Certified Public Accountants serve as trusted advisors and often guide their clients to other professionals, including attorneys, for assistance. However, CPA firms, like most professionals, often overlook their own need for good legal advice.
For example, CPA firms should have a clear and concise engagement letter for all clients. These carefully drafted documents set forth the specific understanding of a particular engagement when it comes to the scope of the CPA firm’s work. Services, such as tax return preparation and financial statement review, must be outlined accordingly.
In addition, the engagement letter should contain provisions that limit the CPA firm’s exposure to liability. This can include an exculpatory provision that limits the CPA firm’s liability to the amount of fees it has collected from its client. This is an advantage CPA firms have over attorneys, who cannot similarly limit their liability to a client.
Many CPA firms are corporations, partnerships or limited liability companies. This means they may have multiple shareholders, partners or members. As a result, they should have a sound shareholder agreement that addresses the respective rights and obligations of each shareholder, partner or member.
These agreements should contain provisions regarding:
- Restrictions on transfer of ownership interests
- Terms for transfer of the ownership interest of a deceased or disabled owner
The agreements should also cover any disputes that may arise in the operation of the firm and provide an expeditious and cost effective way for resolution of such disputes.
Additional Protections Legal Advice and Documentation for CPA Firms
Finally, like any business, a CPA firm, should seek legal counsel for matters such as:
- Employment agreements, including non-solicitation covenants which can protect the CPA firm and its clients
- Intellectual property rights (trademarks, trade names, etc.)
- Insurance needs
Maintenance of a good relationship with a trusted attorney; one who can provide the legal “nuts and bolts” of operating a CPA firm, along with guidance on general legal questions or issues that arise during the course of operations, can be a valuable asset for any CPA firm. At Goldenberg Heller & Antognoli, P.C. our attorneys have experience in business and commercial law, and several have worked as licensed CPAs. Contact us to learn more. 800-782-8492.