Future think: why your small firm needs a practice continuation plan.

• Author: Schaim, Mark R.
• Position: Professional issues

did you hear the one about the sole practitioner who became disabled and couldn't return to work? Within several weeks she lo.t all of her clients and employees.

Not much of a joke, is it?

But situations like this happen all too often because no provisions are made for another CPA to immediately call clients and pick up the load. But it doesn't have to happen that way. In this case, all the practitioner would have needed was a little planning and a practice continuation agreement. which would helped preserve the value of her practice something; she may have spent wars building and could be the largest asset in her estate.

If you become disabled. die or otherwise are unable to continue running your practice and haven't adequately planned for someone to immediately step in, properly 'notify your clients stick! take over for you--you will be lucky if your clients stick around for a month. Why should they if there is uncertainty about your condition or about their continuity of service? person contacting them and seamlessly continuing the practice, they will find another accountant, and quickly. And, truth be told. most or your clients already know of another competent CPA they would use.

You also risk losing your employees. What quality stall members would stick around if they had no idea of the firm's future and saw clients leaving?

What is a Practice Continuation Agreement?

A practice continuation agreement is a contract with anther CPA or group of CPAs to take over your practice in the event that you Can't for health or other reasons. It provides for the transfer of your practice to a compatible. preselected practitioner. Additionally the agreement can be used as at retirement vehicle.

Implementation Steps

Ensuring the continuity of your practice by using a practice continuation agreement requires three major steps:

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1. Identifying it successor;

2. Determining the value Of your practice; and.

3. Negotiating terms.

Identifying a Potential Successor

The successor is the key to the benefits you and your heirs will receive in the event V01.1 can no longer run your practice. Your ideal successor will share your values, commitment and technical skills. To decide who will he a potential successor, you must first determine your firm's characteristics and attributes. Then:

* Review your goals and procedures. Consider your reputation, specialties billing rates, salary structure, location and business culture.

* Consider your...