, Bookkeeping, some RIA
- Location = Midwest
- Years in business = 6th year (first tax year was 2015, did less than 20 returns)

I decided that I was a CFP with a CPA license and NOT the reverse.

You may have told me at one point but cannot recall--how did you gain the required experience to become a CFP?

I had a series 7 for a few years before that and other work qualified.