I recently posed the following question to small-firm CPAs: If you become disabled or die tomorrow, what would happen to your accounting practice? If you haven’t planned for this possibility, the answer probably isn’t going to be pretty. A few days later, the New York State Society of Certified Public Accountants published an article in The Trusted Professional imploring small-firm CPAs to take action and implement a practice continuation agreement (PCA) to protect their clients, their practices and their families. The reason this issue is getting increased attention is because the profession is aging and far too few small-firm CPAs have a plan in place. Despite the fact that PCAs have been the subject of numerous publications and articles for more than 20 years, PCAs continue to be “a well-kept secret,” with as few as 6 percent of solo practitioners having a PCA in place.

If you are a solo practitioner or small-firm CPA, you need to put a plan in place because your practice probably won’t survive 30 days without one if you die or become disabled. Clients want their phone calls and emails answered today, and they need to know their work will get done. No matter how well you have organized your practice, it cannot run by itself. If your clients don’t feel they can rely on you to get their work done, they will look for someone else. If calamity strikes, the practice you have worked so hard to build could be gone in as little as a month if you don’t plan ahead.

The basic objectives of a PCA are fairly straightforward. Execution, however, is not so simple. Basically, you should have a plan to deal with temporary disability so you have a practice to go back when you are ready to return, and you should have a plan for permanent disability so you and/or your family can realize the value of the practice you built when you are no longer able to practice. The considerations for dealing with temporary disability are different from those for dealing with permanent disability. A temporary arrangement essentially involves paying someone to manage your practice until you are ready to run it again. Permanent arrangements are structured like a sale of your practice. To address both of these scenarios, you will need to form a plan and then execute that plan. The process may be time-consuming for some and potentially stressful for others, but the rewards are substantial.