The short answer: A solo tax/bookkeeping practitioner commonly takes home $75,000, $150,000. Owners of firms doing $500K, $1M in revenue typically produce $175,000, $400,000 in SDE, because small accounting practices return about 35%, 45% of revenue to a single owner-operator. That SDE, not just salary, is what you buy, and it sets the price at roughly 2.33× SDE.
What accounting firm owners actually earn
"Owner pay" in a small firm is really two numbers stacked together: the salary the owner draws, plus the profit the business throws off after that salary. Business-brokerage data combines them into seller's discretionary earnings (SDE), the total economic benefit to one full-time owner. It's the number that matters when you're buying, because your loan payment comes out of it.
Because accounting practices carry almost no equipment and little overhead beyond labor and software, a large share of revenue survives to the bottom line. Well-run small tax and accounting firms commonly convert 35%, 45% of revenue into SDE.
Owner earnings by revenue band
| Annual revenue | SDE @ 35% | SDE @ 45% | Profile |
|---|---|---|---|
| $200,000 | $70,000 | $90,000 | Solo, part-year seasonal book |
| $500,000 | $175,000 | $225,000 | Established solo + admin help |
| $1,000,000 | $350,000 | $450,000 | Owner + small staff |
| $2,000,000 | $700,000 | $900,000 | Multi-staff firm, owner manages |
These are illustrative bands using the 35%, 45% owner-margin range; actual SDE depends on staffing model, billing rates, and how much production the owner personally does. As a firm adds staff, the percentage margin often dips while the absolute owner profit rises, a good trade for a buyer who wants to work on the firm, not just in it.
The best-priced firms pay their owner well and still run when the owner takes a week off.
Building SDE: the add-backs
When you underwrite a target, you rebuild SDE from the tax return. Legitimate add-backs in an accounting practice typically include:
- Owner's salary / guaranteed payments, added back, then a market replacement wage considered.
- Personal perks run through the business, vehicle, phone, meals, travel, a family member on payroll who doesn't work.
- One-time costs, a software migration, office move, or legal fee that won't recur.
- Interest and depreciation, financing and non-cash items removed to show operating cash flow.
Discount write-downs, don't add them back
If the owner routinely writes down invoices or under-bills long-time clients, that's a real cost, and sometimes an upside if you can re-price. Don't treat chronic realization losses as a one-time add-back.
How earnings become a purchase price
Price follows SDE. At the ~2.33× SDE anchor for accounting firms, the earnings bands above map to value like this:
| SDE | Price @ 2.33× | ~10% SBA down |
|---|---|---|
| $100,000 | $233,000 | $23,300 |
| $250,000 | $582,500 | $58,250 |
| $400,000 | $932,000 | $93,200 |
Notice that a typical firm lands near 1.0× revenue at the same time, the two rules of thumb converge for a healthy practice. Run your own numbers in the valuation calculator, and see live comps on the accounting firm multiples page.
See what that SDE is worth
Plug in earnings and a multiple to get a defensible price and down payment.
Frequently asked questions
A solo tax/bookkeeping practitioner commonly takes home $75,000, $150,000. Owners of firms with $500K, $1M revenue typically produce $175,000, $400,000 in SDE, since small practices return about 35%, 45% of revenue to the owner.
Small owner-operated firms typically run a 35%, 45% owner margin (SDE ÷ revenue). Staff-leveraged firms may show a lower SDE margin but higher absolute owner profit once the owner steps back from production.
Yes. SDE adds one owner's salary and discretionary perks back to net profit, so it's the total benefit to a single owner-operator before financing. Your loan payment comes out of that SDE.
Price is SDE × a multiple of about 2.33× (which also lands near 1.0× revenue for a typical firm). $250,000 of SDE is worth roughly $580,000. Higher recurring revenue and lower owner dependence raise the multiple.
Sources
- Accounting/CPA/tax practice earnings & multiple benchmarks, BizBuySell Valuation Benchmarks (2025).
- SDE margin and valuation methodology, Peak Business Valuation; Wall Street Prep (SDE).
