Looking for an accounting and bookkeeping business plan? You're in the right place.
A practice that already has clients is asked different questions from a start-up. What does the existing business earn today? What does a new service line cost before it pays? How many part-time staff can the revenue carry, and what happens to a tax practice's cash between seasons? A template that starts from a blank page will not answer any of them.
In this article we'll walk through a complete sample business plan for a one-owner tax practice in Chicago, Illinois that is adding bookkeeping, section by section. We'll cover the executive summary, the SWOT analysis and, in particular, all of the financials, including an opening balance sheet.
Here's what the plan gives you to work from:
- The executive summary: shows how to describe an existing business and a planned expansion on one page, so a lender sees the starting point before the ask
- The market and competition sections: show how to place a local practice against national chains, online services and other firms without inventing numbers
- The sales plan: sets out how a new service line draws first on current clients, and how many it can serve before the next hire
- The first year, month by month: shows which months of a tax practice's year lose money, so cash can be planned around them
- The personnel plan: ties each part-time hire to the client list it can serve, so payroll does not run ahead of revenue
- The five-year profit, cash flow and balance sheet: show how an existing practice's numbers carry forward and how the new line changes them
- The downside case: gives an answer to "what if revenue is 20% short?", with the steps the owner takes in response
If you're adding a service line to a practice that already trades, read this before you write your own. The firm is fictional, so take what fits your practice and change the rest.
In this plan
To turn this example into your own accounting and bookkeeping business plan, use the accounting and bookkeeping business plan template.
Summary of the Expansion
Greenwood Tax & Accounting has been Max Greenwood’s practice in Chicago’s Loop since 2016. He is a CPA and the sole owner. In 2026 it took in $238,000, of which $158,000 was tax preparation and $80,000 was management accounting, QuickBooks set-up and training, and advisory work. After paying Max, it cleared about $29,000. On 1 January 2027 it begins selling monthly bookkeeping, delivered by part-time bookkeepers. Max gives up routine bookkeeping, and the practice gains income in the months between tax deadlines.
The expansion costs $35,000. Max contributes $20,000 and a bank lends $15,000. Equipment and a team room take $14,000, legal work and the launch campaign take $11,000, and $10,000 stays in the bank as a cushion. The practice starts the year with another $38,000 of its own cash.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $329,225 | $457,700 | $626,100 |
| Net income after start-up costs | $7,602 | $28,173 | $24,557 |
| Closing cash | $64,034 | $86,780 | $94,059 |
Three bookkeeping clients, all drawn from Max’s advisory work, are in place at launch. The count reaches 20 in December 2027 and 70 by the end of Year 5. Year 1 revenue is $91,225 above 2026, and $78,225 of that is the new line. Earnings before interest, depreciation and tax (EBITDA) are positive in March, April and September to December, and losing money in the remaining six months. The practice made money before the expansion and keeps doing so in Year 1, although the margin is slim once the $11,000 of launch costs is counted. The model does not deduct those costs for tax.
The plan includes a stress case. If bookkeeping signs half the clients planned, and Max holds back hiring, trims marketing, stays in the current suite and takes no distributions, the practice earns almost nothing in Year 1, makes a smaller profit in Year 2, loses money in Years 3 and 4, and still ends each year with cash. Tax and advisory revenue are held at plan in that case.
What the practice offers is simple. The bookkeeper who maintains a client’s accounts, the CPA who reviews them and the preparer who files the return share one office, and the monthly fee does not change.
The Practice Today
Legal name: Greenwood Tax & Accounting, LLC, an Illinois limited liability company. Owner: Max Greenwood, CPA, 100%. Established: 2016. Premises: a 700-square-foot office in the Loop, Chicago, replaced in January 2027 by a 1,000-square-foot suite in the same building under a lease amendment. Stage: trading. The bookkeeping line has not launched; the engagement letters for its first three clients are drafted.
Purpose
Keep Chicago owner-run businesses’ books current and their tax returns filed correctly, and let the same office do both.
Targets
- Grow bookkeeping from 3 clients at launch to 20 by December 2027.
- $457,700 revenue in 2028, the second year of the line.
- 52 bookkeeping clients and $626,100 revenue in 2029, with owner distributions beginning that year.
- The bank loan repaid in full by the end of 2031.
Three sources of income
| Service | How it is priced | 2026 actual | Year 1 share of revenue | Year 5 share |
|---|---|---|---|---|
| Tax preparation and compliance | Fixed fee per return | $158,000 | 50.1% | 29.7% |
| Management accounting, QuickBooks set-up and advisory | Hourly or fixed project fee, about $140 an hour | $80,000 | 26.1% | 16.3% |
| Monthly bookkeeping (new in 2027) | $525 a month on average | $0 | 23.8% | 54.0% |
From 2026 to Year 1
| 2026 | Year 1 | Change | |
|---|---|---|---|
| Tax preparation and compliance | $158,000 | $165,000 | $7,000 |
| Management accounting and advisory | $80,000 | $86,000 | $6,000 |
| Bookkeeping | $0 | $78,225 | $78,225 |
| Total revenue | $238,000 | $329,225 | $91,225 |
Licensing
The Illinois Department of Financial and Professional Regulation (IDFPR) licenses CPAs and accounting firms, and both Max and the firm hold current licences. No attest or compilation reports are issued during the plan. At every renewal Max rechecks ownership, licensing and peer-review status. Adding bookkeeping creates no new filing for the firm.
Where the Practice Competes
No market-size figure is quoted. The practice sells locally, to owner-managed businesses that already pay for tax preparation or advisory and to businesses sent by its lawyers, lenders and insurance agents. The target has employees, a payroll and a tax return with more than one form.
Wages and software
The Bureau of Labor Statistics gave the median accountant’s pay as $83,680 in May 2025 and expects accountant and auditor employment to grow 5% from 2025 to 2035. It gave $50,670 as the median for bookkeeping, accounting and auditing clerks and expects a 6% decline over those ten years, since software handles more routine entry. Both are national figures. Software here takes the data entry, part-time bookkeepers check and categorise at about $28 an hour, and the CPA is paid to review. Chicago wages in the plan are set above the national medians and are not drawn from a local table.
Fees
No published fee range is quoted. In the 2021 National MAP survey of the AICPA, reported in the Journal of Accountancy in February 2022, equity partners and owners at all firms billed an average of $227.50 an hour. The practice’s blended $140 for management accounting and advisory is well below that, because much of the work is routine set-up and training.
Who else a client could hire
| Alternative | What it offers | Why a client picks it | How the practice differs by design |
|---|---|---|---|
| National tax-preparation chains | Seasonal return preparation at many locations | Convenience and brand recognition | A named CPA signs every return, and the same office is open in July |
| Online bookkeeping services | Remote bookkeeping, often bundled with tax | Software-led process and published plans | Same office for books and returns, in person when needed |
| Other Chicago CPA firms | Tax, bookkeeping and advisory | Established referrals and long client histories | Flat monthly bookkeeping fee and a fixed month-end schedule |
| Freelance bookkeepers and enrolled agents | Bookkeeping or tax only | Lowest price | A CPA reviews the books before the return is built on them |
| Do-it-yourself software | Self-service bookkeeping | Lowest cost | Owners who have stopped keeping up are the target, not those who enjoy it |
Each row sets out what the alternative sells and where the practice chooses to differ. None is ranked, and prices are left out because every provider publishes its own and changes them often.
Strengths, weaknesses, opportunities, threats
| Strengths | Weaknesses |
|---|---|
| Eleven years of clients to sell to, and a proven tax practice | Max is the only CPA until month 21; review stalls when he is away |
| Three bookkeeping clients ready before launch | No track record yet in recurring bookkeeping |
| Profitable before the expansion, so the loan is not covering losses | Part-time staff are harder to schedule through tax season, and bookkeeper turnover is a cost |
| Opportunities | Threats |
|---|---|
| Tax clients with books in poor shape are a ready audience | Software reducing the time bookkeeping takes and pressing fees |
| Referrals from lawyers, lenders and insurance agents | Online services pricing below a local office |
| Advisory work for clients whose books are current | A bookkeeper leaving in the middle of the tax season |
Who Buys, and Why They Switch
The typical buyer owns a restaurant, a building firm, a dental practice, a design studio or an online shop with 2 to 25 employees. The owner is skilled at the trade and weak at the paperwork, and the books only get attention once a lender wants statements or a tax bill lands bigger than expected.
Starting point: 190 individuals and 40 businesses
Each year the practice prepares about 190 individual returns and 40 business returns. The three launch clients already pay Max by the hour for book clean-ups, and a monthly fee replaces that arrangement.
How buyers cope now
Spreadsheets, a part-time bookkeeper plus a separate preparer, or an online service. The usual weak point sits between the person keeping the books and the person filing the return, which leaves a return resting on figures nobody has checked.
Triggers for switching
A late or untidy return, a lender asking for reconciled accounts, a bookkeeper who has left, or an owner tired of doing the books on Sunday nights.
Where bookkeeping clients come from, and the effect on tax revenue
Of the 20 clients expected by December 2027, 8 come from the existing base: the 3 launch clients and 5 current tax or advisory clients who add bookkeeping. They already file with the practice, so they add no tax revenue. The other 12 are new. Four of those 12 move their business and owner returns to the practice for the 2028 season, worth about $7,200 at Year 2 prices, and referral partners send roughly $4,800 of tax-only work. The two together come to about $12,000, in line with the $12,050 by which Year 2 tax revenue exceeds Year 1 plus the 3% price rise.
Buying priorities
Accurate books come first, then a return filed on time, then a person to call, then a fee that stays the same each month.
Winning Bookkeeping Clients
The path to a signed client
A 30-minute call to learn about the business, a proposal at a fixed fee inside two working days, then an engagement letter and a set-up call during week one. Max takes every first call in Year 1.
Where Year 1 clients come from
The plan needs about 20 gross new bookkeeping clients, from roughly 50 first calls at a 40% close rate. That is more than the net rise of 17 because the plan has 20% of clients leaving each year. Tax and advisory clients come on top, mostly by referral.
| Lead source | Gross new bookkeeping clients | Share |
|---|---|---|
| Referral partners (lawyers, lenders, insurance agents) | 8 | 40% |
| Existing tax and advisory clients | 5 | 25% |
| Local search and Google Business Profile ads | 4 | 20% |
| Networking and chamber events | 3 | 15% |
Fee levels
Fees scale with how many transactions a business has and whether it runs payroll: about $300 a month at the small end, about $900 for a business with payroll and several accounts. The $525 average reflects most clients sitting in the middle. Fees are flat in Year 1 and rise 3% a year after that.
Losing clients and replacing them
The plan loses 20% of bookkeeping clients a year, a higher rate than the practice sees among tax clients, because small businesses close, sell or change provider more often. Clients who also file tax with the practice are expected to stay longer.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Bookkeeping clients at year end | 20 | 36 | 52 | 66 | 70 |
| Gross new clients needed | 20 | 22 | 25 | 26 | 18 |
| Part-time bookkeepers at year end | 1 | 2 | 3 | 4 | 4 |
After Year 3 bookkeeper capacity, not demand, limits growth. Hiring tracks the client list, so new clients are turned away before the team is overloaded.
Tax work comes in waves
In Year 1, February to April brings in $87,000, 53% of the year’s tax revenue and 26% of all revenue. September and October bring $34,000, or 21% of tax revenue, and the other seven months share the remaining $44,000, 27%. The bookkeeping line is meant to fill the gaps, which is why it is a monthly fee collected by bank debit in advance.
Marketing Spend and Channels
Year 1 marketing totals $26,000, made up of $8,000 for the launch, paid from the start-up capital, and $18,000 of running costs, 8% of Year 1 revenue, dropping to 3.4% in Year 3 and 2.6% in Year 5 as referrals and existing clients do more of the selling. Divided across about 20 gross new bookkeeping clients, each costs about $1,300 to win, or two and a half months of fees.
| Channel | Year 1 spend | What it is expected to do |
|---|---|---|
| Bookkeeping web pages and brand refresh (launch) | $5,000 | Pages for restaurants, contractors, health practices and online retailers, with a booking link |
| Referral materials and launch event (launch) | $3,000 | Introductions to the first 20 referral partners |
| Referral partner programme | $4,500 | Coffee meetings and a short referral guide; about 8 clients |
| Email and onboarding offer to existing clients | $1,500 | A reduced set-up fee for current tax clients; about 5 clients |
| Local search and Google Business Profile ads | $6,000 | Searches such as "bookkeeper Chicago Loop"; about 4 clients |
| Networking and chamber memberships | $3,000 | Small business workshops and a chamber membership; about 3 clients |
| Website guides and deadline reminders | $3,000 | One practical guide a month, aimed at the questions owners ask in January and September |
Checkpoints in 2027: new suite open with 3 bookkeeping clients in January; 9 clients by April, as the first tax season closes; 16 by September, with the extension-season workload tested; 20 by December, billing $10,500 a month.
How the Work Gets Done
The suite
The practice takes 1,000 square feet in the Loop at an all-in $38 a square foot a year, or $38,000 in Year 1. A team room holds desks the part-time bookkeepers share. In Year 4 it moves to about 1,200 square feet, a one-off cost of $14,000 for removals and fit-out. The rent figure is a planning figure, not a market quote.
A client month
Every bookkeeping client has a close checklist. Bookkeepers categorise transactions weekly from bank feeds, reconcile accounts in the first week of the following month and send the owner a short report by the 10th. A CPA spends half an hour reviewing each close. On the tax side, a preparer completes the return and Max reviews and signs it. From February to April a seasonal W-2 preparer takes the extra volume.
Tools
QuickBooks Online and Xero, receipt capture, tax preparation software, practice management software that tracks due dates, plus a client portal for secure document exchange and e-signing. Software costs $11,000 in Year 1 and $23,000 by Year 5.
How many clients a bookkeeper can carry
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Clients at year end | 20 | 36 | 52 | 66 | 70 |
| Part-time bookkeepers | 1 | 2 | 3 | 4 | 4 |
| Clients they can serve | 21 | 39 | 56 | 74 | 74 |
| Share of capacity used | 95% | 92% | 93% | 89% | 95% |
The first bookkeeper works about 30 hours a week and the rest about 26. At five bookkeeper hours per client per month, the first covers about 21 clients and each later bookkeeper about 18. The next bookkeeper starts before the current ones fill up.
What one client leaves behind
| Per client, per month | Amount | Share of fee |
|---|---|---|
| Average fee | $525 | 100% |
| Bookkeeper pay with on-costs (5 hours) | $161 | 31% |
| CPA review (half an hour of the owner’s time) | $33 | 6% |
| Direct costs (bank feeds, receipt capture, card fees) | $26 | 5% |
| Left to cover software, rent, selling and profit | $305 | 58% |
Staffing by year end
Year 1 closes with Max and one part-time bookkeeper, plus the seasonal W-2 preparer each spring. Year 2 adds a senior accountant (CPA) and a second bookkeeper. Year 3 brings a third bookkeeper and a part-time administrator, Year 4 a fourth bookkeeper and Year 5 a second senior accountant, for eight people in all. Until the administrator starts in month 31, bookkeepers and Max handle scheduling and client enquiries. Hires follow revenue, and the stress case shows which are delayed or dropped. In Year 1 Max spends about 800 hours on tax and about 610 on management accounting and advisory, with the rest going to review, onboarding and selling out of roughly 2,000 working hours.
Rules and cover
- IDFPR licences for Max and the firm, renewed on time.
- Every preparer holds a PTIN, and the firm is registered with IRS e-file.
- A security plan, in writing, for client data. The IRS points preparers to Publications 4557 (safeguarding taxpayer data) and 5709 (drawing up the plan) and notes that FTC regulations oblige tax preparers to protect client data.
- Professional liability, general liability and cyber insurance, plus key-person term life and disability cover on Max, together budgeted at $7,000 in Year 1. Workers’ compensation sits in payroll on-costs.
- Engagement letters for every client, setting out scope, fee and due dates.
The practice buys from software vendors and a payroll service, and keeps an employment lawyer on call for staff contracts. Each could be swapped out.
Who Runs It
Max Greenwood, CPA
Max worked six years in public accounting at a mid-size Chicago firm and opened his own practice in 2016. He holds an Illinois CPA licence and an accounting degree. Referrals have built the practice to about 190 individual and 40 business tax clients, with a seasonal preparer each spring. The extra $20,000 comes from his savings.
What he has not done yet
He has never employed bookkeepers, run a recurring-fee service or marketed beyond referrals. To cover that, an employment lawyer is on call, a written month-end checklist lets any bookkeeper take over another’s client, and referral-partner meetings are held at a fixed weekly time.
If Max is out
Until the senior accountant joins in month 21, a CPA at another Chicago firm signs returns under a reciprocal arrangement. The practice also holds life and disability cover on Max, budgeted in the $7,000 insurance line.
Outside eyes and ownership
A retired practice owner reviews the first-year numbers every quarter. Max holds all of the LLC and signs the personal guarantee the bank asks for. Quarterly accounts go to the bank under the loan terms.
Questions a Lender Will Ask
What did the practice earn in 2026? Revenue was $238,000. Costs other than Max’s pay were about $76,000, and Max’s wages and on-costs about $133,000, leaving a profit of about $29,000, 12% of revenue. The 2024 to 2026 tax returns and year-end accounts are supplied with the application.
How concentrated is the client base? About 230 tax clients, and none above 4% of 2026 revenue. The largest paid about $9,000. About 90% of 2025 tax clients returned in 2026.
What happens to cash in Year 2? Years 2 to 5 are annual in the model, so no Year 2 monthly cash line exists. Year 1 has the tightest month: February, at about $25,000 after allowing for receivables. Year 2 closes with $86,780.
What is the downside low? In the case where bookkeeping signs half as many clients, year-end cash is lowest in Year 4, at $22,379. A monthly low is not modelled.
What is the collateral? A personal guarantee and a lien on business assets, including the new equipment and receivables. No real estate is offered, which is why the loan is $15,000.
What if a bookkeeper leaves? Part-time bookkeeper turnover is set at about 30% a year. Clients are assigned to a bookkeeper with a named backup, the month-end checklist is written down, and hiring starts when a bookkeeper gives notice. Max covers a gap of a few weeks.
Who covers Max? A reciprocal sign-off arrangement with another Chicago CPA firm until month 21, and life and disability cover budgeted at about $2,000 a year.
The Numbers Behind the Expansion
The forecast runs for five years, with 2027 shown month by month and the later years as annual totals. Because Greenwood Tax & Accounting is already trading, it starts from a real opening balance sheet, and the bookkeeping line is added on top of the tax and advisory work that exists today. The inputs are listed before the statements so each figure can be traced.
What the launch costs and who pays for it
| Use of funds | Amount |
|---|---|
| Laptops, monitors and a second scanner for the bookkeeping team | $7,000 |
| Office reconfiguration: team room and extra desks | $7,000 |
| Legal: bookkeeping engagement letters, part-time staff contracts, lease amendment | $3,000 |
| Launch: bookkeeping web pages, referral materials, local campaign | $8,000 |
| Cash reserve for the build-up of the bookkeeping line | $10,000 |
| Total uses | $35,000 |
| Source of funds | Amount |
|---|---|
| Max Greenwood’s additional investment | $20,000 |
| Bank term loan | $15,000 |
| Total sources | $35,000 |
Max adds $20,000 of his own money, 57% of the total. A bank lends the other $15,000 over five years at 10.5%, with interest only for the first six months and a personal guarantee plus a lien on business assets as security. The rate illustrates the example and is not a quoted lending rate. The practice also holds $38,000 of its own cash on 1 January, and $25,000 goes on equipment, legal work and launch marketing, which leaves $48,000 in the bank at the start of January. The loan is small because the practice was profitable before the expansion. The tightest point is February, when month-end cash drops to about $25,000, roughly one month of costs. A $15,000 line of credit would do the same job. Tax distributions to Max under an S corporation election, which would cover his personal tax on the firm’s income, are not modelled.
What the forecast rests on
- Opening position on 1 January 2027: $38,000 cash, $12,000 receivables, $3,000 payables, $5,000 paid-in capital and $42,000 retained earnings. 2026 revenue was $238,000, made up of $158,000 tax work and $80,000 management accounting and advisory. The existing computers and furniture are fully written down and sit outside the model’s balance sheet, so only the new equipment is depreciated.
- Year 1 tax revenue of $165,000 comes from about 200 individual returns at $450, 45 business returns at $1,300 and $16,500 of extensions, amended returns, Illinois filings and estimated-tax planning. That is about 1,200 hours, split roughly 800 for Max and 400 for the seasonal preparer who works February to April. Prices are held at 2026 levels in Year 1, then rise 3% a year. Volume grows as bookkeeping clients bring their returns and as the senior accountant arrives in month 21.
- Management accounting, QuickBooks set-up and training and advisory earn $86,000 in Year 1, about 610 hours of Max’s time at $140 an hour.
- Bookkeeping fees average $525 a month, rising 3% a year from Year 2. Three advisory clients convert on day one. The line closes Year 1 with 20 clients after 149 client-months, which is $78,225. Year-end clients are 20, 36, 52, 66 and 70. Eight of the first 20 come from the existing base (the 3 launch clients and 5 conversions) and 12 are new to the practice.
- Churn is set at 20% a year, which suits small-business bookkeeping and is lower for clients who also file tax with the practice. Gross new clients needed are about 20 in Year 1, 22 in Year 2, 25 in Year 3, 26 in Year 4 and 18 in Year 5.
- Each client uses about 5 bookkeeper hours a month plus half an hour of CPA review. A bookkeeper at 30 hours a week delivers about 1,240 client hours a year once leave and non-client time are taken out, enough for about 21 clients. One at 26 hours a week delivers about 1,075 and covers about 18. Four part-time bookkeepers can serve about 74 clients against 70 at the close of Year 5.
- Per client, bookkeeper pay with on-costs runs about $161 a month, 31% of the fee. Owner review adds about $33 and direct costs about $26. Roughly 58% of the fee is left for software, rent, selling and profit.
- Receivables turn over in 14 days. Bookkeeping fees are drawn by bank debit up front, tax work is invoiced when delivered and advisory is invoiced on 30-day terms. Direct costs come to about 3.2% of revenue: e-file and per-return software on tax, and bank-feed, receipt-capture and card fees on bookkeeping.
- On-costs are 27% of full-time pay, 15% of part-time pay and 10% for the seasonal preparer. They cover payroll taxes, Illinois unemployment insurance, workers’ compensation and paid leave, plus health cover and a retirement match for full-time staff. Workers’ compensation is carried here and nowhere else. The seasonal preparer is a W-2 employee because the work is done in the office on the firm’s own returns. The personnel table shows starting wages; pay raises of 3% a year appear as a separate line from Year 2.
- Insurance of $7,000 in Year 1 splits into about $5,000 for professional liability, general liability and cyber, and about $2,000 for key-person term life and disability cover on Max.
- Rent is based on 1,000 square feet in the Loop at an all-in $38 a square foot a year, moving to about 1,200 square feet from Year 4. The rate is a planning figure. The Year 4 move costs $14,000 for removals and fit-out, expensed in that year. Replacement laptops and kit for new hires are budgeted from Year 2.
- Tax uses the 21% federal corporate rate plus Illinois’s 7% corporate income tax and 2.5% replacement tax, 9.5% in all. The $11,000 of launch costs is not deducted before tax, which errs on the cautious side. An S corporation election would shift income tax to Max’s personal return and leave a 1.5% replacement tax at the firm, so corporate rates serve here as a placeholder.
- Distributions of $10,000, $40,000 and $55,000 are taken in Years 3 to 5, and only out of cash the model shows to be spare. The bank loan amortises on schedule and is repaid by the end of Year 5.
Revenue by service line
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Tax preparation and compliance | $165,000 | $182,000 | $218,000 | $240,000 | $265,000 |
| Management accounting, QuickBooks set-up and advisory | $86,000 | $94,000 | $114,000 | $130,000 | $146,000 |
| Monthly bookkeeping subscriptions (new line) | $78,225 | $181,700 | $294,100 | $406,200 | $482,200 |
| Total revenue | $329,225 | $457,700 | $626,100 | $776,200 | $893,200 |
| Growth on prior year | – | 39% | 37% | 24% | 15% |
Half of Year 1 revenue is tax work (50%), but its share falls to 30% by Year 5 while bookkeeping climbs from 24% to 54%. Revenue is $91,225 above 2026, of which the new line supplies $78,225 and tax and advisory the other $13,000, through extra returns and referrals from bookkeeping clients. Bookkeeping bills every month, which is what smooths the cash between the two tax peaks.
Month by month in 2027
| Month | Tax preparation and compliance | Management accounting, QuickBooks set-up and advisory | Monthly bookkeeping subscriptions (new line) | Total revenue | EBITDA |
|---|---|---|---|---|---|
| Jan 2027 | $3,500 | $8,500 | $1,575 | $13,575 | ($10,918) |
| Feb 2027 | $15,000 | $6,000 | $2,625 | $23,625 | ($1,191) |
| Mar 2027 | $30,000 | $5,000 | $3,675 | $38,675 | $13,375 |
| Apr 2027 | $42,000 | $5,000 | $4,725 | $51,725 | $26,006 |
| May 2027 | $9,000 | $8,000 | $5,775 | $22,775 | ($2,014) |
| Jun 2027 | $5,000 | $8,500 | $6,300 | $19,800 | ($4,893) |
| Jul 2027 | $4,000 | $8,000 | $7,350 | $19,350 | ($5,328) |
| Aug 2027 | $4,500 | $7,000 | $7,875 | $19,375 | ($5,304) |
| Sep 2027 | $12,000 | $7,500 | $8,400 | $27,900 | $2,947 |
| Oct 2027 | $22,000 | $8,000 | $9,450 | $39,450 | $14,125 |
| Nov 2027 | $9,000 | $7,000 | $9,975 | $25,975 | $1,084 |
| Dec 2027 | $9,000 | $7,500 | $10,500 | $27,000 | $2,076 |
January is the quietest month and April the busiest, when individual returns fall due, with a smaller lift at the autumn extension deadline. Bookkeeping contributes about $1,575 in January and $10,500 in December. Measured by EBITDA (earnings before interest, depreciation and tax), the practice makes money in March, April and September to December, and loses it in January, February and May to August. Month-end cash bottoms out in Feb at about $25,000, after adjusting for the 14 days clients take to pay. Later years are annual only, so no monthly cash is shown beyond 2027.
Who is on payroll, and from when
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and managing CPA | $105,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Bookkeeper | $43,000 | Month 2 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Seasonal tax preparer (W-2, February to April) | $80,000 | Month 2 | – | – | – | – | – |
| Second bookkeeper (part time) | $38,000 | Month 13 | – | 0.5 | 0.5 | 0.5 | 0.5 |
| Client administrator (part time, 20 hours a week) | $28,000 | Month 31 | – | – | 0.5 | 0.5 | 0.5 |
| Third bookkeeper (part time) | $38,000 | Month 26 | – | – | 0.5 | 0.5 | 0.5 |
| Senior accountant (CPA) | $98,000 | Month 21 | – | 1 | 1 | 1 | 1 |
| Fourth bookkeeper (part time) | $38,000 | Month 40 | – | – | – | 0.5 | 0.5 |
| Second senior accountant (CPA) | $100,000 | Month 57 | – | – | – | – | 1 |
| Total payroll incl. on-costs | $200,679 | $289,987 | $429,118 | $481,635 | $534,893 |
January has Max alone on the full-time payroll. The first part-time bookkeeper starts in month 2, and a W-2 seasonal preparer works each February to April. After that the order is: second bookkeeper in month 13, senior CPA in month 21, third bookkeeper in month 26, part-time client administrator (about 20 hours a week at $27 an hour) in month 31, fourth bookkeeper in month 40 and, last, a second senior CPA in month 57. Bookkeepers and Max cover scheduling and client calls until the administrator starts. Bookkeepers are added as the client list fills the last one’s capacity, and senior accountants as tax and advisory work outgrows Max and the seasonal preparer. Part-time wages are the amounts actually paid: $43,000 for the first bookkeeper at about 30 hours a week, $38,000 for each later one at about 26. The seasonal preparer’s wage is shown as an annual equivalent, though only three months are paid. Max draws $105,000 from the first month, so every profit figure is after his pay.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $329,225 | $457,700 | $626,100 | $776,200 | $893,200 |
| Direct costs (payment fees, per-return software) | ($10,581) | ($14,710) | ($20,123) | ($24,947) | ($28,707) |
| Gross profit | $318,644 | $442,990 | $605,977 | $751,253 | $864,493 |
| Payroll incl. on-costs | ($200,679) | ($289,987) | ($429,118) | ($481,635) | ($534,893) |
| Rent | ($38,000) | ($39,100) | ($40,300) | ($49,800) | ($51,300) |
| Utilities | ($3,000) | ($3,100) | ($3,200) | ($3,600) | ($3,700) |
| Marketing | ($18,000) | ($20,000) | ($21,000) | ($22,000) | ($23,000) |
| Insurance | ($7,000) | ($8,500) | ($9,500) | ($10,500) | ($11,500) |
| Professional fees | ($3,000) | ($3,500) | ($4,000) | ($4,500) | ($5,000) |
| Software subscriptions | ($11,000) | ($14,000) | ($18,000) | ($21,000) | ($23,000) |
| CPE, licence renewals and professional dues | ($3,000) | ($3,500) | ($4,500) | ($5,000) | ($5,500) |
| Phones, supplies and postage | ($3,500) | ($4,000) | ($4,500) | ($5,000) | ($5,500) |
| Equipment replacement and new-hire kit | $0 | ($3,000) | ($4,500) | ($4,500) | ($5,500) |
| Year 4 move and fit-out to the larger suite (expensed) | $0 | $0 | $0 | ($14,000) | $0 |
| Bad debt allowance | ($1,500) | ($2,500) | ($3,500) | ($4,500) | ($5,500) |
| Annual pay raises (3% a year) | $0 | ($8,700) | ($26,133) | ($44,661) | ($67,134) |
| EBITDA | $29,965 | $43,103 | $37,726 | $80,557 | $122,965 |
| Depreciation | ($2,400) | ($2,400) | ($2,400) | ($2,400) | ($2,400) |
| Interest | ($1,546) | ($1,297) | ($978) | ($623) | ($229) |
| Income tax | ($7,417) | ($11,233) | ($9,791) | ($22,101) | ($34,302) |
| Net income before start-up costs | $18,602 | $28,173 | $24,557 | $55,433 | $86,034 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($11,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | $7,602 | $28,173 | $24,557 | $55,433 | $86,034 |
Year 1 earns $18,602 before launch costs and $7,602 after. The practice was profitable already, and the new line puts a bookkeeper on payroll ahead of the fees that pay for the role. Year 2 earns $28,173 at a 9.4% EBITDA margin, close to Year 1’s 9.1%, with the second bookkeeper and the senior accountant added. Year 3 is the narrowest at 6.0%, with a full year of the senior accountant and the third bookkeeper and administrator starting. Year 4 rises to 10.4% despite the $14,000 move, since the only addition is a part-time bookkeeper. Year 5 reaches 13.8% with the second senior CPA on payroll for four months. Tax is payable from Year 1 because the practice starts out in profit.
Where the cash goes
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | $6,374 | $25,645 | $20,498 | $52,076 | $83,947 |
| Equipment and fit-out | ($14,000) | $0 | $0 | $0 | $0 |
| Funding received | $35,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | ($1,340) | ($2,900) | ($3,219) | ($3,574) | ($3,968) |
| Owner distributions | $0 | $0 | ($10,000) | ($40,000) | ($55,000) |
| Net change in cash | $26,034 | $22,746 | $7,279 | $8,502 | $24,979 |
| Closing cash | $64,034 | $86,780 | $94,059 | $102,561 | $127,540 |
Cash stays above zero throughout, growing from $64,034 at the end of Year 1 to $127,540 at the end of Year 5. Owner distributions start in Year 3, when cash and retained earnings can fund them, and the bank loan is cleared in Year 5.
Balance sheet at each year end
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $64,034 | $86,780 | $94,059 | $102,561 | $127,540 |
| Accounts receivable | $12,628 | $17,556 | $24,015 | $29,772 | $34,260 |
| Equipment and fit-out (net) | $11,600 | $9,200 | $6,800 | $4,400 | $2,000 |
| Total assets | $88,262 | $113,535 | $124,874 | $136,733 | $163,799 |
| Bank loan | $13,660 | $10,761 | $7,541 | $3,968 | $0 |
| Paid-in capital | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 |
| Retained earnings | $49,602 | $77,775 | $92,332 | $107,765 | $138,799 |
| Total liabilities and equity | $88,262 | $113,535 | $124,874 | $136,733 | $163,799 |
Margins, break-even and cover
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | 9.1% | 9.4% | 6.0% | 10.4% | 13.8% |
| Net margin (before start-up costs) | 5.7% | 6.2% | 3.9% | 7.1% | 9.6% |
| Payroll incl. pay raises as share of revenue | 61% | 65% | 73% | 68% | 67% |
| Revenue per full-time equivalent at year end | $219,483 | $152,567 | $156,525 | $172,489 | $162,400 |
| Average monthly revenue | $27,435 | $38,142 | $52,175 | $64,683 | $74,433 |
| Monthly revenue needed to cover operating costs | $24,855 | $34,430 | $48,927 | $57,747 | $63,846 |
| Debt service cover (EBITDA / interest + principal) | 10.4x | 10.3x | 9.0x | 19.2x | 29.3x |
A year breaks even on operating costs when its average month beats the “needed” row. Year 1 averages $27,435 against $24,855, a cushion of 10%, and the cushion runs between 7% and 17% in later years. The average conceals the season: six months of Year 1 lose money at EBITDA level and the busy months pay for them. Revenue per full-time equivalent, with each part-time employee counted as half, is $219,483 in Year 1, when the team is Max and one part-time bookkeeper, and between $152,000 and $173,000 from Year 2. Debt service cover is at least 9x in every year.
If the bookkeeping line signs half as many clients
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $290,113 | $366,850 | $479,050 | $573,100 | $652,100 |
| Net income before start-up costs | $503 | $15,440 | ($21,038) | ($6,112) | $32,600 |
| Net income after start-up costs | ($10,497) | $15,440 | ($21,038) | ($6,112) | $32,600 |
| Closing cash | $47,435 | $59,432 | $33,272 | $22,379 | $50,381 |
Here only the new line is stressed. Bookkeeping clients come in at 50% of plan every year, roughly 10 at the end of Year 1 and 35 at the end of Year 5, and tax and advisory revenue stay at plan because that book is eleven years old. The response: the first bookkeeper starts two months late, the second bookkeeper and the senior CPA start six months late, the administrator and fourth bookkeeper are never hired, the third bookkeeper waits until month 44, the last senior CPA hire is dropped, marketing is cut by 20%, the practice stays in its first suite and distributions stop. Max keeps his full pay. Year 1 then earns $503 before launch costs and loses $10,497 after them. Year 2 earns $15,440 against $28,173 in the base case, Year 3 loses $21,038, Year 4 loses $6,112 and Year 5 recovers to $32,600. Cash remains positive but thin, with a year-end low of $22,379 in Year 4, less than half a month of operating costs. The monthly low for this case is not modelled. Equity closes Year 1 at $56,503. A second shortfall of that size would call for a line of credit or a pay cut for Max, neither of which the case includes.
Sources
- BLS Occupational Outlook Handbook, May 2025 pay data: accountants and auditors; bookkeeping, accounting and auditing clerks.
- Journal of Accountancy, February 2022, on the AICPA 2021 National MAP survey: billing rates of top-performing firms.
- Illinois Department of Revenue income tax rates: 7% corporate income tax; replacement tax of 2.5% for corporations and 1.5% for partnerships, trusts and S corporations.
- IDFPR accounting firm application checklist.
- IRS security guidance for tax professionals, covering Publications 4557 and 5709 and the FTC security-plan regulations.
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