July 17, 2021 at 9:20 pm #3304897ScottycpaParticipant
I’m trying to see what a reasonable salary increase is at year end. A little background.. I have five years of public accounting experience with 3 years licensed.. I’ve been working for the same firm for five years and the last two years I’ve worked closely with one of the partners whom I’ll be buying out.. he is retiring at the end of this year but I won’t buy in until 2023.. my current salary is 75k.. when said partner retires, I will be doing all of his work.. approximately 250-300k in annual Billings.. other partners will review what is necessary.. I myself have generated a book of approximately 60k (18k first year, 42k last year, and should be around 60k this year).. I’m anticipating a bump in pay but wanted to get some thoughts.. I was thinking somewhere in the 90-100k range salary plus year end bonus.. location is OhioJuly 19, 2021 at 4:46 pm #3304909ReckedParticipant
Kind of hard to say, do you have this deal in writing by any chance?
If the partner is retiring at the end of this year, being 2021, but you are not buying until 2023, that indicates to me that the other partners are buying him out.
How much of the firm you get to buy, will be the unknown.
The typical pay structure is 1/3 to wages, 1/3 to overhead, and 1/3 to profit to be split among the owners.
So if you are just an employee doing 300k in work, your salary would probably be about 80-90ish at a larger firm. This structure does not work in smaller firms, and there needs to be more added to your piece of the pie to make it worth it for you to stay.
When someone transitions on as a partner, there is typically some type of buy in arrangement, but the deal is usually structured so that you have an increase in salary, but then a decrease for your funds going to buy out the old partner. The net increase and decrease are usually targeted to provide you with a higher take home, so you feel you are earning more (to account for your new partner status).
Whatever deal you are working out, please be sure to get the details in writing.
The whole things sounds slightly suspect to me that you don't know the buy-in or compensation numbers already. (They should also offer you some type of discount for your portion of the book of business, you don't want to pay for your own clients you have brought in.) If you knew the buy in numbers, and the overhead numbers, that might make it easier to estimate what your salary should be.July 20, 2021 at 1:17 am #3304915ScottycpaParticipant
The buy in is structured as 20% of the retiring partners collections for five years.. I will be buying in at 25%.. at that time I know how the compensation is structured.. my question was more geared towards a reasonable salary increase for the one year of work before buy in.. I’ve been involved in the hiring process for the next person to come in and replace me and that person will start in the 25-28 per hour range with only internship experience, no license, and obviously zero book of business.. thanks for your reply!July 21, 2021 at 3:29 pm #3304984ReckedParticipant
I'd refer you to the Robert Half salary guide, which probably has your locale.
I would expect a bump, but 75 to 90-100 is a pretty large increase.
90-100 sounds about right for your expected workload (but I think that number is usually for people with more than 5 years experience), but this is the last years for the owners to make money off their investment in you.
Let me know what Robert Half says. This topic interests me.
- You must be logged in to reply to this topic.