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I figure it can’t hurt to get some anonymous internet feedback. This question is probably gauged more at the older/more experienced crowd here.
Started with my sole/prop firm/employer in 2001 as an intern, and full time in 2002.
Did not apply for the CPA by 2009 when NYS changed the education requirements from 120 to 150, so in the mean time I got my EA, and waited out the clock on the 15 year experience pathway to CPA (instead of getting a masters).
In 2012 I figured out I was grossly underpaid for education and experience, and received a minimal raise, and I agreed to stay under the condition that I was earning in equity into the firm aka, building something for the future. (For reference, someone I know was making 60k/year 5 years out of school in industry with no CPA.)
My employer is now 74 years old, works part time, and is pulling about 50% more in comp. He says he can’t afford to pay me more, yet pays for 2 BMWs, always gets the newest iPhone, travels for a month every Dec-Jan including international travel, etc etc etc. He’s very much broke and lives above his means. When I got licensed I received a large raise $25k to keep me here, but then lost my $10k post tax season bonus that I had received the year before, effectively cutting my raise, and I brought in enough new work to pay for the rest of the raise. It’s coming up on a year and 9 months and we’ve made no progress on the negotiations. He keeps stalling and postponing conversations. I thought I had already “paid my dues” but after I got licensed he wanted to start me at 20% and work me up to 50% over the next 4-5 years, without a change in compensation, and he won’t make a move unless I agree to buy the other half at 100% of receipts. Internal acquisitions are averaging 75-80% based on numerous sources I have talked to.
The firm has grown from about $200k in 2002, to a little over $400k in 2019, which is decent for only 2 professionals. The way I see it, is if I keep bringing in work for every dollar I bring in, I am increasing my buyout by 25cents, and seeing no increase in comp for the extra work. I have received authorization to start a side practice which I did this year, but that just means working even harder just to try and get ahead while still being employed full time.
I feel he wants to have his cake and eat it too, collecting 50% more comp now, and then wanting 100% for his half on the back end as well. If I were to leave I estimate about 100-130k of the business going with me, which doesn’t get me to my 50% which is why I’m stuck. I have evidence of the verbal agreement, but no specific terms were laid out. Employer and I share a friend who is an attorney who is trust worthy and I bounce ideas off of, and he has recommend that I seek counsel so I have an appointment for Monday.
In 2002 I started at $30k a year. Comp for each year as follows. All comp figures include wages, health, and any other benefit I receive, except CPE.
2002 – 20k (Part year)
2003 – 31k
2004 – 34k
2005 – 35k
2006 – 37k
2007 – 39k
2008 – 40k
2009 – 41k
2010 – 42k
2011 – 42k
2012 – 46k
2013 – 55k
2014 – 56k
2015 – 64k Licensed EA
2016 – 73k
2017 – 89k
2018 – 101k Licensed CPA (mid year raise)
2019 – 107k (First full year with raise)
Did I get screwed or am I way off base? I realize a lawsuit is going to completely blow this thing up. I live small, save big, and have no debt. My unemployment can be measured in decades before I am in dire straights. I also have other offers, one of which is Tax Director for another area firm with comp of about 140k and fast track to shareholder, but it would require a change in work life balance that I’m not looking to accept at this point in my career. Opinions?
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