What I wish I’d known before becoming partner

Becoming a partner/owner in an accounting firm is often seen as the pinnacle of one’s career in the profession. It represents not just a significant achievement but also a transition into leadership, business development, and an entirely new set of responsibilities. However, as many find out, the path is fraught with challenges, lessons, and insights that are seldom discussed openly. Here, seasoned partners and members of the AICPA Tax Practice Management Committee share what they wish they had known before taking the leap, offering a blend of advice, caution, and encouragement for those considering this significant career milestone.

Did anything change in your work/life balance as you became a partner?

Michael Whitmore: Yes, I didn’t realize how much administrative work was involved in being a partner. Running an accounting firm can be really hard, and I took that for granted. It made me much more appreciative of the partners I worked with earlier in my career. Running a firm takes time, and that time has to come from somewhere.

Shannon Hudson: As a partner and a founder in a small firm, everything changed. At a small firm, the partners wear multiple hats. Not only am I responsible for my book of business and training/mentoring staff but also for human resources — hiring, firing, payroll, reviews, etc. While it is a lot of work at times, it also allows me to be sure our firm is doing all the things I wished my prior firms had done and avoiding those things that made me cringe in my prior firm life.

Matthew Becker: My firm has always been very flexible from a schedule perspective, and while “balance” means different things at different times, I have always felt supported in making my life and my career equally successful. Focusing on flexibility at all levels is the key.

Brandon Lagarde: The partners in our firm all worked more than most others, so I knew that work/life balance would change. As a new partner, I felt that I had to prove that I belonged. So, I constantly said yes to things to prove my worth. This is not the way to operate as a new partner!

Angela Alexander: The amount of time I spent on administrative items, scheduling, and staff needs more than doubled. I was already involved with these and wasn’t expecting to see much change, but I was wrong.

Pamela Slatten: It’s critical to know that you aren’t going to work less as a partner, at least not in the early years. You must decide to create an acceptable work/ life balance and walk away from the office when you need to. The responsibilities and demands increased and will always exist — the onus is on you to manage it.

Teela McCullar: No. The great thing about a firm like mine is there is no certain number of hours required that All partners must work. Some partners work more than others, some are part-time, and pay is adjusted accordingly by what people work and the size of book they manage.

What questions do you wish you had asked before agreeing to become a partner?

Chris Wittich: I wish I had spent more time asking about the expectations for me as a new partner and how the partners budgeted past the first year.

I should have spent more time asking these types of questions: 

• What are my goals for billable hours the first three years?
• What is the expectation for total hours worked for each of the first three years?
• Do you envision changing what I spend my nonbillable time doing?
• If the firm meets budget, what is my expected compensation the first three years?
• What does the firm budget look like for the next three years?

Mark Gallegos: I was lucky in that most of these questions were answered for me before I became a partner. But here are some recommended pivotal questions for prospective partners before accepting their roles:

• What are the specific expectations for business development?
• Can you outline the firm’s long-term strategic vision?
• What are the details of the partnership agreement?
• What is the profit-sharing model?
• What is the decision-making process within the partnership?
• What are the expectations regarding firm leadership and management?
• How does the firm support work/life balance for partners?
• What are the expectations for mentoring and developing junior staff?

Lagarde: There were many questions I had going into being a partner: 

• How do I get paid now? And how much?
• Is there a buy-in? How much is the buy-in?
• Are there agreements that I will have to sign as a partner that differ from those I signed when I was a senior manager/director?
• Is there a process to be removed as a partner?
• Are there certain responsibilities and actions that I must take now as a partner?

Slatten: As part of the management team, we had many discussions about ideal client profiles and the future growth of the company. The change from management to ownership made those discussions more relevant to my personal future. With different owners in the mix, we needed to have a broader discussion about the vision of the future of the firm on a longer horizon than the five-year discussions we were having as management.

McCullar: Here are some questions I would have liked to understand more, as some firms limit what nonequity partners can see or vote on: 

• What kind of decisions are made at the partner level, and is it different for nonequity versus equity partners?
• What kind of decisions are made by the managing director only?

What do you wish you had known about the financial commitment?

Wittich: The firm was very clear with me about the capital contribution. I knew exactly how much money the firm asked for and when it was due several months in advance. What I wish I had asked more about is the “why” behind the capital contribution. It’s easy to see that a partner should have some “skin in the game” and put up capital to fund the operations, but I should have asked more about how they came up with the amount. Why did we pick $X instead of $2X or $0.5X? How does the initial contribution change over time? How much capital do older or managing partners have?

Alexander: Neither the financial commitment nor the bonus structure or how personal expenses worked was discussed with me prior to admittance to partner. It was hard for me to get this information. This was a big disappointment to not be given this information or to have it discussed with me prior to my promotion. One of the partners actually told me the details, not the managing partner.

What do you wish you had known about how the firm operates and makes money?

Becker: At the time I became a partner I focused a lot on metrics. Things like realization percentage, productivity, and rate per hour are rather arbitrary at times. The real metrics that matter are revenue growth, gross margin percentage, and earnings. I’ve learned that focusing on too many metrics is paralyzing.

Wittich: I wish that I had asked more questions about how the current Managing partner and executive committee views profitability in the firm. As accountants, we all understand how a business makes money, but I wish I had been able to view it through the lens of the most senior partners who would be making the key decisions. What are the two or three key metrics that they think drive profitability and compensation in the firm? Is it partner billable hours, revenue created through rainmaking, efficiency gained through processes and procedures, or something else? If I had done a better job understanding where they came from, I would have had fewer surprises at how they approached various situations.

Gallegos: Here are several key areas of firm operations and financial management that would give new partners a better grasp before stepping into their roles:

• Business model clarity; 
• Revenue streams;
• Cost structures; 
• Financial health indicators; 
• Operational strategies and risk management; 
• Investment in technology and innovation;
• Client relationship management; and 
• Growth strategies.

Lagarde: Compensation is probably one of the most difficult aspects of any job/career, and that does not change when you become a partner. Having a clear understanding of how the firm shares revenue among the partner group usually isn’t addressed until you actually become a partner . And by that time, you have already committed to join. These conversations should happen earlier in the process.

Do you wish you’d had different technical skills?

Whitmore: I wish I’d had a better understanding of employment laws and human resources. Things such as paid time off or short-term disability seem simple when youfre a manager, but they are not.

Becker: As a tax partner, one needs to present highly technical topics in a way that clients understand.

Hudson: I wish I’d had a stronger business skill set. Our firm is a small practice, and we do a little bit of everything. I specifically focus on our high-net-worth individuals, but I wish I’d had more experience with business returns and some of the more complex business matters.

Do you wish you’d had different soft skills?

Becker: Every decision a partner makes and every action a partner takes is meaningful to someone. As leaders, we send messages even when we don’t intend to do so.

Hudson: I think the ability to not take things too personally is really important as a partner . Needing to have “thick skin,” if you will. At times, you will need to deal with very difficult and uncomfortable situations. As a young and brand-new partner, some of the confrontational moments with clients and employees were difficult for me. As I’ve grown in the partner role, I’ve learned how to handle these moments better and separate my own emotions.

Lagarde: Every firm should have a partner-in-training program that covers all of the soft skills needed to run a business and manage a practice. Within tax, we focus a lot of attention on ensuring that partners are technically strong . But we spend a lot less attention and time on ensuring that our partners have the soft skills needed to successfully run a business and manage a practice.

Slatten: I focused time in my career on developing leadership and management skills (as well as technical skills, of course), but I did not do much to master the art of selling. While I don’t believe CPA firms necessarily have to sell as much as other industries, I do believe I would have benefited from stronger networking skills and more core knowledge of how to effectively sell services prior to becoming an owner.

McCullar: I felt prepared in this area, but thatfs because my firm supported me and other staff in gaining the critical soft skills needed. I attended not only the AICPA Leadership Academy but also the AICPA & CIMA Emerging Partner Forum, both of which really helped me step into the partner role.

What unexpected changes happened in your day-to-day schedule?

Whitmore: I was surprised about how many more internal meetings there are.

Becker: As a partner, my day was more difficult to plan. Leaving capacity for dealing with urgent and important matters is critical.

Hudson: A significant increase in administrative responsibilities while still needing to manage a large book of business. As a partner, you find yourself in many planning and strategy meetings. Any new process, program, employee, etc. is determined by the partner team. You spend a lot of time working on and in the firm, and that’s a big change from the role of a manager.

McCullar: Nothing was unexpected, as the partners’ schedules at our firm are pretty visible, so you know what to expect. But the partner group has various meetings including monthly meetings that can definitely take up time, and you don’t quite realize how much time until you start attending them all.

What are the unwritten rules you wish you’d known?

Wittich: I wish I had asked about unwritten rules or the rules that apply only to unlikely events that they don’t tell you about in the basic introduction. It’s been a very unusual first three years, but in that time, I’ve basically broken every area of the formula and run into these seemingly unwritten rules that cover unlikely scenarios. In three years, at one point or Another, I exceeded every cap for high performance and ran into every cap for minimum performance at the same time.

Alexander: Pick your battles. It’s like a marriage: If all you do is cause problems and talk about the things you don’t like, your partners won’t support or respect you for long.

Critical unwritten rules

Many partners speak of the cultural and political nuances within their firms that became apparent only after they joined the partnership. From decision-making processes to internal alliances and expectations for partners’ engagement in firm activities, these unwritten rules can significantly affect a partner’s ability to navigate the new role effectively. Gaining insight into these nuances can significantly smooth the path for new partners, enabling them to integrate more seamlessly into their roles. Here are several critical unwritten rules that new partners often wish they had been aware of:

• Decision-making influence: Understanding the real influencers within the partnership circle is crucial. Decisions may not always be made democratically, and knowing who has the most sway can inform how you present your ideas and whom you need to convince.
• Internal alliances: The importance of building strategic relationships within the firm cannot be overstated. These alliances can provide support for initiatives, offer insights into firm dynamics, and facilitate smoother navigation through internal politics.
• Contribution recognition: Not all contributions are recognized equally. It’s vital to understand what types of contributions (e.g., business development, client management, internal initiatives) are most valued and how you can align your efforts to be recognized and rewarded.
• Expectations for firm engagement: There may be implicit expectations for how partners should engage in nonbillable firm activities, such as recruiting, mentoring, or participating in committees. Understanding these expectations can help you balance your time and contributions effectively.
• Cultural fit and influence: Adapting to and influencing the firm’s culture is a subtle but critical aspect of being a partner. This includes understanding the firm’s values, the way communication is handled, and how to effectively enact change within those parameters.
• Navigating competitiveness: While partnerships aim for a collegial atmosphere, competitiveness can arise, whether for clients, resources, or recognition. Understanding how to navigate this competitiveness in a way that is constructive rather than destructive is key.
• Work/life balance norms: There may be unspoken norms around work/ life balance, including expectations for availability and responsiveness. Balancing these expectations with personal needs is a common challenge for new partners.
• Performance evaluation: Performance evaluation criteria for partners can be complex and not always transparent. Gaining insight into how your performance will be judged, beyond financial metrics, is crucial for long-term success.
• Communication channels: Understanding the preferred channels and protocols for communication within the partnership and with staff can avoid missteps and ensure your messages are effectively received.

A challenging but rewarding transition

The transition to partnership is as rewarding as it is challenging. The insights shared by those who have walked the path highlight the importance of preparation beyond the technical aspects of the job. Soft skills, business development, financial management, responsibility, work/life balance, and continuous learning all play a significant role in the success of a partner in an accounting firm. For those aspiring to this role, understanding and preparing for these challenges can make the journey more manageable and the destination more fulfilling.

Contributors

Angela Alexander, CPA, MSA, is director with Barnes Wendling CPAs in Akron, Ohio; Matthew Becker, CPA, is a national managing partner of tax with BDO USA LLP in Grand Rapids, Mich.; Mark Gallegos, CPA, is partner with Porte Brown Accountants & Advisors in Elgin, Ill.; Shannon Hudson, CPA, MST, is partner with Altair Group PLLC in Bedford, N.H.; Brandon Lagarde, CPA, J.D., LL.M., is partner, Tax Services, with Eisner-Amper in Baton Rouge, La.; Teela McCullar, CPA, is a managing director with Barnard Vogler & Co. CPAs in Reno, Nev.; Pamela Slatten, CPA, J.D., MBA, is an attorney and director with Marietta CPAs in Indianapolis; Michael Whitmore, CPA, is a shareholder with HMA CPA in Spokane, Wash.; and Chris Wittich, CPA, MBT, is partner with Boyum Barenscheer CPAs and Business Advisors in Minneapolis. April Walker, CPA, CGMA, is lead manager–Tax Practice & Ethics, Public Accounting, for AICPA & CIMA, together as the Association of International Certified Professional Accountants. Walker is staff liaison, Lagarde is chair, and the others are members, of the AICPA Tax Practice Management Committee. For more information about this column, contact thetaxadviser@aicpa.org.