Australia guides

How much is an accounting practice worth in Australia?

Australian accounting practices are usually valued one of two ways: by capitalising future maintainable earnings, or by applying a rate in cents to each dollar of recurring fees. The most recent free, credibly published Australian figure for the second method comes from CPA Australia's own practice guidance and puts the common rate at 80 cents to a dollar in the dollar of maintainable fees — but that guidance is dated December 2017, so treat it as a documented convention rather than today's market rate. What actually decides the price is how much of the fee base recurs, how much of it follows the departing principal, and how much of the consideration ends up sitting behind a client-retention clause.

By the bizflip team · Published 2 September 2026 · Facts checked 2 September 2026 · Sources listed below

Accounting practices are unusual among small businesses in that the profession has its own pricing convention. Rather than a multiple of earnings, buyers and sellers often talk in cents in the dollar of fees. That convention is real and documented, but it is a shorthand, and understanding what sits behind it is what stops a seller from either underselling a good practice or holding out for a number the market will not pay.

Two methods, and the profession uses both

Practice management guidance for accounting firms sets out the same short list of methods used for any business: capitalisation of future maintainable earnings, the rule of thumb or industry method, net book value, and discounted cash flow. Of these, capitalisation of future maintainable earnings is described as the most commonly used, followed by the rule of thumb method. Where a partnership or shareholders' agreement exists, it will usually nominate the formula to be applied and set the key inputs — how many years of earnings are counted, and what capitalisation rate is used — so read that document before doing anything else.

Capitalisation of future maintainable earnings works as it sounds. You estimate the earnings the practice can sustain, strip out non-recurring income, and divide by a capitalisation rate reflecting the return a buyer expects for the risk; inverting that rate gives the familiar multiple. The factors feeding into the rate are the ones you would expect: the risk-free rate, industry and business risk, how long the firm has traded, the impact of technology, and dependency on clients, staff or the practitioner.

The cents-in-the-dollar convention, and what it is worth

The rule of thumb method applies an industry standard to every firm in the industry, expressed as a multiplier or as cents in the dollar. For accounting practices it is normally applied to gross fees. CPA Australia's own valuation and pricing guidance for public practitioners states that the most common rate occurring in the market is in the range of 80 cents in the dollar to a dollar in the dollar of maintainable fees, with transactions falling both above and below that range depending on the fundamentals of the practice.

Two things must be said about that figure. It is the most recent free, credibly published Australian rate we could locate, which is itself informative about how thin the public evidence is. And it is dated December 2017. A rate described as current in 2017 is a documented convention, not a market quote for today, and anyone using it now should say so out loud. If a buyer or a broker offers you a rate, ask what evidence it rests on and from what year.

The same guidance is candid about the method's weakness: industry standards only really apply to firms that operate at the industry average, and the multiplier offers no premium for a firm above that standard and no discount for one below it. Where a rule of thumb is used, the guidance says the result should be compared against an alternative methodology to check that the investment actually stacks up — a purchaser usually has to borrow, and the profits have to service the borrowing.

One practical carve-out: where a practice carries a financial planning revenue stream, it is normal for that stream to be valued separately rather than folded into the fees figure, typically once those revenues are material.

The ATO benchmarks will not help you here

For most industries, the ATO's small business benchmarks are a free way to sanity-check cost ratios before valuing anything. Accounting practices are not among them: the benchmarks A–Z covers about a hundred industries — architectural services, child care services, plumbing services and so on — but no accounting or bookkeeping category. The burden of demonstrating a normal cost structure therefore falls entirely on your own reporting, which is a reason to have clean, segmented management accounts well before a sale.

What actually moves the number

Registration is an entity obligation, not an asset you sell

A practice providing tax agent services for a fee must be registered with the Tax Practitioners Board, and the registration requirements land on the entity and its people rather than on the goodwill. For a company or partnership, each director or individual partner must be at least 18 and a fit and proper person, the entity must maintain professional indemnity insurance meeting TPB requirements, the entity must have a sufficient number of registered individual tax agents to provide the services and supervise them, and the company must not be under external administration.

That last requirement is the one that bites on a sale. If the departing principal is the registered individual tax agent holding the entity's registration together, the buyer needs their own registered individual in place. Registration also has to be maintained and renewed: an application to renew must be lodged at least 30 days but not more than 90 days before expiry, and if registration lapses the entity cannot provide tax agent services for a fee or reward and loses access to ATO online services for agents. Separately, changes to practice structure, legal or trading name, or circumstances relevant to registration must be notified to the TPB within 30 days of becoming aware of them — which includes the structural changes a sale produces.

Price is not value, and retention clauses are where the difference lives

CPA Australia's guidance is direct that value and price diverge, because real transactions are not conducted between equally willing and equally informed parties, and it notes that it is not uncommon to see a price at a premium or discount of up to 33 per cent of the valuation. In practice sales it also describes an increasingly common structure: part of the purchase price is made contingent on future performance, protecting the purchaser against clients or work leaving when the vendor departs, and typically limited to the first anniversary of the sale date.

These are the earn-out and clawback arrangements the profession uses as a bridge when vendor and purchaser cannot agree on a headline number. Treat them as part of the price, not as paperwork. A practice sold for a strong headline figure with half of it at risk on twelve-month retention is a different deal from one sold for less with the money certain, and only one of those two numbers is the one you will actually receive. Your final payout is likely to be linked to how well the purchaser retains the clients, which is why an orderly handover is in the seller's own financial interest.

Work in progress, and why the split matters for tax

It is common for sale agreements not to apportion the price across asset classes, and CPA Australia's guidance warns this causes problems later. The specific trap is work in progress: where part of the consideration is a payment for unbilled work in progress, that amount is on revenue account and assessable, rather than being treated as a capital receipt like goodwill. Apportion the price deliberately across goodwill, plant and equipment, work in progress and working capital, and get your own tax advice on the treatment before you sign — this guide gives general information and cannot advise on your circumstances.

Working out a number for your own practice

Start with the fee base rather than the profit line. Segment fees by client, by service and by recurrence, and identify which relationships sit with you personally. Normalise earnings with a market salary for every principal, then run both methods — capitalised maintainable earnings and the fees-based rule of thumb — and see how far apart they land; a wide gap usually means the fee base and the profitability are telling different stories. Then decide what you will accept at risk on retention, because that decision changes the real price more than any argument about the rate. How much a business is worth covers the general method, SDE and EBITDA covers the earnings basis, and free data on Australian business sale multiples sets out what public evidence exists to check yourself against.

bizflip's free market appraisal produces an indicative range from your own figures and publishes its method. For a practice sale it is a starting point only — engage a valuation practitioner, and take independent tax and legal advice on the sale structure, the apportionment and the retention terms.

Sources

Every load-bearing claim in this guide, and where it comes from:

Ready for your own number? The valuation calculator is free and ungated, and its methodology is public.