Trueleaf Finance, a small-business funding service in Saginaw, Michigan, explains how to finance buying or growing an accounting, tax or bookkeeping practice in Saginaw County: what drives the price, how retention shapes the deal, combining a term loan with seller terms, carrying the months between deadlines with a line of credit, and a worked example with invented figures.
How Many Accounting Firms the County Has
Saginaw County had 61 accounting, tax preparation, bookkeeping and payroll firms with paid employees in 2023, about 683 employees between them, and 52.5% with fewer than five employees (County Business Patterns 2023, NAICS 5412). Separately, Nonemployer Statistics counted 124 accounting businesses without payroll in 2024. Practices can change hands as owners retire, with an existing firm adding clients or an employee buying the owner out.
What Drives the Price
Price may reflect annual fees, the mix of work and how many clients are expected to stay. Recurring monthly bookkeeping and payroll clients can be valued differently from once-a-year individual tax returns. Clients with complex business returns may follow the person rather than the firm. A careful buyer asks for fees by client type and by service, not just a total.
How to Finance a Business Purchase Like This
A practice purchase can combine three sources: the buyer's own cash, a term loan and seller terms, where part of the price is paid over time or depends on retention. Seller terms reduce the amount borrowed and keep the seller invested in a smooth transition. A partner reading the request may want the purchase agreement, the seller's fee history and tax returns, and the transition plan.
Which Way to Finance a Business Purchase Depends on Retention
If retention is uncertain, a structure that shares the risk with the seller, such as an earn-out or a seller note, can make more sense than borrowing the full price up front. If the practice is mostly recurring monthly work with a long history, a larger term loan may be reasonable. There is no single right way; it depends on how predictable the fees are.
Carrying the Months Between Deadlines
After a purchase, the new owner may face months where payroll outruns billings until deadline work is collected. A line of credit drawn in those months and repaid from deadline fees keeps the term loan from carrying working capital needs it was not sized for.
Worked Example With Invented Figures
Illustrative figures only, not an offer. A Saginaw County firm buys a retiring owner's practice with $180,000 in annual fees. The parties agree on a price of $190,000: $40,000 from the buyer's cash, $110,000 from a term loan and $40,000 paid to the seller over two years, reduced if retention falls below an agreed level. If 85% of fees stay, year-one fees are about $153,000; the buyer checks that the loan payment and the seller payments fit inside that cautious case after added wages.
When the Seller Stays On
A seller who stays for a tax season or two, introducing clients and handling the transition, can be worth more than a lower price. A partner may read a written transition plan as reducing retention risk. Agree on the seller's role, hours and pay for that period in the purchase agreement, and tie any seller-note payments to the transition being completed.
What to Gather Before Asking
- Seller's fees by client type and service for recent years
- Client count and recurring versus annual work
- The purchase agreement or letter of intent, with seller terms
- Your own firm's tax returns and bank statements, if you are an existing firm
- A transition plan: how long the seller stays and how clients are introduced
More on what firms finance is on accounting firm funding; county data is on the Saginaw, MI page.
By Trueleaf Finance · Updated
