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Career (and life) decisions need to be made



Just a little background: I am 41 years old and have been a CPA for 13 years and have worked for the same employer. Right now, I work full time + during tax season and three days a week the rest of the year. I LOVE IT! I really enjoy my job and the flexibility it gives me. I am the primary breadwinner. DH has many very part time jobs. My kids are 4 & 6.


My boss approached me today, he is 61 years old and wanted to discuss his retiring. Granted, he still wants to work five more years but he has put in an offer to purchase the building he currently rents and wanted to know if I wanted to buy half of it. Basically, he wants to phase out over the next few years and me take over.


I'm not sure that is what I want. I don't know that I want to be a business owner and be responsible for employees. I really don't think I want to work full time + all year. Could I make more money doing that? Of course - but I am perfectly content doing what I am now.


I am trying to have a more long term perspective. I just really enjoy where I am right now. I want to be able to spend time with my kids. My income, for now, is sustaining us, but as the kids get older I am sure their expenses will increase. We are currently doing doing BS 4 & 5 - our house is paid for.


My boss basically told me that if I did not want to take over his practice I would need to find another job, and that if I wanted to continue my current work schedule I could probably do so for any other accounting office in the area, so it's not like I would be without work. But, do I want to work for someone else for the rest of my life?


As you can tell, I am thinking out loud and trying to put into words all the thoughts in my head. If you could offer any perspective, I would greatly appreciate it!


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Something sounds fishy to me.


If your arrangement has worked for 13 years and he is planning to phase out, what makes this arrangement unacceptable to him now?


If he is phasing out why does he want to buy the building? Is rental income to be part of his retirement plan?


What does "taking over his practice" mean. Most people don't just give their businesses away. Will he want you to buy him out? Or will he want a percentage of the income?

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Robinbird - he is the sole owner.

GreatLakesGirl - this great deal comes at a cost.

Plinda - it does not sound fishy to me.

He has come to a point where he realizes he needs to make a plan for his retirement. If I am not going to buy him out, then he needs to start looking for someone who will. I won't "take over his practice", but will buy it. He told me yesterday the typical price is a year's fees, which I guess is about 300k, payable over a period of years. I'm not sure if he wants to rent the building or sell it.


This has made me look at this situation from a financial perspective. I will buy the practice for 300k and I figure he nets 100k a year. At that rate, it would take me six years to pay it off if I pay him 50k per year (I'll need the other 50k to live on). Then, the building would cost 200k, so another four years to pay it off. That's 10 years worth of debt. That's a lot!

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Maybe over the next 5 years, you can start taking over, and getting that increased income while his decreases. That would allow you to save the money to buy it.


If that's what you want, of course.

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Here are my thoughts, but keep in mind, I'm a relatively simple person, not a business owner, or an accountant..... as a matter of fact, I quit accounting in college.... gave the teacher the stupid penny and dropped the class.... that kind of stress just wasn't worth it to me.


He wants to retire in 5 years, but wants you to put up half the money for the building now? Do you have the money to buy half a building now? How will that be handled? Will he be paying you rent until you take over? Would you be on the mortgage with him? Is he buying for cash or will it have a mortgage?


I understand him "phasing out" of the job over the next 5 years, but will he be expecting to be paid in full during that time as well? And what if he decides that he's not ready to retire? Will he then become your employee? Could you afford him?


The offer that he put in on the building has not yet been accepted? So it is truly unclear at the moment what exactly you would be buying? The business or the business and the building.


Have you seen the books on the business? Do you know for a fact that it clears 300K? Or does it not really clear 300K? Because if his salary is only $100,000.... then it's not clearing 300K, unless there's a whole heck of a lot in reserves.... How much does it cost to run this business each year? How will that increase with Obamacare? Do you know for sure that he is making $100,000 a year? This is a whole lot of supposition.... I would not make this decision unless you can see the facts.


If you begin to purchase this business, by putting up half the building.... what happens to the "profits" from the building then? Will he continue to draw his salary for the next 5 years, while you buy the business on YOUR salary? Will there be some form of profit sharing until he actually retires?


Do you know anyone who has actually bought a business in this way? I think I would start looking for someone. If you are going to make this purchase for a half a million dollars, then you need a mentor, someone who has been there, done that, who can help you walk through all the obstacles.... and a lawyer. Before agreeing, I'd invest in an attorney who can explain things as well.


But as of right now, it looks like you would be spending the next 15 years in debt.... and it sounds like that starts now.... the next 5 years with a $200,000 mortgage (rent? insurance? etc...).... and then the following 10 paying off the business. I would definately want to see the books before doing this.


How many hours does your boss work? It concerns me a little bit that he's 61 and only now considering retirement. This is not necessarily a good sign for the business. How good are you at smoozing? Selling? A business owner has to sell their services. Can you do that? How good are you at calming the ruffled feathers? Filling out/understanding government forms?


I think that the "not working for anyone" thing is a little misleading. You are still working for someone, your customers. They would then be the ones paying your salary and keeping you employed. And you would have to keep ALL of them happy.


Finally.... money isn't everything. You would be trading something you LOVE for being the boss. My DH refuses to be promoted for this very reason.... any further he would be "boss" and not be doing what he loves so much. Instead he would be dealing with paperwork and politics. The extra money each year isn't worth it. He would be miserable.


Goodness.... there is a LOT to think about. A LOT of information that you do not have. Do the "business" debts get sold with the business? Are there any? (besides the mortgage?) If it makes $300,000 a year.... is it worth it to clear $100,000 in 15 years? Would this be the time that you begin to consider selling it yourself so that YOU can retire?


This is a business that should not require much overhead. What would it take for you to set yourself up in business? With just the you employee until you can afford to hire someone else? Do you understand ALL the positions in the current business? How skilled are you in BUSINESS practices? Not accounting, but business.


You would be giving up 3 days a week, for 6 or more. Children may get more expensive as time goes on, but are you willing to give up seeing them grow up for paying for everything? Some folks "work to live," some folks "live to work".... which one are you. Sounds like a good option based on all your suppositions.... (don't forget that you will be paying interest on that half a million dollars).... but I just don't know if it's worth it. I don't think you do either. You need the facts before making a decision. I truly don't like his "buy the business or find another job" threat.... And I don't like that he is making this threat after putting in an offer on the building, but before it's accepted, and part of the "buy the business" thing is that you have to buy half the building NOW. Please tell us that he has been planning this for some time and has just now made the official offer.... and it is in writing right?


Good luck!

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Momto6 covered a lot of the questions. One thought is that as a CPA $100k should be a salary you could get working for someone else without the headaches of owning your own business. So I would be looking at this from an A/B/C pro/con decision. Buy the business/find another job/start my own business.


I do have a friend who did exactly this. He worked 20+ years in a business that he loved and had a great talent for. He bought the business and has struggled financially for the last approximately 7 years. His talent was for the technical aspect of the business but NOT for sales, managing personnel, taxes, bookwork, customer service, etc. At this point he would be better off working a minimum wage job.

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I would do some introspective hard thinking and figure out if this is the direction you want your life/career to go before proceeding.

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As momto6 (as always) so much more eloquently elaborated - buying and owning a business is NOT simple. It is not something you should fall into easily or accidently. Ending up as a business owner is something that should be carefully and conscientiously planned.....and that you have an aptitude/calling for.


From everything in your post - you do not. You like the status quo, it works for you and your family and your priorities. There is absolutely NOTHING wrong with "working for someone else" your whole life. Owning a business may be fulfilling and financially lucrative, but only when done right by someone willing to sacrifice a lot of time (and sometimes money) into it with a true passion for it to succeed.


If its truly a buy in for $500K or leave situation, I'd start looking now. He doesn't sound like a patient or tolerant person if you decline the offer....and it doesn't sound like you'd get the time to really do your due diligence in making the decision either way.

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I decided to give an update on this situation.  First, the offer to buy the building was not accepted, which is no big deal to me.  I had told the boss I was not interested in buying into the building.  The space is in a small office complex and there are three units, each owned individually.  I was not comfortable buying "part" of a building since I would not have control over the other 2/3.  I mean, who's to say a disreputable company would not open up next door? 


I had told the boss that I would buy his practice BUT, my dad passed away in December.   With my inheritance I will have enough money to save for my kid's K-12 private school and college educations with enough left over to save for retirement.  So, at this point, I've decided that I don't want or need the stress in my life.  I haven't told the boss yet, given that I just now found out how much I will inherit.  I guess that some time next week I'll have to tell him. 

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