For those of you evaluating accounting firms, you should have a “buyer beware” of any firm showing a 70%+ gross margin. There are several reason this “may” be possible (but absolutely rare):

- They outsource all of their client delivery labor
- The owner of doing most or a ton of the client work and is not adding their own salary to Cost of Labor
- They are intentionally (or worse naively as accountants) not posting the US labor that does all their client work to Cost or Labor

Firms and Brokers alike do this to make you think their gross margin is like software companies. It is literally impossible for this to be the case on 99%+ of accounting firms. Realistic gross margins are lower than 70% and I would always challenge the firm you are evaluating by making them show you how they are calculating their Cost of Labor (and are they allocating the owners and managers time that is spent on client work).

Accounting is still by far a HUMAN cost for labor - VERY few firms in the USA for sale have fully outsourced or “automated” their work.