Planning to leave public practice

Unlike resigning from any other job, leaving public practice is a bit more complex and takes a bit of planning.

You might choose to hand over to your partners, or sell to a third party. Some people sell their practice and stay on as staff for a handover period.

If you’re in partnership, then the exit of partners should be addressed in the partnership agreement.

The partnership agreement should also deal with the death or incapacity of a partner. If it doesn’t, now is the time to raise the issue with your partners and engage a lawyer to address it.

Regardless of whether you’re a sole trader or partner it’s never too early to put a plan in place for your departure.

A business valuation will likely be needed to determine an appropriate value for sale, but before this you should consider what you can do to improve the value of your practice – this should be an ongoing concern.

If you’re a sole practitioner you must have a plan in place to manage the event of your death or incapacity. Who will manage your clients until the business can be sold? If this is done poorly, your dependants may see the value of the business erode at the same time as trying to determine what needs to be done to sell or close the practice.

Cancelling your Certificate of Public Practice

If you’re no longer providing services to the public, you don’t need a Certificate of Public Practice. Cancelling it will reduce your obligations and annual subscription fee.

Cancelling your CPP doesn’t affect or cancel your membership with us. You will remain a valued member of Chartered Accountants ANZ.

Cancelling other registrations

Remember to cancel any other registrations you may have as many of these will have ongoing fees and obligations you may no longer need to satisfy.

Some examples:

• Registered Company Auditor
• Licensed Auditor (NZ) / Qualified Auditor (NZ)
• Registered Company Liquidator
• Registered Trustee in Bankruptcy
• Registered Tax Agent
• Registered BAS Agent
• NZ Insolvency Practitioner Licence

Insurance

Claims made against accountants often arise many years after the services are performed.

Even though you’ve retired, you still need to have professional indemnity insurance to protect yourself if a previous client makes a claim. This is sometimes called run-off cover.

You need run-off cover for at least seven years after ceasing practice. Consider maintaining run-off cover for a longer period if you have concerns about a possible claim.

If you were a partner at a firm, your old firm may retain insurance that covers former partners, which may address this risk.  Check with your former firm to see if you are covered by them.