Becoming a partner in your Pennsylvania accounting firm means you become an owner of the business: working the business, making decisions, managing directors and staff, and benefiting directly from the company’s financial success, while still working directly with your own clients. This is a dream goal for many accountants.
How long it takes to become a partner varies dramatically, based on the size of the firm, company procedures, and the skills and qualities of the potential partner. However, there are certain traits that are generally expected in order to be given the opportunity to become a partner.
What it takes to become a partner
A candidate becomes a partner if the other partners see that the person will add value to the firm. While there are many important qualities needed to be a partner in an accounting firm, the following are necessary:
- Proven management skills, with the ability to mentor, train, supervise, and delegate while maintaining the respect and cooperation of junior staff
- Ability to prioritize workload while maintaining strong client and co-worker relationships
- High energy, positive attitude, and a clear commitment to the firm’s values and goals
- Strong customer satisfaction skills proven by a deep, well-worked client base of valuable accounts
- A reputation as an expert in the field with a breadth of connections and strong networking skills that could bring more business to the firm
- Excellent communication skills with the ability to collaborate, build consensus, and guide discussion toward firm goals
- Trustworthiness and the personality that makes other partners think, “I’d like working with that person”
The costs of partnership
Buy-in: In most accounting firms, new partners are expected to put up capital to buy into firm ownership. Different methods have developed over the years. Previously, a large lump sum of money was expected for buy-in, for which many would-be partners took out loans. However, many firms are switching to a combination of low up-front payments with regular withdrawals over a period of years. Some even wave the up-front payment entirely. However, it’s important to look at how much, over time, you will be paying to buy in. Some firms that still retain the single up-front payment model actually have lower buy-in amounts, since the full cost is clear rather than being hidden over years.
Self-employment costs: As an owner, you will receive a Schedule K-1, reporting your share of the partnership’s income, gain, loss, deductions, or credits. You will have to pay quarterly estimated tax payments, and because it is an estimate, you should have extra money earmarked especially for tax payments, in case you owe more at the end of the tax year.
Performance-based income: While becoming a partner can certainly mean more income in good years, there is of course the risk of less income than an employee with a salary does not generally experience.
Is this what you want?
If your aim is to become a partner, find a senior mentor with whom you relate well and share your career plans with them. Ask for direction on how to reach your goals. Always keep your objectives before you and with the right guidance, you should be able to reach the coveted goal of partner.