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At what point is your employee your competitor?


SFA

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I know that many of you prepare tax returns for an employer, but also prepare tax returns as a side business, so this may be a touchy topic. But here goes . . .

Today I interviewed a CPA who has a small income tax practice, but has answered a help wanted ad that our firm has placed. He has a website and is actively seeking to expand his own income tax prep business.

Am wondering what the atxcommunity has to say on this subject.

Should I consider hiring him or not?

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I know that many of you prepare tax returns for an employer, but also prepare tax returns as a side business, so this may be a touchy topic. But here goes . . .

Today I interviewed a CPA who has a small income tax practice, but has answered a help wanted ad that our firm has placed. He has a website and is actively seeking to expand his own income tax prep business.

Am wondering what the atxcommunity has to say on this subject.

Should I consider hiring him or not?

Are you looking to feed this person clients to work with? No matter if the person has their own book of business or not you always have to worry about eventually losing a client if someone else does the work. This profession is all about personal relationship and if the existing client likes this person there is always the underlying fear when that person leaves so leaves the client with them.

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Thank you for your input. Finding a good employee is not easy for a small seasonal business in our profession. To handle the higher end business clients, we need accounting and tax credentials. Unfortunately, it is not easy to offer some of our employees year-round work, so what to do.

Many of the people who chose the profession of taxes, I find to be somewhat eccentric. Because of that, I am usually open to accommodate some quirks. What kid grows up and dreams of being an income tax preparer? I know I didn't. I wanted to ride horses for a living!

He can do the work. I like him. But, I believe starting out with an employee, who has clearly established a side business, is a relationship doomed for failure. I also think our other employees will be encouraged to cultivate side "clients" as well.

I agree. While tempted, he is not the right one for our office. Again, thank you for helping me to sort this out.

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I was just wondering when Jack and another CPA member here would chime in, because in a previous post they took the opposite position from the rest of the members. I guess it is based on the employer and employee relationship as Jack mentioned.

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I have been that employee for 10 years now. I work for the firm and have my own practice. The owner and I established all the limits and guidelines as part of my being hired. It has been a very good symbiotic relationship.

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Which is very rare. Many individuals couldn't resist the urge to 'recruit' their employers' client. I know when I took the Block course, they wouldn't consider someone who had a small side business.

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Which is very rare. Many individuals couldn't resist the urge to 'recruit' their employers' client. I know when I took the Block course, they wouldn't consider someone who had a small side business.

It has nothing to do with recruiting the clients away. If the client works with a professional and they form a relationship the client is already at risk of leaving. The best course of action if you want to secure your clients is to do the work yourself.

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If you have a large practice then it may not be possible for you to do every return personally. Fortunately I don't have that problem. My part-time seasonal person does only inputing, scanning, mailing, filing etc. I am the main face in front of the client.

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If you have a large practice then it may not be possible for you to do every return personally. Fortunately I don't have that problem. My part-time seasonal person does only inputing, scanning, mailing, filing etc. I am the main face in front of the client.

I find this to be so true. I also agree with SFA. I would love to find someone to help who knew what they were doing, taxwise. Many years ago, I was that person for another accountant. Our businesses never intertwined and I stayed with her until mine grew to the point of not being able to handle both. I also agree that this is very rare. It's a matter of ethical loyalty to your employer. Not everyone is capable of keeping that separate from loyalty to "self".

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While I lean against the hiring in question, I appreciate the professional and personal ethics of CPAs like Jack and others that have gone down this road. A note to consider is that if this hire is to attract clients you are not currently able to service, what have you lost. For this concern only let him work those clients. You might also want to check with an attorney on a way an agreement could be codified to protect you and the CPA. You may also want to consider hands on followup. Many individuals think appreciate a contact with the "boss." So followup after the service is rendered and others, such as birthdays, Christmas,etc could help the client identify with your practice instead of only focusing on the employee (CPA).

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Another aspect. When my current employees are out and about, they should be proud enough of working for this office, to promote goodwill and perhaps attract and bring new clients to our office.

Our employees can be rainmakers if they are committed to the practice.

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mcb, that is EXACTLY where I am. Two more seasons, and I am independent. I will NOT take any clients from my employer. Nor will I take new clients after I leave that have been clients of my current employer.

There is enough new business for me without cutting out from my employer.

How do you handle clients that have been working with you that want to follow you to your new place?

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I have had my private practice for 13 years. I have worked for the firm since Feb. 2004. Therefore, the issue of clients wanting to follow me to my "new" place is moot.

The firm I work for has several other preparers with equal or more experience than myself, and will provide the same quality service. I an NOT telling any clients from the firm that I will be leaving. The firm and I have truly been symbiotic. I have less than any reason to take clients. In the future, I may want to purchase his business...

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Another thing to consider is the following: I had a client who had an employee who sold knockoff perfume on the side. Unknown to the client, the employee would come in early and use the phones to make sales. The company was sued by the perfume manufacturer for selling the knockoff. It ended up costing them over $100,000 and legal fees.

In our case, an employee's client could sue us if something goes wrong. You never know how a judge will rule and the judge may rule that he was an agent of yours and you are responsible. It's happened before. Will malpractice insurance cover us for that? I don't know.

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>> Will malpractice insurance cover us for that? I don't know

When you renew your E&O insurance you are suppose to let them know about your employees, their functions etc.

Check your policy or call your broker before you hire an employee just to make sure you are covered.

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For SFA, you say you have CPAs on staff to handle the high-end work and year-round accounting. Are you looking for seasonal help now? Then, an EA or other non-CPA sounds like what you are really looking for. According to you, a CPA would expect year-round work -- and this one might want to grow his business and leave you. Even if not at your expense, not taking any clients with him, as has been said, clients might leave anyway when he does. And, you really can't expect to keep him forever if he's trying to build his own business, so you're back to hiring and training again.

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Lion, thank you for thinking of us. Yes, we are now working on "Plan B." I have two interviews coming in on Wednesday. Good prospects for payroll, basic bookkeeping and basic 1040 returns. If either or both of them work out, hopefully, we have enough other preparers to handle the more complex returns.

FYI, the CPA was in his late 50's. After mulling over the outcome, I know it worked out for the best. We had made him a VERY good offer to join us full time and incentive to bring his small client list with him. His billings were less than $5,000. Initially he accepted, but then backtracked on bringing his clients to the table. So for the sake of $5,000 on the side, he turned down a full-time position with us. Oh well, we have moved on.

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