The accounting industry is one of the most valuable because accountants work with professionals and companies in a variety of capacities. The certified public accountant (CPA) position is one of the most vital and useful.
Perhaps this is why the CPA industry is rising at 6 percent over the course of the next few years.
So if you run a CPA firm and you're thinking about calling it quits, you can still sell your business and allow its value to live on. Before you can sell the firm, you will need to get to know the ins and outs that'll help you get the maximum value.
The tips below will help you sell a CPA firm of any type.
Things to Know When You Want to Sell a Tax or Accounting Practice
The process of selling your firm will be a lot more productive when you know the practical steps. Here's what you need to consider in order to get the results that you're looking for:
1. Make Your Books and Records as Presentable as Possible
Bookkeeping records will be the first thing you'll need when another party makes an offer. Working with a third-party, impartial accountant will help you put together your financial records in a way that tells the true story of your business.
If you run a small business, you'll need to be particularly mindful to separate your personal expenditures from your professional expenditures. Putting your bookkeeping records together also means calculating discretionary earnings and a breakdown of your assets and liabilities.
Include charts and graphs and written assessments to help add context to the numbers. The more clearly you can sell your company through these records, the easier your presentations and negotiations will be.
2. Stay on Top of Your Taxes
When selling a business, the last thing you'd want is to have tax issues that hamstring the process.
As such, you need to address your taxes head-on. This means handling your past-due taxes, creating payment arrangements and making sure that you don't have any liens on your record.
Doing business with a tax accountant can be one of the best steps that you take in this regard.
3. Make as Many Value Improvements as Possible
If you're selling your small business, there are several value improvements you'll want to make prior to seeking offers.
Things like improving your property and upgrading technology will put your business in the best position to increase in value. The more that you understand the market as a whole and where it's headed, the easier it'll be to make improvements that count.
4. Research and Use an SDE Multiplier
It's important to get as specific as possible when trying to determine the value of your firm.
One of the most critical formulas you'll need to get to know is the seller's discretionary earnings (SDE) multiplier. With the SDE multiplier, you are taking the income you bring in before taxes and other factors and multiplying them to get to know the exact monetary value of your firm.
This is one of the most critical assessments that any prospective buyer will want to look into before making you an offer.
5. Get a Feel for Where the Industry Is Headed
You'll be in a better position to negotiate during the sales process when you understand the industry as a whole. Studying the industry gives you the leverage that you need, and informs the way that you present yourself to the market.
This means not just staying on top of the current trends, but also understanding what sort of value your company holds and has the potential to improve to over the next several years.
6. Seek a Few Different Professional Valuations From a Third-Party
One of the best things an accounting or finance firm can do for you is to give your firm a fair valuation. By touching with a third-party professional that offers valuations, you will be able to stand firm on your data so you can set a solid asking price.
There are several different types of valuations that you can seek, to include market valuations, asset-based valuation, and the discounted cash method, among others. When you want to be certain that your valuation is handled properly, you will need to hire an accounting professional that is credible and professional.
7. Determine Your Needs and Why You're Selling
Perhaps the most important part of this process is to determine and get clear on why you are selling your accounting firm, to begin with. When you can find clarity on these issues, you will be able to make decisions that are productive for you.
This usually involves a mix of business and personal reasons, and will also inform the goals that you set in the process. Start taking some quality offers and make sure that they are aligned with whatever your main priorities are moving forward.
You will also need to work with a team of professionals that can help you facilitate the sale in a way that guarantees you the results that you are looking for.
Get the Help You Need When Selling Your CPA Firm
If you need to sell a CPA firm, it pays to use the tips above.
You will need to get some professional assistance so that you are able to get the greatest value out of your firm when you sell it. We would be happy to look after your needs.