Income Partner Or Non-Equity Partner

Many CPA firms utilize an Income or Non-Equity Partner title. Recently, a Senior Manager issued the following memo to the Managing Partner regarding a promotion to Income Partner.

“As the end of the month is approaching fast, I thought that I would outline key items that I would like to discuss with you regarding my promotion to an Income Partner:

To what degree will my authority to make decisions change?

To what degree will I be involved in the strategic positioning of our firm?

Role Definition – As we are currently in the process of developing job descriptions, I assume that my daily duties will remain the same and will change as our business evolves and the firm continues to grow. I need to know what areas you would like me to be responsible for in the future.

What is the best approach to tell management, staff, clients and the business community about becoming a partner? Will this promotion be used in our marketing plan?

What percentage will I share in income? How will this be determined? When will it be distributed? To what degree will I have a say in the firm’s budgeting process?

What will my compensation be?
Will I have key-man insurance?

At what point will I be considered for equity partner? At what percentage and what method will be used to determine value of my interest?

Is there an initial purchase price to become an income partner?

Will there be a written agreement to review prior to our meeting?

What will be the investment to become an Equity Partner?”

Needless to say, I was very impressed with this list of questions and suggest that each firm considers preparing a similar document for meeting with prospective Partners.

Robert J. Gallagher
Chatham Tower, Suite 1-L | 112 Washington Place – Pittsburgh, PA 15219 | 412/281-8559 – 412/281-2115 FAX
http://www.rjgallagher.com
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