Discussion:CPA Payment clause in operating agreement
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Discussion Forum Index --> Advanced Tax Questions --> CPA Payment clause in operating agreement
Discussion Forum Index --> Tax Questions --> CPA Payment clause in operating agreement
| 2 December 2008 | |
| A friend just emailed me with the following question:
1. I am drafting an LLC operating agreement for a client who is considering selling her company (this matter being separate and apart from operating agreement, but very pertinent in various portions of the Op Ag). 2. The Company CPA is trying to get her to include, as part of the agreement or on a separate document, that he will be entitled to a percentage of proceeds of the sale of the company at the time it sells. 3. Is this normal payment methodology? Thoughts?
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| 2 December 2008 | |
| curious as to why the CPA thinks he is due anything IF the company sells, but apparantly nothing if it doesn't.
Why doesn't he just have an engagement letter for his fees like everyone else? | |
Southparkcpa (talk|edits) said: | 2 December 2008 |
| I would say over the course of 26 years as a CPA this is UNCOMMON but I have seen it. I have seen it where the CPA did work for free or reduced rates in a struggling environment.
It absolutely makes the CPA non independent and accordingly can't issue reviews or audits and comps MUST include line on lack of independence. | |
| 4 December 2008 | |
| This is nonsense. If the CPA were instrumental in negotiating the terms of a sale or locating a buyer, then this arrangement would make sense. However, it doesn't sound like that is what is happening here. | |
| December 4, 2008 | |
| Will he be a member of the LLC, or will his consent otherwise be required to amend it? If not, put it there and take it out the next day. If he thinks of requiring his consent for amendments but not for other actions, then transfer the business from that LLC to a new one the next day. | |
