If Your CPA is a Baby Boomer, Who Will Do Your Taxes When They’re Gone?

According to the AICPA, something like 75 percent of the current CPAs will be reaching retirement age in the next 15 years. So what happens to their clients as millions and millions of these CPAs retire? What can you expect if your CPA is a Baby Boomer?

If they work for a firm with multiple partners, they probably have a partnership agreement that specifies what happens when a partner retires. If that’s the case, the retiring partner’s clients will probably be distributed to the remaining partners.

Do you know the other partners at your CPA firm? Do you trust them and like working with them? If so, you’ll probably be in good hands.

If you haven’t met any of the other CPAs at the firm, or if they haven’t ever worked on your returns and aren’t familiar with your situation, the transition could be rocky. If you believe in the firm, be patient. They should be able to get up to speed fairly quickly. But, if you don’t feel confident in your new CPA, it might make sense to look for a different one.

But what if your CPA is a sole proprietor and they decide that they’d rather go sit on a beach instead of doing the tax-season grind? What happens then?

Usually, one of two things happens in a situation like this. Either the CPA sells their practice to someone else, or they just close the doors and refer all their clients to someone else.

Selling a practice is much more common because the money received will help the retiring CPA reach their retirement goals.

Who’s likely to buy a small CPA practice? Maybe an outside CPA, or perhaps an Enrolled Agent or Licensed Tax Consultant. There’s no guarantee that the buyer will have the same credentials and experience as your CPA.

If the retiring CPA has multiple offers, they’ll usually try to pick a successor that will be able to retain a high percentage of their clients. But, just because your CPA chose a certain person to take over, it doesn’t mean that they’ll necessarily be a great fit for you. The new buyer may have to deal with literally hundreds of new clients all at once. Even with a good transition plan in place, and a motivated and engaged seller, the first year or two can still be quite a challenge.

Without a plan for the transition, or if the retiring CPA just can’t wait to hit the beach, the client experience can be traumatic. The new owner of the practice will almost always have different ways of doing things than the previous owner. So be ready for adjustments to the tax-prep workflow, and potentially to the fees you pay. If you’ve been a long-time client, the fees you’ve been paying may be below market rate, and the new owner may decide that now’s the time to get you caught up.

So what do you do if you don’t like the transition plan when your CPA retires, or if there is no transition plan? Just because your CPA decided to stop doing taxes doesn’t mean that you can stop filing yours. Someone will still have to do them.

You can look for a new CPA, or an EA or LTC, or you can do them yourself. I know some people have family members or friends that do taxes as a favor to them. Sometimes that works out, but what I’ve found is that there seems to be a lower level of engagement when someone is doing a tax return “as a favor.” If you have questions or there’s a problem with the return, you’re likely on your own.

If you find yourself looking for a new CPA, start early and make sure you understand what they specialize in and that you’re comfortable with how they work. Not every CPA firm operates the same way or serves the same clients (and some CPAs won’t be accepting new clients when you’re looking).

For instance, my practice is geared towards helping individuals and small businesses get a good tax return, on time. I guarantee the accuracy of the returns I prepare, offer standard and expedited turnaround times, and all the pricing is upfront, so you don’t get smacked with a giant surprise bill after all the work has been done on your tax returns.

Other firms are different. They may specialize in working with large corporate clients, or only ultra-high-net-worth individuals. They may not have an explicit guarantee for the accuracy of their returns. You may have to call them multiple times to make sure that they’re working on your return, and not just planning to put you on extension. You might not even find out how much you’ll be charged for the return until after it’s all done.

Choosing a new CPA to replace your retiring CPA is an important decision. Make sure you trust your new CPA and you like the way that they do things.

If you’d like to make an appointment to have me prepare your tax returns this year, you can see my calendar online and book the time that works best for you by clicking this link.

-Josh