Accountants Daily Overhead Cost Formula
Learn how to calculate an accountancy practice's annual, daily and billable-day overhead costs.
This calculation converts regular and annual practice expenses into a daily operating cost, then allocates that cost across the team’s expected billable capacity. It helps put overhead recovery into context when reviewing utilisation and pricing.
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Overhead per Billable Accountant-Day
Where:
Divide all annual overhead costs by the billable days the team is expected to deliver during the year.
Variables Explained
| Variable | What It Means | Unit |
|---|---|---|
| monthlyPremisesCost - Monthly premises cost | Regular office, utility, cleaning and related premises expenses. | currency |
| monthlyOperatingCost - Monthly operating cost | Regular non-premises expenses such as software, administration and marketing. | currency |
| annualFixedCost - Annual fixed costs | Yearly costs such as insurance, professional fees, equipment and training. | currency |
| workingDaysPerYear - Working days per year | Normal operating days after non-operating days and planned closures. | days |
| billableAccountants - Billable accountants | Number of team members able to perform client-chargeable work. | number |
| billableUtilisation - Billable utilisation | Expected proportion of working time that is chargeable to clients. | percent |
| totalAnnualOverhead - Total annual overhead | Combined annual recurring and fixed overhead costs. | currency |
| annualBillableDays - Annual billable accountant-days | Estimated billable capacity across the team for the year. | days |
Step-by-Step Calculation
Annualise monthly costs
Add regular monthly premises and operating costs, then multiply by 12.
annualRecurringCost = (monthlyPremisesCost + monthlyOperatingCost) * 12
Calculate total annual overhead
Add annual fixed expenses to annual recurring costs.
totalAnnualOverhead = annualRecurringCost + annualFixedCost
Calculate daily operating overhead
Spread annual overhead over normal operating days.
dailyOverheadCost = totalAnnualOverhead / workingDaysPerYear
Estimate annual billable capacity
Apply expected billable utilisation to the working capacity of each billable accountant.
annualBillableDays = billableAccountants * workingDaysPerYear * (billableUtilisation / 100)
Calculate overhead per billable day
Allocate annual overhead across estimated billable accountant-days.
overheadPerBillableDay = totalAnnualOverhead / annualBillableDays
Worked example: four-person accountancy practice
Annual recurring costs
($2,500 + $3,500) * 12
$72,000
Total annual overhead
$72,000 + $12,000
$84,000
Daily overhead cost
$84,000 / 230
$365.22 per operating day
Annual billable accountant-days
4 * 230 * (70 / 100)
644 days
Overhead per billable accountant-day
$84,000 / 644
$130.43 per billable day
Final Result
Estimated overhead is about $365 per operating day and $130 per billable accountant-day.
Assumptions
- ✓Monthly costs are broadly stable for the year.
- ✓Working days reflect actual normal operating days, not calendar days.
- ✓Utilisation reasonably represents chargeable time after non-billable work.
- ✓All included costs are overhead costs the practice intends to recover.
Limitations
- !The calculation does not automatically include billable staff salaries, owner drawings, taxes, financing costs or profit.
- !Actual utilisation can vary by season, client mix, leave and workflow.
- !A daily average may hide large one-off payments or uneven monthly expenses.
- !The result is an operational estimate, not financial or business advice.
Common Mistakes to Avoid
Using 260 weekdays without allowing for holidays, closures and other non-operating days.
Entering total team headcount instead of only people who can generate billable work.
Treating 100% utilisation as realistic while ignoring administration, meetings and business development.
Leaving out annual costs such as insurance, professional subscriptions or training.
Using overhead per billable day as a final client price without considering labour, profit and write-offs.
Related Formulas
Frequently Asked Questions
How do you calculate daily overhead for an accounting firm?
Add annualised monthly expenses and annual fixed costs, then divide the total by the practice's operating days per year.
What is overhead per billable accountant-day?
It is total annual overhead divided by the estimated billable accountant-days available during the year.
Why does lower utilisation increase overhead per billable day?
The same annual overhead is allocated across fewer chargeable days, so the amount assigned to each available day rises.
Should accountant salaries be included in this formula?
The calculator focuses on overhead. A practice may include non-billable staff costs in operating expenses, while assessing billable staff costs separately.
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