Selling my practice

[Headlinesman]

I'm looking to sell my tax practice at the end of the 2025 tax year filing.  Any recommendations or suggestions on how to go about this?  It is just going to be me selling my clientele list as I'm the sole preparer.

[Jim-from-Ohio]

Just one suggestion here. do a search for your area at this site to see who local preparers are and you can draft a letter or call them to introduce your firm, etc https://dashboard.refundo.com/2023/ext/?fbclid=IwAR1wqzXZGNt5rSVjYqjSaqEfhdKjRFBurMoK2trFCskcGsfzWbg...

[Accountant-Man]

Dear Head: I tried for a year meeting with other CPAs and firms in my town and surrounding towns. Even though I had purchased lists three times previously, I tried to sell without requiring me to work except in very limited circumstances. I should have known better. I had over 500 1040s and about 80 others, some for over 25 years.

Then I contacted a broker, accountingpracticesales.com. They cost 10% of sales price, minimum $20K commission. They found several potentials, I spoke and met with four, and made the deal. 25% of annual fees for 4 years(2025 taxes in 2026 is the final year!). New clients are also mine and I get the 25% for them, too. I lose some clients every year.

I still hold some hands, still prepare all the 1041s, and try to avoid speaking with most clients since it's not mine anymore. I get paid hourly for working.

So I sold the list; I did not merge the practice into his. Otherwise I would have to work more than I prefer. I have worked about 50, 60 and 70 hours each year, respectively.

[Headlinesman]

Thank you very much.  I appreciate your insight and advice

[TaxGuyBill]

If you Google "Fred Stein sell tax practice", you'll find some awesome information, including several videos on YouTube.  I'm not sure how much he says about the initial starting of "how", but he has some fantastic advice/suggestions (and pitfalls to watch out for) about buying or selling a tax practice.

[ljr]

I was going to say accountingpracticesales.com as well. They are always sending me flyers or letters. I can't believe I'm saying this, but I get stuff from H&R Block about selling as well. 

What state are you in?

[George4Tacks]

Be aware that you are selling multiple things.

#1 Goodwill - The value of what you and your reputation have added to the practice then things like

• Equipment - make a full listing of printers, computers, paper clips, tables, .... and value them. Remaining depreciation is an offset
• Lease - possibly you have a remaining one OR The sale of your building
• Software - possibly you have already purchased next year's software, or things like my good buddy  Tax Tools.
• other parts of the practice that you can assign value to.

[Accountant-Man]

I used them. See my post above.

[Headlinesman]

I live in Utah.  But I have clients in 33 states and 13 foreign countries

[Headlinesman]

Utah

[Headlinesman]

Accountman,

Thank you for the advice and information.  A couple of quick questions if I may?

1)  What time of year did you first reach out to them and how long till the sale?

2)  Were most of your clients local or in your state?  I'm asking because most of my clients are scattered thru the US and about 20% are out of the country.

Thank you for your help

[Greta]

I also plan to retire after this tax season. I thought I'd just walk away, but I have a rather large clientele, who have also become my friends over the decades. There is a huge need in our town (pop 25,000) for tax preparers. I am not keen on going through a sale with a broker, it seems like a hassle. I contacted the accounting department in our university--the prof who teaches the class on taxes and also has her students prepare pro bono returns for low-wage residents suggested I come in January to speak to her students, perhaps one senior might be interested in taking over a ready-made clientele. I can stick around for a year to help with the transition. If this works (I know...it's a big if), should I ask for a certain % of each client's fee that the new person prepares?

[TaxGuyBill]

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@Greta wrote:

should I ask for a certain % of each client's fee that the new person prepares?

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The amounts vary, but a somewhat common method is that the seller received 25% of the amount of your clients for four years.  If the client keeps going to the new preparer for four years, you would receive the equivalent of 100% of one year; if the client only goes to the new preparer for one year, you would receive the equivalent of 25% of one year.

The problem for the seller (you) with that method is that the new preparer could only be seeing their own interests; they could dump the clients they are not interested in, and therefore you wouldn't get anything for those dumped clients.

If you are more concerned about just finding someone and passing the clients to a new preparer, then you may consider a much lower amount, with the goal of just finding SOMEONE.

[SnowPhoenix]

@Greta If the client's can be managed remotely, I am definitely interested.