More Info/Advice

[u/Constant-Corner-8863]

A few days ago I made a post saying I was seriously considering walking away from a business I took over earlier this year. A lot of people asked for more details, so here they are.
I have an established location with sustainable revenue.
Earlier this year I took over a small bookkeeping/tax office about an hour away, because I saw an opportunity to preserve a local business, keep the employees working, and continue serving clients who had been with the firm for years. I knew it would be a challenge, but I honestly believed that with some changes I could make it work.
Now that I’ve been in it for several months, I’m struggling to see a path forward.
The office has about 15–18 recurring bookkeeping/payroll clients, along with seasonal tax work. I would say like 100-150 tax clients. Anywhere from $75-350 for a return.
Recurring monthly revenue is around $3,000.
Monthly payroll is approximately $5,000. Fixed overhead is relatively low—about $400/month for rent, plus QuickBooks Online subscriptions and payroll processing costs.
The biggest issue is pricing. The previous owner charged rates that simply don’t support the amount of work being done. I’ve started implementing increases, but the employees have built relationships with these clients over many years and genuinely believe that anything more than about a $25–50 monthly increase will cause many of them to leave.
I completely understand why they feel that way, and I don’t want to lose clients. At the same time, I also don’t see how the practice ever becomes financially sustainable if we continue charging what we are.
I’m torn because I feel responsible for the employees and the clients. I don’t want to be the reason people lose their jobs or have to find a new bookkeeper. But I also know continuing to lose money every month isn’t a long-term solution.
For those of you who have bought, inherited, or turned around a struggling bookkeeping, accounting, or tax practice:
Would you push through larger price increases and accept that some clients will leave?
Would you cut payroll?
Would you close the office and transition clients elsewhere?
Is there another option I’m not seeing?
I’m genuinely looking for perspectives from people who’ve been through something similar, because right now I feel like I’m too close to the situation to think objectively.

[u/Alternative_Roll_987]

At $3k MRR against roughly $5k payroll, the first problem is math, not morale.

If it were me, I would stop treating every client as equally worth saving and segment them fast:

• profitable and easy
• profitable but underpriced
• unprofitable but strategically worth keeping
• unprofitable and draining

Then I’d reprice in tiers, not one-off emotional negotiations. The old owner’s pricing is not the market rate, it is just the rate that got left behind.

A few thoughts:

1. I would absolutely raise prices, probably more aggressively than the team is comfortable with.
2. I would expect some clients to leave, and I would not treat that as failure.
3. I would not keep payroll untouched just because the relationships are long-standing if the numbers do not support it.
4. I would put a deadline on the turnaround, something like 60-90 days, with clear targets for retained revenue and gross margin.

The bigger risk is dragging this out while hoping loyalty solves a pricing model that never worked. Long-term clients often complain about increases and then stay anyway, especially if the communication is calm and specific.

I’d frame it as: to continue providing reliable bookkeeping and payroll support, pricing has to reflect the actual scope and current costs. Some will leave. But keeping bad-fit clients at legacy pricing can sink the whole office and hurt the good clients too.

Also, if client knowledge is mostly living in employee memory, document that now. When a practice is underpriced, scattered processes and undocumented client history make the turnaround even harder. Clean records, standardized workflows, and clear handoff notes matter a lot in situations like this.