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Understand firm ownership when the unexpected strikes

BOA Business

Anne Janotta Erickson, MNCPA senior business & industry marketing coordinator | February/March 2020 Footnote

Editor's note: Updated January 31, 2020

Succession planning may stink, but you know what is worse? Avoiding the topic altogether.

Do your firm and your family a favor by discussing what happens to the structure of your firm should you or another owner pass unexpectedly.

The Minnesota Board of Accountancy (BOA) has rules in place regarding firm ownership. Avoid complications by understanding these rules, especially if non-CPA owners are involved.

Contact the BOA right away

The days following the death of a CPA owner are going to be chaotic. But, it is important to notify the BOA just the same.

CPA firms have 30 days to notify the BOA of changes to the firm’s ownership structure. Notification must be submitted in writing.
Need clarity before submitting changes? Consider making your first step a phone call to the BOA. Staff can review the rules and options available to you under the law.

Questions to consider prior to calling include:
  • Will the firm need to be dissolved, sold or merged?
  • Will there be a new non-CPA minority owner?
  • Has a non-CPA owner of a firm statement been submitted?

Understanding non-CPA firm ownership

Non-CPAs can be part-owners of a CPA or sole proprietorship firm, but their ownership cannot exceed 49 percent in terms of financial interest or voting rights. The simple majority (51 percent) must belong to the CPA owners.

Firms without simple majority CPA ownership cannot operate or advertise as a CPA firm or sole proprietorship.

If a CPA’s death results in minority ownership by the remaining CPAs, the firm will need to make ownership adjustments or cease to practice.

Questions?

As noted above, the BOA is here to support CPA firms through unexpected transitions. They can be reached at 651-296-7938 or www.boa.state.mn.us.

The MNCPA is always a call or email away. Reach us with questions at 952-831-2707 or customerservice@mncpa.org.