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Bookkeeping, Payroll & Tax Prep Business: Non-CPA Owner



  • Price

  • Cash Flow

  • Revenue

  • Profit Margin

  • Intangible Assets
    Outstanding reputation and customer loyalty

  • Reason for Sale

  • Location
    Under 30 minutes east of central Omaha

  • Employees
    3 FT, 2 PT

  • Service Area
    Eastern NE & Western IA

Serving Western Iowa for 47 years, this non-CPA owned accounting and tax prep business offers payroll, accounting and consulting services. Nearly 200 clients engage in regular payroll and accounting services, and thousands of federal and state taxes were filed in 2016. Of these, 92% were individual returns, with many also filing for small businesses, farms and rental properties.

While most clients are located, or have been located, in Western Iowa, an increasing number of customers are coming from the Omaha metro based on a fabulous word-of-mouth reputation. Operating full-time out of its current 2,000-sq. ft. office since 2005, 3 full-time employees work on payroll, accounting and income tax prep.  Assisting during tax season are an additional 2 part-time employees working in reception and tax prep.

As the business has grown by reputation, a buyer could grow the business with advertising by signage, social media and promotions. The current owner has not raised fees, and does not charge for consultations, which a new buyer could consider, as well as adding audit services.

Business Highlights

  • Years in Business: 47
  • Location: Under 30 minutes east of central Omaha
  • Service Area: Eastern NE & Western Iowa – an increasing number of clients are coming from the Omaha metro
  • Number of Clients: Weekly & monthly payroll services – 167; Monthly accounting - 30
  • 2016 Tax Returns Filed: 3,094 Federal, 2,525 Iowa, 1,541 Nebraska, 196 other states; 92% individual tax returns with 50% of those also filing business returns
  • Lease: 2,000 sq. ft. leased at $1,500/month
  • Reason for Selling: Retirement
  • Employees: 3 FT – payroll, accounting, income tax prep; 2 PT – income tax prep, reception
  • Hours: Mon – Fri 8am to 4pm
  • Tax Season Hours: Mon – Fri 8am to 8pm, Sat 8am to 3 pm
  • Seller Training Period: Through April 2018 - transition during tax time
  • Growth Opportunities: Advertise – business has grown by word of mouth, but would grow more with advertising; increase fees; add audit services; charge for consultations (currently free); investment advice (with the proper license); QuickBooks consulting
  • Current Owner’s Responsibilities: Manage employees, some tax preparation, accounting review

Financial Highlights

  • List Price: $560,000
  • 2016 Gross Sales: $394,913
  • 2015 Gross Sales: $374,605
  • 2014 Gross Sales: $369,522
  • 2016 Cash Flow: $184,727*
  • YOY Growth: Business grew by 6.4% between 2015 and 2016 with no advertising
  • Profit Margin: 47%
  • Assets Included in Purchase: $27,500
    • Equipment – 6 computers, printers, scanners, server, copier and 2017 prepaid tax software and forms
  • Intangible Assets: Outstanding reputation and customer loyalty

*80% of profit is earned during a 3-month period



  • General ledger & financial statement preparation
  • Bookkeeping
    • Monthly, quarterly and annually
  • Accounting system setup for new businesses
  • Computerized payroll services
  • Business tax return preparation
    • Sales & use
    • Business property

*please note the personal financial planning is not provided, but could be added by a new owner

Tax Services

  • Payroll
    • Development of payroll systems
      • Check preparation
      • All phases of payroll and related tax process
    • Prep of all federal and state payroll tax returns and W-2’s
  • Sales tax
    • Compilation of information and prep of sales tax returns
  • Tax planning
  • Tax preparation
    • Individuals, corporations, partnerships, trusts, estates, and non-profits
    • Preparation for every state required tax returns


  • Assistance in choosing business entity forms for new businesses
  • Determine the most advantageous form for a company

Fees for services have a wide range depending on client size and needs. However, tax filing fees average around $120.

Client Stats and Demographics

  • The typical client is a small business owner filing both individual and business returns
  • 92% of returns are individual returns, with half of those also filing for small businesses
  • 84% of revenue is earned through filing for small businesses, farms and rental properties
  • 20% of clients do not meet face-to-face, and submit documents electronically

While the majority of clients are in Western Iowa, many new clients are coming from Nebraska and the Omaha metro area. Some clients own property in both states, as well as many others.

  • Weekly or bi-weekly payroll services provided for 37 clients
  • 130 monthly or quarterly payroll tax or sales tax returns provided for small employers
  • Accounting services for 30 clients
  • 16% of revenue comes from payroll services

Sales Analysis

  • Tax return numbers have increased for all filing entities, with the company growing solely by word of mouth
  • Individual tax returns in 2015 numbered at 2,751
  • In 2016, those numbers increased to 2,866 individual returns, a 4% increase

  • Between 2014 and 2016, revenue increased by 6.4%
  • Tax return profits grew 2.68% during the same period

  • Over 9 years, revenue has grown by 53.8%
  • Average year-over-year growth is 8%


  • 3 FT employees
    • Employee 1 – accounting, payroll and reception duties as needed
    • Employee 2 – income tax preparation, accounting and payroll
    • Employee 3 – accounting, payroll and reception duties as needed
  • 2 PT employees
    • Employee 4 – income tax preparation and reception duties
    • Employee 5 – income tax preparation and reception duties

Part-time employees work mostly during January – April for tax season

In addition to the above employees, there are 2 very part-time receptionists that put in hours during tax season.  In 2016, their combined pay was $754 for 75 total hours.

Growth Opportunities

  • Advertise
    • Current growth is achieved by word of mouth only, and the seller does not actively market or advertise the business
    • Introducing signage, promotions and some social media presence would help
    • A buyer could also target Facebook in the ramp up to and during tax season to gain visibility and more clients
  • Add audit services
    • A CPA buying this company could add auditing as an additional revenue stream
    • The current owner does not provide this option but feels it is a great way to go
  • Increase fees
    • This has not been done by the owner, but should be considered by a buyer looking to inject more cash flow after a suitable period of client integration
  • Add fees for consulting or tax planning
    • These services are currently free, but a fee could be added for some marginal growth
  • QuickBooks consulting
    • The current owner has chosen not to consult on QuickBooks as he has not been in favor of QuickBooks
    • This is currently referred to an outside person, but bringing this in house would assist in profits and provide clients with more services
  • Investment advice
  • With the right licensing, this would be a great asset to the business as the majority of investors rely on good advice to create wealth

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnTax ReturnNotes
GROSS SALES$394,913$374,605$369,522
Net Income Shown on Financial Statement$182,492$181,157$177,599
Compensation to Owner$0$0$0Sole-proprietorship - distributions only
Depreciation$4,019$6,918$12,494Non-cash item
Non-Business Telephone$973$945$697Personal cell phone payments
Travel$496$1,523$4,523Personal expenses
Meals & Entertainment$2,044$2,207$1,907Personal expenses
Fuel & Oil$2,360$2,646$2,68950% personal fuel & oil, plus insurance at $77.40/mo
Rent$-14,500$-12,000$-12,000$1,500/mo at $18,000/year
Repairs$6,843$1,224$3,236Personal expenses
TOTAL ADDBACKS$2,235$3,463$13,546
Seller's Cash Flow = Total Addbacks + Net Income$184,727$184,620$191,145
Profit Margin46.78 %49.28 %51.73 %
  • 47% profit margin in 2016
  • 5.4% increase in sales between 2015 and 2016 with no advertising

Valuation Details

The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business.  The formula used is as follows:

Cash Flow       x          Multiplier          =          Price

Cash Flow is the sum of net income plus any owner perks and non-onward going expenses.

Multiplier is a prescribed number between 1 and 5 determined by a 100-point, 20-question rating system used to determine the business valuation. The average multiplier is 3.

The Cash Flow for 2016 is $184,727, and the prescribed multiplier is 3.

With this information, the computation result as follows:

$184,727         x          3          =          $554,181

The List Price for the business is set at $560,000 due to steady Gross Sales and consistent Cash Flow.

Payment Structure

Purchase Price:                       $560,000


Down Payment: $200,000

Seller Carry: $360,000


Balance to be paid over 3 years to seller in annual payments. This is an industry standard practice designed to incentivize the seller into assisting in client retention. 


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210 N 78th St. 2nd Floor
Omaha, NE 68114

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