A fifth-year CPA firm owner shares a transparent look at their 2025 financial performance, revealing a second consecutive year of revenue decline despite letting go of major clients. The owner discusses the challenges of firm growth, the unexpected optimism for the upcoming tax season due to a new scheduling system and a key hire, and detailed income and expense breakdowns. The post also highlights the critical role of IT security and virtual desktop solutions in modern accounting practices.
This annual tradition of sharing financial insights has become a staple, offering transparency into the journey of firm ownership. This year's theme, looking back at 2025, was about learning to fall forward and perhaps acknowledging undiagnosed ADHD. Despite a second consecutive year of revenue drop and letting go of two of the biggest clients, leading to a slower start for 2026, there is an unexpected sense of optimism.
In 2025, the firm's revenue dropped for the second year in a row. This was compounded by the decision to part ways with two significant clients, placing the firm further behind going into 2026. While this might seem like a setback, it is not viewed as a failure. In the accounting industry, making less money can often feel like a misstep, but the reality is more nuanced.
Last year, there was a strong belief that 2025 would be a year of significant firm growth, with aspirations of adding numerous business clients, engaging in marketing for the first time, and even niching down to video production-related businesses. However, most of these plans did not materialize.
Despite these challenges, a surprising sense of optimism has emerged, the most positive in the last three years. For the first time ever, there is excitement for tax season, a feeling that is quite unusual. This newfound enthusiasm is attributed to the success of a new tax return scheduling system and a crucial hire made at the end of 2025. Previously, the thought of long days ahead would cause dread, but now, the upcoming tax season feels controlled and contained, at least on paper.
Before delving into the specifics, here is a snapshot of the gross income generated in 2025 across different ventures:
2025 marked one of the lowest years for new client meetings, largely due to zero effort in new client acquisition. The primary referral source, a local CPA firm, began accepting new clients again, which slowed down that pipeline. Currently, new clients primarily come from LinkedIn exposure, personal networks, and referrals from existing clients.
Towards the end of 2025, service packages for new clients were tweaked. The base package now includes advisory services, moving beyond compliance-only offerings. This shift aims to deliver more value to clients, with compliance-only clients gradually transitioning as more advisory clients are brought in.
A significant change in the first half of the year involved letting an employee go. This decision was made respectfully, and both parties remain on good terms. It was realized that the capacity to provide the necessary training for the employee to progress as a tax and accounting professional within the firm was lacking. The need was for someone with experience who could handle client communications and manage projects effectively.
Consequently, in December, a manager was hired. This experience will be detailed in a future video, but so far, it has been a very positive development.
2025 was the first year UltraTax was run through Verito. UltraTax runs noticeably faster, and the team now has a dedicated virtual desktop. This eliminates concerns about IT security, WISP compliance, and potential oversights in IT management, as Verito's managed IT solution handles all these aspects.
The total firm income for 2025 was $224,700, derived from various sources:
In 2025, a total of 119 returns were prepared, comprising 93 personal returns, one trust, seven partnerships, and 18 S-corps.
A bright spot is the average price per return, which in 2025 was $1,470. This figure has consistently increased since the firm's inception and is expected to continue its upward trend. The average client engagement was approximately $1,700, calculated by dividing total client-related revenue by the number of clients. As of now, the minimums are $2,000 for a 1040 and $2,500 for a business return. The firm also averaged seven monthly accounting clients throughout 2025 at $300 per month.
Expenses can sometimes apply to all three businesses, such as travel for conferences, content creation, learning, and networking for Counter. Here is a detailed look at the expenses, starting with the largest categories:
Total expenses for 2025 amounted to $89,600. At least expenses saw a decrease.
Among the software expenses, Verito stands out as the MVP of 2025. While not flashy, it significantly reduces risk and enhances daily operations. All client work and tax returns were moved to be processed through Verito, a virtual desktop and IT security service provider. This eliminates concerns about security compliance, WISP handling, and device security. Verito's support team understands tax software, and everything within their environment runs fast, without shared resources or VPN headaches. They have maintained zero downtime during tax season. Recently, they proactively identified and removed a virus, demonstrating their robust security measures. This level of IT management is invaluable, removing a significant burden of responsibility.
For those interested in Verito, signing up through a partner page link and mentioning the firm can waive the setup fee, a $200 value. Additionally, before April 15th, 2026, there is a chance to win three months free of Verito Space for up to three users, a $1,000 value, plus a free WISP and a free membership to Counter.
2025 was a year of significant changes and learning. Despite a dip in revenue and strategic client adjustments, the firm is moving forward with renewed optimism, driven by operational improvements and key personnel additions. The focus remains on delivering value to clients and leveraging technology to enhance efficiency and security.
