[Anonymous]

On 1/1/14, I “bought” out 1/2 of my bosses firm. We have a TIN, are registered with the Secretary of State as a partnership/LLC, and we have a firm permit from the State Board. The only problem is that I hadn’t seen the Buy/Sell agreement until September! Yup, 9 months after the fact that I forked over all of my life savings to buy something that I still don’t have a clear picture of what I’m buying. I’ve asked for financials, but nothing has been forthcoming. When I finally saw the Buy/Sell I almost had a heart attack. There is one little sentence, buried deep on the last page that says “I will maintain the employment of one employee for a period not less than 10 years.” WTF!!! In my opinion, no one is worth a 10 year contract, unless they are fully licensed and basically super CPA. This person is not.

I was already stressed out beyond belief with work that no one seems to know/or care how to do. For example, one governmental client’s information sat on a table behind my desk for eight (yup 8) months and no one touched it. I can only assume that they were waiting on my to do it. I managed to get it all done in less than 48 hours. No I didn’t sleep at all during that time, and I delivered it to the client during their monthly meeting. I was the one who took a public a$$ chewing. Now I’m not one of those women who goes through life with her skirt tucked up in her pantyhose. I like things done promptly and accurately. Getting publicly humiliated is not high on my list of priorities.

But this was evidently the straw that broke the camels back, so to speak. My health began a rapid decline. My doctor says I’m in the middle of “hypothyroid hell” which is fairly unheard of since I have do not have a thyroid thanks to thyroid cancer. I’m depressed. I can’t sleep. I can’t think clearly. I hurt everywhere and I have this constant “buzzing” all over my body as if I’m running a marathon, but my brain has the parking break on. I’m a freaking mess. My doctor is treating the symptoms but there isn’t anything to do but wait until my TSH reaches a normal level. A healthy person has a TSH of less than 5. Mine is currently 42.15. That’s not good no matter how you look at it.

So my questions to everyone are:

Did we have a partnership?

Am I entitled to 1/2 of last years profits?

Can I get my money back?

What is the state board going to do?

I have a building of my own that is 95% complete. Should I just go get my license off the wall and start from scratch?

I have 4 clients, my favorites by the way, who have told me they are going where I go. Is this unethical?

Any help or insight is greatly appreciated. Oh and did I mention that I feel like a freaking fool! Because, yeah, I do!

[Texan_Stuck_In_OK]

Did you sign that buy/sell agreement? If so, when? If not I would imagine that you do not have a contract. So there has been offer and consideration but no acceptance. Not a legally binding contract. No contract means you should be able to get your money back. It is super dangerous to give someone a 10 year contract. They could just not do any work and you have to keep them on. Do you have any idea why that would be in the contract?

Your health is much more important. If it were me, I would take my certificate and my loyal clients and get the heck out of there. Then serve papers for the amount you paid. So sorry to hear that you are going through all of this!

A 88, B 76, F 84, R 76 Passed 2014

Licensed in OK

[Anonymous]

Did we have a partnership? It appears that way.

Am I entitled to 1/2 of last years profits? If you had a partnership, I would think so; however, any specific profit allocations should be spelled out in the partnership agreement.

Can I get my money back? You could ask your partner dissolve the deal. If he agrees, the courts would be the best avenue. The transaction is suspect. It would be pretty easy to paint him as the bad guy in court. You have a greater than 50% chance of a settlement.

What is the state board going to do? Only your state board could answer that.

I have a building of my own that is 95% complete. Should I just go get my license off the wall and start from scratch? I would try to work it out first. If it gets ugly, I'd say it's the best course of action.

I have 4 clients, my favorites by the way, who have told me they are going where I go. Is this unethical? Absolutely not. This happens all the time.

[Tncincy]

Oh My Word, what a rip off.

Well, I would get an attorney, sue for my money back, take the license off the wall, start on your own and make sure there is no non-compete clause in the contract as well. I believe it was a fraudulent contract with the intent to deceive….I don't know anybody with a 10year guaranteed employment. But I would definitely get an attorney and sue for the money. This person is probably not going to give the money back or they will probably negotiate some ridiculous terms where they will keep most of the money and you continue to do the work for the firm. While you're seeing an attorney see if you can change those terms of the contract ( that's if you're trying to stay).

Wow it is so much to say about these terms……….I would have a hard time trusting this partner after this.

It begins with a 75
Been here too long as a cheerleader.....time to pass

It begins with a 75
Been here too long as a cheerleader....ready to pass

[Anonymous]

As far as the ten year employment contract is concerned, there are other ways to get the message to the employee:

1) Never give them a raise, or worse pay them less each year until they are running for the door.

2) Give them ALL the shit clients and completely unreasonable deadlines.

[Tncincy]

@Texan, was that answer a reg blaw test question? Good answer though

@Kricket…….please get better, nothing is worth your health.

It begins with a 75
Been here too long as a cheerleader.....time to pass

It begins with a 75
Been here too long as a cheerleader....ready to pass

[san4596]

Kricket – First and foremost, I hate hearing this is happening to you, and you should get a lawyer involved immediately.

1) When did you or have you signed the agreement? Not signed, then no agreement and no partnership. He owe's you every penny back. I still question if he had an intent to deceive, which would make the contract void I think. Still, get a lawyer now.

2) Profits depend on #1. If signed, you should be entitled to 1/2

3) Again, revert to #1

I have a question though, who is this employee that is supposed to be employed for 10 yrs? Sounds unreasonable to me, and contracting someone for 10 yrs is outrageous. What if this person quits, dies, or just stops showing up? Does the contract state what you have to pay them? If you get stuck with this person, I would attempt to cut their pay down to nothing, and have them on part time to file/clean toilets or something. If they refuse to work, send them home after an hour, and that is done. I can only assume this employee is the partners family member of himself.

CPA EXAM: DONE!!!!
Ethics Course: Passed
Application Mailed: 3/16/15
Professional Conduct Exam: 97
Certification Date: 4/2/15!!!

[fuzyfro89]

Moral of the story… never skimp on due diligence.

One though, and I'm no expert so it's best to consult with one, but are you allowed to form another CPA firm in a legal sense? Could you then “sell” clients from one place to another, and then close/liquidate the one you bought? If not sold, could the clients simply fire the 1st firm and hire the 2nd? Would the 1st firm partner have any recourse against the 2nd?

YOu mentinoed you only bought 1/2 of the practice, so I assume you have other partners?

My assumption is the contract has not been executed since consideration has not been given by both sides until you contribute your purchase price (equity) and you get your share of profits. Trouble is you usually have to demand these things through a legal route, which costs a lot of time and effort… so it's usually best to value those two against other options.

[Anonymous]

Guys-

Despite what you may think, signed agreements are not the end-all-be–all. Not even close.

There are plenty of other legal theory avenues that may be pursued. I am a litigation consultant and have worked on some very large lawsuits that have far less evidence of the actions of the parties than there are here. I've seen $10 Milllion settlements off of UNSIGNED Memorandums of Understandings (MOU). With NO transfer of funds. If you don't know what an MOU is, look it up.

Anyway- it looks like there was a contract in place here. Let's look at the elements of a contract: Offer, Acceptance, Consideration, Mutuality. He offered, she accepted and paid. Both are professionals, so it would be hard to say that they didn;t know what they were getting into, thus mutuality was achieved.

As far as a signed contract, there is no specific requirement for a signed contract unless the damaged party would like to seek damages under the Statute of Frauds.

Kricket-

If you got burned this bad, your best bet right now is to consult qualified counsel and to NOT take anyone's advice that is not an attorney. Not even mine (except to get an attorney).

[Skynet]

WOW! Hate to see you in this situation.

But as billbrasskey says, get legal council ASAP! You should not have to lose evrrything over this.

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[Anonymous]

Thanks for all of your input. The truth is I NEVER SIGNED ANYTHING! He applied for the TIN. He took it upon himself to get the LLC. He opened the bank account. He filed the paperwork with the state. I just did all the freaking work. And the “employee with the 10 year contract” is his daughter who offends every client she comes in contact with. I was unaware that the human body was capable of belching, snoring and farting at the same time, but I know this to be a fact. You don't want to know how, just believe me when I say it's possible. I have clients that hang up the phone if she answers it, which isn't very often. I typically do that just to try to save what is left of the firm. There are only 2 CPA's and her. I am definitely going to seek legal advice. I just wanted some input from y'all to make sure I'm not totally crazy. Thank you all! It means more than you will ever know.

[Anonymous]

Belching, snoring, and farting at the same time? Wow, that's multi-tasking!

LOL

[Anonymous]

I remember my tax professor giving us a lecture on to NEVER, EVER, under ANY circumstance to enter into a partnership – even with family. It's just not worth the risk.

Anyway, I know nothing about this subject, but I had grave's disease early in my life and suffered from extreme hypothyroidism until I took the radioactive iodine pill (no I did not gain any spidey powers) and now it's under control. I used to get the same shock feeling around my body – the same that you're describing, especially when I was stressed or nervous. Definitely get your health in check, your TSH levels are scary high.

[Anonymous]

I completely agree with never, never, never getting into business with family. I'm not actually related to anyone in the office.

I have Hashimoto's disease, which does not go away once the thryoid is removed, and I've had my fair share of RAI 131. 150McI's to be exact. I had to be in complete isolation for 7 days. I shouldn't have any thyroid cells left in my body other than the fake ones I take every morning to get out of bed. LOL TSH takes weeks or even months to get back to normal levels but I can't wait that long. Right now the only treatment for the “buzzing” is Valium. So for now I'm going to take a nap and then call my attorney. Getting legal advice seems to be the concensus and obviously the right thing to do. Thanks again everyone. If nothing else, I feel better about my decision to just walk the hell away!

I will keep everyone posted, if for no other reason than to keep someone else from making this enormous, mind blowing, stupid mistake! Thanks again!

[san4596]

Kricket – I knew it had to be a family member, and have seen how it plays out. One of the partners had his daughter working at the firm, but was let go when he semi retired. She did absolutely nothing but mess up bookkeeping for a handful of clients. I took them all on after she left on top of my usual workload, and am doing fine now that the books are in order. Needless to say, she could not do a bank rec in CSA to save her life, and Quickbook's was greek to her. She never received a college degree, and was labeled a para-professional. I believe her salary was less than $25K a year, but she was still a drain on the entire business. You are not crazy, take a good nap, and get the best attorney in town.

CPA EXAM: DONE!!!!
Ethics Course: Passed
Application Mailed: 3/16/15
Professional Conduct Exam: 97
Certification Date: 4/2/15!!!

[Kimboroni]

Part of my job is as a corporate legal assistant, so I have a few comments which are not legal advice but semi-educated observations:

LLCs and partnerships legally are 2 different things. It cannot be both. Your liability situation is very different depending on which one was formed.

An employment clause for a non-partner or non-member does not really belong in a buy sell agreement. That is very strange. Buy sells are for setting out ownership and restricting transfers of your ownership– what happens when an owner dies or becomes disabled; can they sell their piece to anyone they want, etc. This does not sound like a proper buy sell to me.

Good– you are getting legal help to sort this all out. You may not need to get out of it, but fix it instead so that it has proper documentation going forward.

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[Author]

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