As a longtime partner in your CPA practice, you’re proud of your professional expertise and what you’ve been able to accomplish. Whether you took the step of becoming a partner to have a bigger say in how your practice serves its clients, to gain a greater reward for the hours you invest, or simply to gain more control over your own destiny, the endurance of your practice is a testament to your thinking and your skills.
Whether retirement is on your near-term horizon or decades away, have you taken a moment to ask yourself what you’re really trying to create? Are you focused on your professional reputation and interested in influencing future CPAs who become part of the practice, or is your primary intent growing the practice’s capital to enrich your financial future and theirs?
No, it’s not an either-or question for most CPA practice partners, but nearly everyone leans more toward one side or the other. For some, the unspoken goal seems to be a desire to be remembered as a talented, respected leader and practitioner. There’s nothing wrong with leaving that kind of legacy, and the profession is always in need of people capable of setting the bar and inspiring others to surpass it. However, it’s tough to live on reputation alone.
Some CPAs are so dedicated to preparing their clients for long-term financial health that they neglect their own future well-being. Growing your practice’s capital is one of the best ways to ensure you’ll have the retirement lifestyle you’ve always dreamed about. Stronger capitalization also makes it easier to weather difficult times, such as economic downturns or the loss of key clients.
One prudent approach to increasing capital is developing and implementing a plan for adding partners to the practice. While you may be reluctant to spread decision-making among more professionals, if you structure your partnership agreement and responsibilities correctly, each new partner will not only bring new capital to the practice, but will also add a significant amount of revenue, and make it easier for the practice to fund your retirement when the time comes. While the cost to become a partner may be daunting to a young professional, you can help overcome those concerns by using innovative structures such as arranging for and guaranteeing outside financing that will be repaid from the new partner’s share of the practice’s growth.
If your personal goal is to create a legacy and be remembered as an extraordinary professional, that’s laudable. But as you’re creating that image and influence, don’t forget to address the financial side of the equation. Knowing that you’ve been able to improve the capital position of your practice and lay the groundwork for future financial strength when you retire is a mighty impressive legacy in itself.