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How Much Should the MP Earn?

Marc Rosenberg, CPA / October 19, 2015

Question from a Reader: What should our Managing Partner earn?  Our 3.4M revenue firm is comprised of 4 equity partners with income averaging $231,000. Ownership percentage is the sole determinant of income. The MP spends a substantial amount of time managing the firm and maintains a $775-800K book of business. The MP’s ownership percentage is…

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Partner Comp Systems: The Bonus

Marc Rosenberg, CPA / September 28, 2015

Most multi-partner CPA firms structure their partner comp systems to pay at least two tiers of income, most commonly the base and a bonus. Many firms have a third tier for interest on capital, but we won’t address this in today’s blog. Base and bonus defined: Base: Compensation for a partner’s historical value to the…

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Why Most Firms’ Partner Comp Systems are Performance-Based

Marc Rosenberg, CPA / September 21, 2015

Any discussion of partner compensation must start with a fundamental concept: Should a partner group’s income allocation system be performance-based? Compensation motivates performance. To be successful year after year, CPA firms need to service their clients well on a continuous basis. CPA firms typically lose 10-20% of their revenue sources every year because clients merge…

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Managing Partners: What’s Keeping You Up at Night?

Marc Rosenberg, CPA / May 18, 2015

The CPA industry’s most active consultants formed The New Horizons Group 15 years ago to share ideas and experiences. The following nuggets from a recent meeting are intended to help managing partners address issues facing their firms. Mergers. Tips for merging two sizable firms together: (1) You really need a process; make sure each meeting…

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Should a Partner Be Compensated for Bringing in a Merger?

Marc Rosenberg, CPA / April 6, 2015

This question has been posed to me by several partners over the years. As you might guess, the partners raising the question all had a hand in identifying firms that were either merged in or came close. Note: This question applies only to line, client service partners, not to partners whose specific job it is…

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Comp Committee Project: The Simplest Consulting Job I Ever Had

Marc Rosenberg, CPA / March 2, 2015

I love my job. CPA firm partners are wonderful to work with. The projects are interesting and challenging. CPA firms pay well and on time. Almost all of my consultations have a medium-to-high level of difficulty. Nothing is ever easy. This is mostly a good thing. But sometimes, I wish I had a job that…

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Should Your Firm Allocate Partner Income by Comp Committee? Top 10 Reasons Why

Marc Rosenberg, CPA / September 2, 2014

The correlation between size of firm and use of a compensation committee to allocate partner income is no surprise to CPA industry observers – the trend seems to gather steam every year, according to The Rosenberg Survey. Now 61% of firms with 8 partners or more report the CC as their method of choice, and…

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‘Tis the Season – The Comp Committee Season

Marc Rosenberg, CPA / December 16, 2013

CPA firms across the country are gearing up for the tax/busy season, and with the year rapidly coming to an end, the Compensation Committee (CC) season is kicking into gear as well. Now is the time which marks the beginning of the CC’s deliberations. The comp committee system is by far the most common partner…

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CPA Firm Comp Committee Members Are Like Judges

Marc Rosenberg, CPA / April 24, 2013

The heart and soul of the Compensation Committee (CC) method for allocating partner income is this:

The system can only work if the people being judged are
willing to trust the judges. Period. If the partners aren’t
comfortable with this, then they should not use the CC.

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CPA Partner Base Salary Guidelines

Marc Rosenberg, CPA / January 9, 2013

I RECENTLY RECEIVED THIS QUESTION: In developing a new partner compensation system, you have spoken about how most firms break down total partner income into three tiers: Interest on capital, base salary and bonus. We seem to be stuck on how to determine what the base salaries should be for each of us. What are other accounting firms using as a base salary?

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