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Selling the business but staying active


Possi

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Well, it is looking like I will be selling my business and working with the new buyer for as long as I want, at least 3 years! So, y'all won't be rid of me yet! 

I feel really good about this. Y'all know how stressed out I was last tax season, and I need to get this office out of my small house. 

I do have a question though. 

I'm in Va Beach. How much should I expect to be paid while I'm working for the new owners? I have no idea! 

Thoughts?

 

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33 minutes ago, Possi said:

Thanks, I was considering a commission and wondered how much to ask. 

Congratulations...all the best in your "semi retirement".  🙂

Maybe suggest a 35% the first year, 30% the second, and 25% the final...assuming it's for 3 years.  This affords you a bit more income in year 1 and allows you to determine if you like working for the new owner.  If you do, great.  If you don't maybe you retire earlier than originally thought.  Whatever you decide, good luck.   

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1 hour ago, Possi said:

How much should I expect to be paid while I'm working for the new owners? I have no idea! 

Congrats!

You are worth a Million Bucks in my book!  Seriously, don't sell yourself short, you are worth a ton to keep those clients coming back to the new owner.   And keep the sale transaction separate from your work.   How much they pay you for the book of business is one thing, and your services as an employee are another.   Don't let them muddle the water.

FYI, I pay my employee/Spouse 50% of the billing fee on all returns/bookkeeping she does.   But she does other office work for me (scheduling, postal trips, office supplies, etc) so I may be high.   I started her at 30% when we first started working together (I stole her from HRB) and I have increased it to where it is now over the years.   If I were to start someone new, I think I would offer somewhere around 30-35% of the invoice, with the option to increase or bonus depending on the volume produced by the employee.   

Tom
Sparks, NV

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28 minutes ago, Yardley CPA said:

Congratulations...all the best in your "semi retirement".  🙂

Maybe suggest a 35% the first year, 30% the second, and 25% the final...assuming it's for 3 years.  This affords you a bit more income in year 1 and allows you to determine if you like working for the new owner.  If you do, great.  If you don't maybe you retire earlier than originally thought.  Whatever you decide, good luck.   

Why would you lower the % ?

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6 hours ago, BulldogTom said:

How much they pay you for the book of business is one thing, and your services as an employee are another.   Don't let them muddle the water.

Excellent advice. I assume you already agreed on a price for the business based on percentage of invoices of retained clients.  In that case, your question is how much should you be paid as an employee of the new owner.  Do you really want to be paid on commission? That tactic is used by HRB and others to ensure that employees actually work instead of play on their phones all day. You are a professional and unlikely to do that, so you either need an hourly rate or salary.  With your credentials and experience, and being in VA Beach, I would think $40+ an hour.

I think commission-based pay can be detrimental in the tax business. People will decline to do returns they know will require research, or slack on the research. They may cut off clients who need help with say W4s or an IRS notice.  No one is going to want to do an amendment on a return a former employee of the company messed up.  Face it, a lot of what we do as a service to our clients is unpaid but is excellent client service, which is what keeps them coming back.  On the other hand, if I was paid on commission I would never take another phone call about the stimulus payment or advance CTC!

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On 7/28/2021 at 2:37 PM, Yardley CPA said:

Congratulations...all the best in your "semi retirement".  🙂

Maybe suggest a 35% the first year, 30% the second, and 25% the final...assuming it's for 3 years.  This affords you a bit more income in year 1 and allows you to determine if you like working for the new owner.  If you do, great.  If you don't maybe you retire earlier than originally thought.  Whatever you decide, good luck.   

Your suggested % goes down each year. I would think she should ask for a larger % each year. Although, I'd favor a salary based on her years of experience & credentials & skills. Maybe $60/hour with a guaranteed # of hours each year.

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