Chicago Tax Preparation with Financial Advising
Business options include bookkeeping, accounting, payroll, and tax work for small and large companies alike. Clients include S corps, C corps, LLCs, estates, trusts, and nonprofits. Services for individuals include personal tax returns, with over 250 personal returns linked to business customers. Additional offerings include personal financial planning, along with education and advice on investments, estates, and insurance.
Capitalizing on an integrated view of all available services, this firm works to build long-term relationships with individuals and businesses that require a consistent and reliable financial partner. The well-trained and dependable team collaborate to meet the needs of each customer. With many years of combined experience, this group of professionals works nearly 13,000 billable hours annually. Some employees are full-time, while some are part-time, and a few are contracted as needed.
- Year Established: 1997
- Location and Service Area: Chicago area, filing in 28 states
- Clients: 560-600: Individuals (2/3), business (1/3)
- Services: Advanced tax preparation and financial advising
- Building: 5,000 sq. ft.: Private offices, open cubes, full kitchen, conference room, reception, data room, with shared fitness center and board room
- Reason for Selling: Business succession
- Employees: 7: Administration (1), Managers (3), Staff (3). There are 4 CPAs
- Hours: M-F 8-5
- Seller Training Period: Seller is willing to transition for 1-2 years, if desired
- Growth Opportunities: Expand to audit services, Expand to include CPA reviews, Increase compilation work, Build the team to increase capacity
- Current Owner’s Responsibilities: Financial advising, oversight, tax work
- List Price: $1,749,000
- Gross Sales:
- 2018: $1,439,539
- 2017: $1,375,476
- 2016: $1,306,200
- 2015: $1,298,102
- Cash Flow:
- 2018: $546,594
- 2017: $543,879
- 2016: $472,107
- Assets Included in Purchase:
- Equipment: $260,000: Furniture, fixtures, computers, office equipment
- Intangible Assets: Objective and knowledgeable team, many years of combined experience in the field, respected name in the industry
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement||P&L Statement||P&L Statement||P&L Statement||P&L Statement||Notes|
|Net Income Shown on Financial Statement||$326,982||$255,750||$195,896||$177,341||$162,334|
|Compensation to Owner||$191,712||$189,401||$171,839||$248,795||$209,286|
|11% Tax on total W2 Salaries||$21,088||$11,352||$12,197||$17,646||$15,319|
|Depreciation||$19,218||$7,366||$4,044||$2,250||$10,135||Non-onward going expense|
|Auto-Personal Use||$6,438||$7,957||$7,800||$10,287||$7,968||Personal expense|
|Non-Business Telephone||$3,450||$3,447||$3,470||$3,406||$3,642||Personal expense|
|Dues & Subscriptions||$1,655||$1,635||$2,014||$1,521||$860||Personal expense|
|Meals & Entertainment||$9,422||$11,352||$17,753||$19,955||$16,830||Personal expense|
|Simple IRA||$5,250||$5,250||$4,680||$5,250||$4,230||Personal expense|
|TOTAL ADDBACKS||$219,612||$288,129||$276,211||$350,958||$319,703||Personal expense|
|Seller's Cash Flow = Total Addbacks + Net Income||$546,594||$543,879||$472,107||$528,299||$482,037|
|Profit Margin||37.97 %||39.54 %||36.14 %||40.70 %||41.29 %|
- 38% profit margin in 2018!
Typical Clients and Services
- S corps
- C corps
- Advanced tax preparation
- Personal financial planning
- Educate and advise on:
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
- Administration (1)
- Managers (3)
- Staff (3)
- Total CPAs (4)
- Bookkeepers and tax prep (2)
- Expand to audit services
- Expand to include CPA reviews
- Increase compilation work
- Build the team to increase capacity
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 Prescribed Multiple = Fair Market Value
Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.
A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.
For this business, a 2018 cash flow was used with a prescribed multiple is 3.2. With this information, the computation is as follows:
$546,594 x 3.2 = $1,749,100
The fair market value found above positions the business list price at $1,749,000.
Purchase Price: $1,749,000
70%Buyer Down Payment: $1,224,300
15%After Year One*: $250,500
15%After Year Two*: $250,500
*Based on performance and retention to show Seller’s vested interest in firm’s success post-sale
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
**The Firm Business Brokerage is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.**
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