Rosenberg Associates Blog
Kristen Rampe, CPAGenerating business is essential to all CPA firms. Even during times when firms are more desperate for staff than they are for new business, clients leave. Ideally, you will replace those clients with work that is even more profitable or better aligned with your niche. Business development still matters. Many firms generate new revenue from…
When two or three partners start a CPA firm together, it’s common to simplify how income is allocated. Often ownership percentages are split equally (e.g. 50/50, or 33/33/33) and total compensation or excess profits may be split the same way or with a small, fixed variation (e.g. $50k stipend to the managing partner, then 50/50)….
Marc Rosenberg, CPAWe are big believers in the case study method of learning. So, we have created a set of facts (a story) for a mythical CPA firm (although the facts below are a composite of actual experiences) that we will use in reviewing the art and science of allocating partner income. The story 1. $20M firm….
We worked with a 10-partner CPA firm a few years ago to change their income allocation method from an incredibly complicated formula that was deeply flawed to a compensation committee (CC). We talked to the partner group recently to get their feedback on how things worked out. Why did you adopt the CC? It…
In our work with CPA firms on partner compensation, we have asked countless partners what they think about various performance criteria and whether or not they should factor into a partner’s allocation of income. Some examples of the performance criteria include firm management, business development, client service, billable hours. Another criterion we ask about is…
What exactly is a partner compensation formula? Income is allocated based on an algebraic equation that pays the bulk of the firm’s income based on various production factors. The main factors are always Finding (business origination), Minding (size of client base managed, which may or may not be the same as Finding) and Grinding (billable…
A satirical blog post in celebration of April Fool’s Day. Partner compensation is a challenge for many accounting firm leadership teams. The desire to balance rewarding performance, book of business, billable hours, and plain old seniority leads to conflict. Feelings of confusion arise when partners who are total jerks continue to out-earn their peers who…
One of the nuances of partner compensation is how to reward partners who are able to add value to the firm in many ways. In our third blog on this topic, we discuss the inherent time conflict between managing a firm well, serving a large client base, and developing a significant amount of new business….
Understanding how common CPA firm operating model flaws affect partner compensation helps firms review and modify their comp systems to better achieve the firm’s goals. In our second blog on this topic, we discuss complacency which can creep into a firm without much fanfare, and causes havoc when partners realize how hard it is to…
Partners at multi-partner CPA firms earn $300-600K a year, more than 99% of all people on earth. How can I have the audacity to suggest that the traditional CPA firm operating model is deeply flawed when partners live so high off the hog? Easy. Money is not the sole measure of excellence. Many CPA firms…
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