Analyzing the Returns Of Becoming A Business Partner

It’s a fact of life in the Big Four :you are there to become a partner. This expectation may not be explicit in Big Four culture, but the undercurrent is undeniable. If your every decision is not focused on becoming a “member of the firm”, your career is in perpetual jeopardy. The whole reason for your being is to attain that status.

The mystique of the partnership is evaporating, and it could change the character and composition of the Big Four fundamentally. Yes, Mr. Dylan, the times, they are a-changin’. Anecdotally, more and more senior managers talk quietly – never publicly – about what their next moves would be. Those illicit conversations occurred in hushed tones away from the office – often emerging from frank advice offered to more junior staff members.

But, where do you go?

Many senior managers are considering VP and C-level positions instead of shooting for the partnership. Citing lifestyle desires (i.e. getting off the road), earning potential, and less politically charged environments, even top-performing senior managers are exploring careers outside the Big Four.

Aside from these internal pressures, up-and-comers clearly have concerns about the resilience – and costs – of the partnership structure. Once upon a time, the partnership buy-in was considered a pristine investment opportunity. The past few years, though, have called this perception into question.

It all started with Enron.

Many of the consultants and accountants in our community are still in pain from the collapse of Andersen – especially the ex-Andersen folks who have sought refuge at the remaining Big Four. Professionals who worked at Andersen, especially former partners, are acutely aware of the risks inherent in buying into the partnership. New partners, with fewer than five years as members of Andersen, were brutalized financially. Their buy-in loans were collateralized with their partnership units. The collapse of Andersen led to a negative equity situation for them; partners owed hundreds of thousands of dollars and could not divest their units to repay the loans.

A similar fear rippled through KPMG, recently. Under investigation for selling abusive tax shelters, KPMG settled with the Justice Department. The settlement included a fine of $456 million. While KPMG avoided the fate of Andersen, the resulting fine equates to around $300 thousand for each of KPMG’s 1,600 partners.

The declining interest in firm membership is supported by potential changes in firm organization. Accenture and BearingPoint have forsaken the partnership model, and both now trade on public markets. Doubts as to the protections of the limited liability partnership model are causing the Big Four to consider incorporation – instead of partnership.

Once recognized as an elite club in the accounting and consulting industries, the major partnerships are losing their mystique. The firms themselves continue to provide the best services available on the market, but the firms themselves are undergoing a fundamental shift. Every associate used to hope to grow up to become a partner. Senior managers could taste it – and would think of nothing else.

The Big Four’s preferred structure is under attack from the outside. Once considered an almost risk-free investment, we have learned from Andersen and KPMG the contrary. This investment risk is magnified by the erosion of protections offered by the LLP structure. Greener pastures lure talent from the partnership while the legal system lays siege to this venerable institution.


About the author:
Hi! I am Thomas Johansmeyer. I am an article writer with http://www.big4.com

If you have any questions mail me at webmaster@big4.com

Business Plan A Necessity Or Burden

Are you planning to start a new business? Or are you considering expanding your current business and require a bank loan or investment from outsiders?

If you are going to look for an investment of capital it is quite likely that you will be required to have a business plan. If you are starting a business, despite the work involved, a business plan can prepare you for the obstacles ahead and help ensure your success.

A business plan is something that many small businesses fail to create, however, many business owners are adamant that having a written business plan is one of the keys to their present success. Creating a business plan forces you to contemplate possible obstacles to your business and prepares you to find solutions that will help you to overcome them.

To find investors or get a bank loan, they will want to see that you have the experience or resources to run the business. They will want to see your projected income as well as your suggested repayment plan already laid out. Taking the time to do this is not only important for them, but it gives you a measuring tool to verify if your business is growing properly. You can gage your success on how close to the plan your business has actually performed. Perhaps you'll do worse, or perhaps you'll do better, either way it helps you determine how well your business is getting on.

If you have never seen a business plan before you may be concerned that is is too difficult a proposition for you to manage on your own.

While there are services available where you can hire someone to write a business plan for you, depending on your needs it may be wise to familiarize yourself with a business plan's layout. This will not only help you to provide the necessary information, but may encourage you to try your own hand at it.

There's a free tool at www.bdc.ca which will assist you in creating a business plan. Some of the topics you will be required to explain are your Market, Customer, Competition, Marketing Plan, Research & Development along with financial forecasts. You may consider hiring someone to help you with your financial sheets after completing the written part of the Business Plan.

Your Business Plan will become your guide and silent business partner - indicating where you need to improve and helping you stay one step ahead of your competition. Make it a priority to have this crucial road map for your business.

About the author:
Scott Morris's personal site on accounting business and business administration http://businessexcel.com
for more information, you can visit http://businessexcel.com

Guide to Select Whether Incorporating Your Small Business Best For You?

There comes a point in time when every small business person
contemplates on whether to incorporate their business or not. A
lot of times small businesses start out sole proprietorships,
and then become incorporated as the business expands and
develops. Small business incorporating can be a difficult
decision, and with this article you’ll gain a little bit of
knowledge on the advantages and disadvantages.

There are many advantages to incorporating your small business,
but limited liability is one of the biggest advantages. When
you have sole proprietorship to the company all the liability of
the company is on the owner. When incorporating the business,
your only liability is to however much you invest in the company.

With sole proprietorship, all of your personal belongings, such
as car and home, can be turned over to help pay the debt of the
business. As a shareholder in the business, you have no
responsibility whatsoever for the debts of the business, that is
of course unless you give a guarantee.

Another advantage to incorporating a small business is the
ability to raise money so much easier. With the ability to
raise money much easier, this increases the odds of the
corporation growing and expanding. Yes, you’re saying any sole
proprietorship can borrow money and incur debt like any
corporation. However, with a corporation you can sell shares
and raise equity capital, which is a big advantage in that you
generally don’t have to repay equity capital and it has no
interest.

There are many tax advantages with becoming a corporation that
you can take a look at as well. Some of these advantages
include income splitting, potential tax deferral and more.
Along with the reasons above, a corporation can have an
unlimited life. The life of a corporation is not dependent on
particular individuals, but the company as a whole. With this,
the company has the opportunity of lasting forever just as long
merges with another company or goes bankrupt.

Now that I’ve buttered up the idea of incorporating your small
business, let’s take a look at some of the possible negatives.

As you incorporate your small business, there now will be two
tax returns to file each year, one for your personal income and
one for the corporation. This may not be a huge deal, but
unlike a sole proprietorship a corporation cannot deduct its
losses from the personal income of the owner. Plus, having
another tax return is the last thing another business owner
wants to deal with.

As a corporation is much larger and more complex then a small
business, therefore the cost to create one is much higher. Just
to set up the corporation will cost a lot more, then you have to
tack on the increased maintenance fees, accounting fees, and
more.

As with everything else, a larger business means more paperwork
that must be taken care of. Corporations must keep a minute
book, which contains the corporate bylaws and minutes from
corporate meetings. Reports and tax returns must be completed
neatly and in a timely fashion. All of the business bank
accounts and records have to be kept separate from personal
accounts and assets. That may sound like a load, but that is
just the start of the increased paperwork that comes with the
territory of incorporating your small business.

While there are many advantages and disadvantages to
incorporating your small business, the decision ultimately goes
to you. It is a decision that could make or break your
business, therefore much more research is recommended. However,
small business incorporating should be a thing that suites you
and others associated with you best.




About the author:
Small business grants and small business resources to help you start and run your own small business. Small business training, information, articles, loans, and more.
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