The Business Side of CPA Firms

Four ways to increase revenue. Four reasons that employees should care.

By Marc Rosenberg
How to Bring in New Partners

Future CPA firm leaders must have an understanding of how their firm operates as a business, including how it makes money and what holds back profitability. With this knowledge, team members will make better decisions about how they spend their time and perform their work.

MORE: Public Accounting as a Business, 101 | Nuts and Bolts of Mentoring Staff | Nine Ways to Measure Staff Performance on the Path to Partner | Sixteen Duties of a Partner | Five People to Keep Out of Partnership
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All businesses have economic structures unique to their industries:

  • Grocery stores are high volume, low profit margin.
  • Real estate ventures use accelerated depreciation and other tax angles to generate cash flow and healthy ROIs.
  • Professional sports teams focus on increasing the value of the franchise so it can eventually be sold for a gigantic profit.

The typical CPA firm is a low-volume, high-priced business, with a relatively high profit margin (generally 30-45 percent of revenue).