THE
WASHINGTON CPA
Volume 65, Number 2
Become a Better Virtual Communicator:
an infographic guide
Fall 2021
Paving the Way: A Framework for Smooth CPA Leader Retirements Washington's New Nonprofit Corporation Act: Is Your Nonprofit Ready?
THE WASHINGTON CPA FALL 2021
www.wscpa.org • memberservices@wscpa.org Tel 425.644.4800 902 140th Ave NE Bellevue, WA 98005-3480
BOARD OF DIRECTORS Thomas J. Sulewski Chair Sara E. Bailey Vice Chair Joyce Lee Treasurer Andrew Brajcich Secretary Jared M. Theis Immediate Past Chair Kimberly D. Scott President & CEO
Aaron R. Dawson Lowel Krueger Sarah Funk Diane Pietrowski Norm Haugen Bryce Rassilyer Courtney Hirata Leslie Sesser Writu Kakshapti Bonnie Tse CHAPTER BOARD CHAIRS TBD Bellingham Area TBD Everett Area Darin Johnson Olympia Area Brittany Malidore Seattle/Bellevue Area Tara Lambert Spokane Area Jessica Packer Tacoma Area Anthony Adams Tri-Cities Area Connie Olson Tri-Cities Area Canada Segura Yakima Area Wade Helms Yakima Area
MAGAZINE PRODUCTION Jeanette Kebede Editor Kaitlin Brake Art Direction
The Washington CPA is published by the Washington Society of Certified Public Accountants for its members. Views and opinions appearing in this publication are not necessarily endorsed by the Washington Society of CPAs. The products and services advertised in The Washington CPA have not been reviewed or endorsed by the Washington Society of Certified Public Accountants, its board of directors, or staff.
CONTENTS
On the Cover Become A Better Virtual Communicator: 19 An Infographic Guide Paving the Way: A Framework for 22 Smooth CPA Leader Retirements Washington's New Nonprofit Corporation 36 Act: Is Your Nonprofit Ready?
Spotlights Advancing Diversity, Equity, & Inclusion: 11 An Introductory Guide What's Keeping You Up at Night? 14 Are You Ready for 2022 Busy Season 16
Departments Leadership Lens 4 Membership News 6 Upcoming CPE 26 Advocacy 31 Classified Ads 32 Peak Firms 35
The Washington CPA is published quarterly by the Washington Society of Certified Public Accountants, 902 140th Avenue NE, Bellevue, WA 98005-3480. $12 of members’ annual dues goes toward a subscription to The Washington CPA. Periodicals postage paid at Bellevue, Washington and additional mailing offices. Cover Graphics Illustration: © iStock/SophonK Icons: © iStock/Momento Design POSTMASTER: Send address changes to The Washington CPA, c/o WSCPA, 902 140th Avenue NE, Bellevue, WA 98005-3480.
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LEADERSHIP LENS
Advice to Future and New CPAs Tom Sulewski Fall is here and another year end marches toward us with each setting sun. With the change in seasons, we see schools reopening and students heading back to campus to re-engage in their education journey. As many firms likely do, we recently had a sendoff event for our departing summer interns which is an event I always enjoy.
& Summer BBQs
A portion of our program was dedicated to lessons learned and experience sharing from the new interns and then some additional time was reserved for the senior partners to reflect on their own words of advice to the future leaders of the profession.
The dialogue between the generations provided a variety of rich perspectives with the following takeaways for me: Create a Legacy – As senior leaders in our firms and in the community, there can be no greater legacy than the transfer of our collective knowledge to the next generation in our firms. It was powerful to watch the senior partners speak and the interns listen. As leaders, however, we need to be at peace that the next generation will hear and absorb but may not duplicate our advice exactly as we would have. If we do our jobs right, they will take the foundational knowledge we share and make it their own with an even more rewarding result than we could have imagined. Build for the Youth – Our next several classes of interns will be approaching their career priorities with an entirely different life experience than many of the current leadership group. They
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will have been toughened and stretched by a global pandemic that has changed their perspectives and priorities. We should not lose sight of the reality that those same perspectives and priorities of our new employees will be representative of our future clients. Invite those new perspectives to the table so we can learn how to better serve in the post pandemic environment. Variety and Mentoring Wins – Almost without exception, each intern spoke about variety. They were motivated by a variety of different projects and responsibilities. And, they valued the people and mentors they had the opportunity with which to work. As leaders in a competitive employment market we need to keep speaking to the variety of projects and career opportunities the profession can provide. And, we need to do it every chance we can get in the office, in the classrooms, and at events.
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LEADERSHIP LENS Say Yes More Often – Our senior advisors encouraged the interns to embrace the opportunities of the CPA profession and to experience as much as they can as soon as they are ready. Some of the most significant personal wins, knowledge growth and expansion of skills come when we simply say “yes” to trying something new. Complacency is the enemy of advancement and taking on the harder project and saying “yes” to new opportunities will differentiate the great from the good. Small Actions Have Big Impacts – Throughout my career I have benefited from some relatively short actions taken by others that have resulted in big impacts in how I personally approached problems, projects and people. Our interns shared several similar personal stories from their summer work. We cannot underestimate the impact of the short, informal “thank you”, the meeting in our office to acknowledge successful execution of an assignment, or taking the time to show an intern or new staff the bigger picture of how their work impacted the value added results to a larger client project. As brief as those moments may be for us, they can completely change the outlook and trajectory of someone’s career path.
deliverables, and multitasking. Organizations that can deploy the emotional intelligence skills from a leadership level to empathize with their team and provide perspective can overcome those inherent stress drivers. A partner once told me to pace myself in this profession as it is more like a marathon than a sprint. There will be good days and bad days—and sometimes all in the same day. Regardless of where you are in your career, you, too, have a unique perspective to share with future CPAs and even with your fellow members. WSCPA resource groups are a great way for you to share that perspective or get advice from peers. If you haven’t joined a group, visit Connect, our private member community, at www.wscpa.org/connect and search for a group to join. If you need help, reach out to memberservices@wscpa. org and someone will help you find a group. Tom Sulewski, CPA, is the shareholder in charge of the audit department for Clark Nuber PS and WSCPA Chair. You can contact him at tsulewski@clarknuber.com. Illustration: © iStock/DrAfter123
Good Days and Bad Days – Client service is at the core of our professional business model. That inherently translates to somewhat unavoidable work stress surrounding deadlines,
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Member FDIC
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Equal Housing Lender
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MEMBERSHIP NEWS
CPE AT A GLANCE
20
120
Minimum CPE hours per year
Total CPE hours per reporting period
Have you met your 20-hour CPE Requirement for 2021? On January 1, 2020, new rules regarding CPE came into effect. One of the biggest changes is that individuals holding an active CPA license are now required to complete a minimum of 20 hours of CPE per year. This started in 2020 and is not retroactive. Active licensees still need to complete a total of 120 hours of CPE, including a Washington State Board of Accountancy approved ethics course, within their total reporting period, but should plan their CPE so they're earning at least 20 hours each year.
WSCPA Offers Ethics On Demand We are excited to announce the addition of WSCPA self-study ethics! Now you can take Mark Hugh's Washington State ethics course whenever you want. Find the new Washington Ethics and New Developments 2021 - ON DEMAND in the WSCPA online catalog. Learn more at wscpa.org/ethics-on-demand.
WSCPA Mailing List Policy The WSCPA does not sell member e-mail or mailing addresses. Members may occasionally receive mail from third-party partners that offer products or services deemed to provide value to members. To be excluded from these mailings, update your Communication Preferences online at https://app.wscpa.org/my-wscpa/subscriptions or send a request to unsubscribe from third-party mailings to memberservices@wscpa.org.
Have you logged onto Connect yet? Collaborate, socialize, and celebrate with your fellow members via the WSCPA website with Connect—the WSCPA’s private community. The Connect platform gives you the ability to find and chat with members from across the state, collaborate within various groups, or quickly ask for advice from this community of more than 6,500 members. If you haven’t already done so, take a moment to visit Connect today! Visit wscpa.org/connect
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MEMBERSHIP NEWS
Call for Nominations: WSCPA Board of Directors The Board Governance Committee is now accepting nominations for the 2022-2023 Board of Directors. Do you know someone who has been involved with the WSCPA and whose leadership could contribute to the future of the organization? Nominate them to serve on the board! To submit a nomination, contact Helen Doty, WSCPA Director of Governance & HR, at hdoty@wscpa.org. Nominations are due by October 31.
Do You Know Someone Who Deserves Recognition? Lifetime Achievement Award Do you know a “rock star” CPA who over their career has held numerous leadership roles inside and outside their organization, locally, statewide, and/or nationally, dedicated to the profession? Nominate them for the Lifetime Achievement Award!
Community Leadership Award Or, do you know a “rock star” CPA who has held numerous or longterm leadership roles in community organizations and whose efforts have expanded the public’s awareness of the value of the CPA profession? Nominate them for the Community Leadership Award! Submit an award nomination at wscpa.org/awards Nominations accepted through December 31.
Utilize your Passport Corporate Card to get great deals on all your cozy fall favorites! • • •
Brooklyn Candle Studio: 15% off candles, soaps, & more! Castle & Crown Cellars: 15% off bottles of wine. Rumpl: 15% off weatherproof, cozy, packable blankets.
Visit wscpa.org/passport for more discounts.
Make your firm or practice visible in our Find A CPA directory! Help prospective clients find your firm by enrolling for free in the Find A CPA directory. Firm administrators can enroll by contacting memberservices@wscpa.org or 425.644.4800. Visit wscpa.org/findcpa
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Set Sail on the CPA Seas With a $5,000 Accounting Scholarship!
New this year! The Washington CPA Foundation is excited to announce our new $2,000 Associate Scholarships for rising freshman and sophomores. Learn more at wscpa.org/aa-new.
WILL YOU BE 1 OF 75?
The Washington CPA Foundation is excited to be able to offer nearly $500,000 in scholarships for students in Washington State. The number of scholarship recipients typically exceeds 75 students.
AWARD AMOUNT $5,000 - $10,000*
* $10,000 scholarships for master’s / PhD candidates
Help Us Give Away Nearly $500,000 in Accounting Scholarships!
APPLICATION DEADLINE
February 14, 2022
APPLY NOW! WSCPA.ORG/CPASEAS
BECOME A SCHOLARSHIP REVIEWER TIME COMMITMENT 15-20 hours
QUESTIONS? 425.644.4800 foundation@wscpa.org
Scholarship applications are reviewed in your home or office through our secure, online portal with a provided scoring matrix and guidelines.
For more information and to sign up, please contact Benjamin Warren at bwarren@wscpa.org.
$5,000
MEMBERSHIP NEWS
UPCOMING SPECIAL CPE EVENT
Build a Crisis Communication Plan in 4 Hours Virtual | December 14 | 8am-12pm When the next crisis happens, this will be the best four hours you’ve spent for your business. Earlier this year, many of you attended Patrick Hardy’s keynote, Creating a Crisis Communication Plan in 5 easy steps, at our Annual Meeting. You asked for even more information on how to create a plan; Mr. Hardy is back to with an in-depth look at the next step. Attend this special event, and in just four hours you will be able to walk away with an outline and how-tos on creating your crisis communication plan.
Register at wscpa.org/4-hour-plan
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The WSCPA is excited to partner with Galasso Learning Solutions to provide A&A Today, real-time A&A updates and answers. Check the WSCPA blog often for new episodes or subscribe on YouTube. WSCPA.ORG/AATODAY
Recent episodes include topics such as: • • • •
Ethics Revised Exposure Draft: Unpaid Fees Ethics Exposure Draft: Accounting Standards Implementation Services FASB Proposal: Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions IFR4NPO Consultation Paper
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DIVERSITY, EQUITY, & INCLUSION
Advancing Diversity, Equity & Inclusion: An Introductory Guide Throughout the history of the United States, one’s ability to lead a safe and successful life has all too often been determined in large part by aspects of who they are — often ones over which a person has little or no control. These aspects include race, gender and sexual identity, culture, and presence of a disability among others. Committing to the advancement of diversity, equity, and inclusion at your organization carries many benefits. First and foremost, it improves the ability of all people to live a dignified and happy life. Additionally, such a commitment weakens the systems that enforce quality of life disparities among people facing barriers in our society. Finally, our businesses, nonprofits, and organizations are stronger, more effective, and more adaptable when they embrace the voices of people they have historically ignored. Like any successful initiative, advancing diversity, equity, and inclusion at your organization requires two things: self-assessment and measurable goals. This guide will help you begin the process of identifying opportunities for improvement at your organization.
STEP 1: ANALYZE YOUR ORGANIZATION’S CURRENT STATE
You must know where you are starting in order to figure out how to improve. A holistic examination of your organization’s policies, practices, and systems is best. However, it may make more sense for your organization to identify areas of high impact like hiring, advancement, and compensation outcomes. Start by gathering and analyzing disaggregated data. How much do Black employees earn in your organization compared to their white counterparts? How many women are promoted to upper management? Once you discover systems at your organization that are producing disparate outcomes, you can take a closer look at those systems, identify the root cause(s), and propose changes to increase equity at your organization. Seek to answer questions like: “How is compensation being determined, and what factors of that system are working against a group or groups?” Throughout this process, it is critical for your organization to involve people who belong to the affected communities. If your aim is to understand how to increase the number of women in upper management, it is crucial that women participate in the advancement system’s root cause analysis and lead the solution-finding process.
STEP 2: SET “SMART” GOALS
Once you’ve identified your organization’s areas of improvement, set specific, measurable, attainable, relevant, and time-bound (SMART) goals. It is a good idea to organize these goals into categories that make sense for your organization. We’ve provided a sample list of goals organized around business functions on page 12-13. Use these goals to kick-start your organizational analysis and modify any that could apply to your organization to fit the SMART framework based on that analysis.
STEP 3: EXECUTE AND REVIEW
With your goals set, it is time to execute. Make sure the initiative has a clear owner who will be responsible for seeing through your planned changes. This may be one or more individuals, and the SMART nature of the goals you set will define the expectations and conditions for success. After a period of time, make sure you review disaggregated data in the areas you are attempting to improve to gauge the effectiveness of your organization’s changes.
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DIVERSITY, EQUITY, & INCLUSION
SAMPLE GOALS FRAMEWORK
Use the framework below as a starting point for your analysis, with sample goals that may be adapted into SMART goals that make sense for your organization.
Diversity & Inclusion Framework BUSINESS AREA
Human Resources & Company Culture
Outward Communication/PR
Recruiting & Hiring Practices
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OPPORTUNITIES
SAMPLE GOALS
• Complete a D&I toolkit and evaluation metrics to establish baselines • Monitor/review development plans through a DEI lens • Review the employee handbook through a DEI lens and update accordingly • Provide DEI training for staff • Revise communications to eliminate biased language • Ask senior representatives of company to be visible champions of your D&I program
• Complete AICPA’s Diversity and Inclusion Assessment toolkit • Sign the CEO Action pledge and/ or The Valuable 500 and share commitment with staff • Review compensation to ensure fair and equal pay for positions • Create a diversity council/advisory board or consider employee resource groups (ERGs) to foster community and open dialogue • Implement requirement for all managers to attend diversity and inclusion training annually
• Review charitable giving organizations that align with company goals/mission • Review and update or create communication guidelines for identifying potentially biased language • Review marketing policies through a DEI lens and update accordingly • Review customer-facing technology/ experiences for accessibility • Implement publication goals for inclusion of diverse audiences in published content, artwork, social media, and internet usage • Find opportunities to engage with external events or groups • Make plans for how company will engage with external awareness days such as Pride, International Women’s Day, Black History month and more
• Commit to investing meaningful donations or resources in D&I causes • Commit company/staff resources to volunteer or pro-bono work in underserved communities or in racial equity initiatives • Advocate at federal, state, and local levels for policies to address the equity gap, or to advance laws that protect against discrimination
• Connect with colleges and recruiting staff to support/expand DEI initiatives related to on-campus recruiting • Create a diversity leadership group and host meetings to share best practices and resources • Find opportunities to invest in diversified talent pipelines such as internship programs, mentoring, and partnerships with other organizations
• Restructure staff referral policies to incentivize diverse referrals • Create policies for diverse slates and interview panels for hiring management roles and increased pool of qualified diverse candidates for promotions
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DIVERSITY, EQUITY, & INCLUSION
BUSINESS AREA
Advancement and Recognition
Vendors
OPPORTUNITIES
SAMPLE GOALS
• Review performance evaluation processes through a DEI lens and update accordingly • Review management and executive promotion processes through a DEI lens and update accordingly • Create a mentorship or sponsorship program or employee resource group (ERG) designed to support, promote and celebrate diverse groups of employees
• Publish all race/ethnicity data by department on career site, internally and with stakeholders • Create a program focused on investing in future leaders with increased mentoring/sponsorship for diverse groups that have typically lacked this support
• Review and update vendor contracts/ contacts for bias • Review guidelines for partnering with other organizations • Advocate for increased DEI from current vendors
• Ask suppliers to complete a vendor workplace diversity survey to get baseline data and metrics • Invest in diverse suppliers, products and marketing
FURTHER READING
Advancing diversity, equity, and inclusion is a broad subject, and a full examination of it is beyond the scope of this guide. To learn more, consider studying the following resources available in the Diversity and Inclusion Resource Group on WSCPA Connect at wscpa.org/connect-dei. •
10 Tools for Eliminating Racial Bias
• • • • • •
Annie E. Casey Foundation’s Race Equity and Inclusion Action Guide Journal of Accountancy article “Assessment is key to a successful D&I effort” Journal of Accountancy article “What we can do to increase the number of Black CPAs” Ibram X. Kendi’s How To Be An Antiracist Tiffany Jana and Ashley Diaz Mejias’s Erasing Institutional Bias Verna Myers’s What If I Say the Wrong Thing?: 25 Habits for Culturally Effective People
For concrete examples of what some companies are doing see below: • Glassdoor’s article “12 Companies Ramping Up Their Diversity & Inclusion Efforts” • Ongig’s article “25+ Examples of Awesome Diversity Goals” Here are some tools that may help you in your DEI initiatives: • AICPA Private Companies Practice Section Diversity and Inclusion Toolkit • CEO Action Diversity Pledge • The Valuable 500 Action Pledge & Resources • Surveymonkey’s Vendor Diversity Survey & Guide • AICPA 2021 Diversity Holidays/Celebration List
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MEMBERSHIP
While accounting firms know they are not alone in the struggle to find talent, it doesn’t take the sting away from the realities of competing for top talent, juggling workloads and balancing the pros and cons of remote work on your bottom line. The WSCPA is currently embarking on a listening tour to continue to try to understand challenges of our members working in the finance sector and of firms who are dealing with the challenges of staff shortages. We know that several things are creating and compounding staffing shortages:
Illustration: © iStock/Elena Shlyapnikova
As I sit down to write this, my son is finishing his first week of in-person full-time learning since March 2020. As I reflect on the week, I am tempted to tell myself that things are moving in the right direction, toward normal even. Still, so many of the rules, regulations, and new routines we must observe are far from normal. There is certainly no shortage of things to keep parents up at night. Work and businesses are experiencing similar growing pains. Business-as-usual still means new rules and protocols while also dealing with economic uncertainty, safety concerns, supply chain shortages and perhaps most impactfully, staffing shortages. In the U.S., accounting and finance roles ranked fifth out of 10 jobs that are hardest to fill. When chatting with CPAs at our first live networking event this year, it was clear this was one of the top things keeping our members up at night, too.
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MEMBERSHIP
Continued Decrease of Accounting Graduates The number of new graduating accountants and CPAs still lags behind baby boomer retirement numbers. While accounting graduate shortages were trending downward before the pandemic, COVID-19 has not improved the situation. WSCPA and the Washington CPA Foundation are still strongly committed to our pipeline initiatives to support more future CPAs. In addition to scholarship support for students entering their junior year through fifth year, we are increasing master’s degree scholarship awards from $8,000 to $10,000 per student. Research has found that students who earn a master’s degree versus completing a fifth year are more successful in passing the CPA exam. Additionally, the Foundation is expanding its scholarship awards to students with an interest in accounting at the college freshman and sophomore level and will award scholarships to students working on two-year transfer degrees at community colleges or four-year schools. By capturing students earlier in the pipeline, we know we can continue to support their growth into this profession and connect them to our community earlier.
Persistent Skill Gaps Required skills in the accounting profession are different than they used to be, and the skills continue to change quickly as technologies evolve. Many public accounting firms are reporting that the skills of college graduates still don’t match the realities of the roles they are filling. CPA Evolution is looking to address that and to update the CPA exam to better align with those industry needs. WSCPA is continuing to focus on the legislative alignments necessary to help move CPA Evolution to its launch of the new Uniform CPA Exam in January 2024. WSCPA held a Small Firm Issues Forum in September to discuss today’s challenging labor environment and better understand how the WSCPA might be able to work with our firms to help address skill gaps. Firms that are focused on talent retention through investing in upskilling their employees are seeing improvement in their talent retention. An ACCA report cited that 49 percent of Gen Zers ranked “opportunities to continually acquire new capabilities/learning” as one of their top five attractions for employment. Investing in WSCPA membership for your staff is still one easy way to continue to contribute to staff upskilling
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through education, leadership opportunities, and increased network and communication skills.
Technology Staffing shortages mean that everyone is trying to do more with less. Investments in technology infrastructure for smalland medium-sized businesses are allowing for increased accounting automation and efficiency. WSCPA launched our Spark Technology Conference last year to focus on new software and technology enabling better collaboration and communication between staff and clients, and technology continues to be a strong focus in our conference lineup this fall. Consider taking advantage of one of these learning opportunities: • Pacific Tax Institute Conference (October 21-22) • Not-for-Profit & Health Care Conference (November 17-18) • Spark Technology Conference (December 8-9) In addition to our listening tour with firms, we are seeking feedback from unemployed members who are currently looking for full- or part-time work or plan to within the next six months. As WSCPA looks at developing programs to bridge our members with work opportunities, we would love to have your input. Please consider sharing your experience in our short survey at wscpa.org/work-survey or by scanning the QR code to the right. As is said of parenting, and very much at the core of returning students back to school safely, it takes a village. In the same way, we know that there is not one solution or organization that can address all the challenges our professional community is facing right now. The WSCPA is continuing to listen and find ways to support you, and we know that we are stronger together. Hopefully, we can all get a few more nights of restful z’s in the process.
Monette Anderson is the WSCPA Director of Membership. You can contact her at manderson@wscpa.org.
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Illustration: © iStock/Andrei Ermakov
PRACTICE MANAGEMENT
Complex workloads, staffing and work/life balance, the next pandemic surge, engaging and encouraging your team, pivoting for increased profitability …
Are You Ready for the 2022 Busy Season? Donny C. Shimamoto Before we know it, the next tax season or next crunch time will be here, if it ever in fact left. If COVID-19 taught CPAs anything, it’s that planning ahead can be priceless, especially when the world is thrust into lockdown. Think about all the technical solutions that suddenly surged in usage when meeting in person was no longer an option. An April 2021 report from Statista stated 17 percent of U.S. employees worked from home five days or more per week before COVID-19, a number that surged during the pandemic to as much as 70 percent in April 2020, according to Gallup, before leveling out at 58 percent in September for four months and dropping to 56 percent in January 2021. The number has dropped every month since, but the Delta variant threatens to halt the decline. So what can your firm do to be ready for the 2022 busy season? Here are a few ideas from experts: 1. Invest in accounting automation to reduce workloads. 2. Identify areas to leverage outsourcing vendors to reduce staffing needs. 3. Refine technology-based collaboration methods. 4. Utilize employee engagement software to help improve team performance.
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Invest in accounting automation to reduce workloads. Everyone talks about artificial intelligence (AI) like it’s a thing coming in the future, but in reality, there are many accounting tools that already leverage AI. These tools can help with tasks like: • Evaluating the completeness of transactions as part of month-end close processes; • Identifying anomalous transactions or transactions that vary from expected parameters; • Identifying potentially fraudulent transactions using risk indicators; • Extracting data from a document and inputting it into a system; and • Automating routine transaction processing based on bank feeds or other source data. And where AI or an integration doesn’t fill the gap, you can use Robotic Process Automation (RPA) tools to help extract data, move data between systems, or perform other routine tasks. There are a few RPA tools that have made creating accounting “bots” as easy as recording a macro in Excel.
Identify areas to leverage outsourcing vendors to reduce staffing needs. One of the larger issues our profession is facing is scarcity of qualified staff. Technology can help to reduce the workload, but we still need people to talk with clients and perform higher-level activities like analytics and problem solving.
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Outsourcing can help to address the staffing crunch. Lower-level tasks can be outsourced either onshore or offshore, freeing up your team to work more with clients or to do higher-value tasks. Historically, offshore resources were seen as not very competent. However, with many large accounting firms (including all the Big 4) having offshore offices now, offshore outsourcing vendors are luring well-trained staff away from these big firms to work for smaller firms where they can have an increased variety of work. So, if you’re working with the right outsourcing vendor, you can get some highly qualified staff for less than half of an American entry level staff’s salary.
Refine technology-based collaboration methods. Whether your team is in-office, hybrid, all remote, or offshore, technology collaboration tools have greatly improved in functionality and ease of use. In our accounting space, these vary from client portals, workflow management software, or even general technologies like Microsoft Teams. Because you can’t manage by walking around anymore, you need to adopt better collaboration tools that enable you to not just meet with people remotely, but also see what work has been assigned to them, their progress on the work, and what they’ve completed. A good workflow tool will also help you to see where bottlenecks are – enabling you to proactively reassign work to meet deadlines.
Utilize employee engagement software to help improve team performance. In the end, though, if the pandemic has taught us anything, it’s that people really are our most important asset. Turnover can cost thousands in recruitment, training, and lost time. That’s if you can even find someone who wants to work for your firm. Change is also hard for everyone, and all the items above involve enacting change. Luckily, employee engagement software has come to the fore to help you keep a better pulse on your teams and drive improved performance. This software helps you track how your team is feeling, enables you to remotely express gratitude to team members, and allows you to see which team members are thanking others. They can also provide a structured way to manage and provide regular feedback to both in-office and remote team members. Donny Shimamoto, CPA.CITP, CGMA, is the Founder and Managing Director of IntrapriseTechKnowlogies LLC, an advisory-focused CPA firm specializing in innovation acceleration and organizational development for small businesses, middle market organizations, and nonprofits. Donny is a recognized thought leader and educator in the fields of accounting technology, IT risk management, and performance management. His dedication to helping accountants and organizations strategically leverage technology while proactively managing their business and technical risk is paramount. He can be reached at 628-222-3511 or donny@intraprise.us. This article first appeared in Connecticut CPA magazine.
Join Donny Shimamoto for the WSCPA Spark Technology Conference, December 8-9, where he will be sharing cybersecurity tips.
Learn more about the conference at WSCPA.ORG/SPARK-21. www.wscpa.org
PROFESSIONAL DEVELOPMENT
Become a Better Virtual Communicator: An Infographic Guide
CREATE PROTOCOLS AROUND COMMUNICATION CHANNELS agree upon response times Establish an expected response time for each specific channel.
move specific types of communication to specific channels Should requests be made through email? Quick questions in chat? Project updates in a project management system?
use @names to cut through channel clutter
Ensure your message gets to the right person in communication channels that have multiple people.
share your status
(Available, Offline, Do Not Disturb, Busy, In a Meeting) Sync your communication tools with your calendar for automatic status setting.
set expectations for virtual meetings
74% of professionals believe remote work will become the new normal
Women with child-care needs are
32% less likely
to leave their job if they can work remotely
61% of professionals would prefer a fully remote position
Is video required? Should participants use headphones? Will someone need to share their screen?
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PROFESSIONAL DEVELOPMENT
75%
VIRTUAL COMMUNICATION BEST PRACTICES
of employees working remotely report being able to maintain or improve productivity on their individual tasks
be clear and straightforward
Need something by a specific day or time? Want an “item received” confirmation response? Make it clear in your messaging.
keep everyone in the loop
Keep your team aware of everyone’s work and project progess. Regular communication allows you to offer assistance, provide feedback, or to correct a problem as soon as it emerges.
Over 70%
of managers said they are more open to flexible models for their teams than they were before the pandemic
provide adequate feedback
Be intentional about making sure feedback gets to coworkers and messages are received in the intended manner.
MUST-HAVE TECHNOLOGIES FOR REMOTE COLLABORATION Communication Channels •Zoom •Slack •Microsoft Teams •Google Hangouts •Email
Project Management
Password Management
Visual Collaboration
Cloud Document Storage & Editing
•Asana •Trello •Monday.com •Zoho Projects •Smartsheet
•Miro •Mural •Conceptboard
•LastPass •Bitwarden •1Password •Keeper
•Office 365 •Google Drive •Dropbox
For more tips on improving workplace productivity and to learn how to take advantage of all that today's technology can offer, join us for the Spark Technology Conference, December 8-9.
Learn more at wscpa.org/spark-21
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PROFESSIONAL DEVELOPMENT
SYNCHRONOUS VS. ASYNCHRONOUS COMMUNICATION synchronous communication Communication in real-time with immediate responses. •socializing •complex discussions •meetings •retreats •emergencies Too much synchronous communication = team burnout and less time for deep work
asynchronous communication Communication happens over a period of time. Responses occur intermittently. •announcements •gathering feedback •project discussions •weekly/monthly updates •project planning/collaboration Too much asynchronous communication = team members become detached and feel isolated
KEY TO A HIGH-OUTPUT REMOTE TEAM: Mostly asynchronous communication with opportunities for synchronous connection
effective strategies for synchronous communication
effective strategies for asynchronous communication
Plan in advance
Set timing expectations
Try to limit impromptu video calls and phone calls.
Use in moderation
Focus on fewer communications with only those who are essential to the conversation.
Use respectfully
Be aware of time differences when scheduling meetings with attendees in multiple time zones.
When beginning the communication share a timeframe for responding and a due date.
Logical organization
To be effective, asynchronous communication should be organized and accessible by all team members. Establish and use a company-wide system for organization and naming conventions.
Overcommunication
Capture synchronous meetings
Record key video calls and share them with those who cannot attend.
Asynchronous communication must be detailed and clear to prevent delays introduced by back-and-forth exchanges. Overcommunicate and be very detailed in responses.
Maximize video and audio quality
DRIs and decision makers
Connect Wi-Fi and test your technology in advance of calls.
Keep asynchronous discussions on track by including decision makers and DRIs (Directly Responsible Individuals). They can wrap up conversations and help with decision-making once sufficient feedback has been shared.
Default to transparency
Aim for most remote team conversations to be in public where all can see. This helps the team make progress when someone is away.
SOURCES:
IN PARTNERSHIP WITH:
https://www.bcg.com/publications/2020/valuable-productivity-gains-covid-19 https://www.catalyst.org/reports/remote-work-burnout-productivity/ https://www.growmotely.com/future-of-work https://twist.com/remote-work-guides/remote-team-communication#effective-strategies-for-asynchronous-communication
Illustration: © iStock/SophonK Icons: © iStock/Momento Design
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ACCOUNTING PRACTICE MANAGEMENT
Paving the Way: A Framework for Smooth CPA Leader Retirements Lisa Downs A key statistic from the most recent Rosenburg Practice Management Survey is that 60-72 percent of partners in CPA firms are over age 50. With the aging of the accounting profession coupled with the projection that all of those in the baby boomer generation will be age 65+ by 2030, there’s no better time to support your soon-to-be-exiting leaders with a post-exit plan than now. According to the report “The Four Pillars of the New Retirement: What a Difference a Year Makes” by Edward Jones, Age Wave, and The Harris Poll, 77 percent of those planning to retire wish there were more resources available to help them plan beyond just their finances.
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ACCOUNTING PRACTICE MANAGEMENT
Retirement is one of the biggest emotional, psychological, and mental transitions in our lives, yet little attention is given to it beyond financial and estate planning. For many whose identity is closely tied to work, it can be something to dread, creating a whole host of issues, not the least of which is going into a potential downward health spiral post-exit. If your firm or company is one where the extent of supporting employee retirements is the annual visit by your employer-sponsored retirement plan representative to talk about investments, along with a “bon voyage” party, it may be time for a different approach to support those on the verge of retiring while also developing your rising stars.
slow march toward the inevitable end. According to the theory of role centrality, popularized by author and researcher B.J. Biddle and others, the more positive view we have of our profession upon entry, the more negative view we have of leaving it behind (high role centrality). Or, contrarily, if we’re not that closely tied to our careers when we start working, the easier our transition to retirement will be (low role centrality). When the first words out of someone’s mouth in response to the question, “What do you do?” is about work, that’s a good sign that there’s high role centrality in play, potentially leading to a tougher time transitioning to retirement. If life has been work and work has been life, the thought of leaving the firm or company, not to mention clients, behind can strike fear in the hardiest of hearts. No wonder many leaders still come into the office when they’ve got one foot out the door, hesitant to leave completely. If not this in their lives, then what?
Benefits of Developing Retiring Leaders
A Matter of Identity For some, retirement is something to look forward to as a next exciting chapter in life, or a continuation of life as they know it. For others, though, it can be viewed as a time of chaos or a long,
Why bother investing in the career development of those who will be exiting soon? For a number of reasons, including that it: •
• • •
•
Creates “raving fans” of alumni who can spread the word to recruit talent for your firm or company as a “best place to work”; Lessens any struggle and awkwardness of the exit process; Lends itself to help with succession planning, younger talent development, and knowledge and client transfer; Allows people to exit smoothly sooner, knowing they have goals and a plan post-exit, freeing up positions, office space, resources and equipment; Serves as part of your staff and leadership well-being, development, or engagement programs.
This then begs the question, “How can we do this, especially if resources are limited?” By following a framework that sets you up for success.
End-to-End Talent Development Framework To provide a gradual “off ramp” for your exiting leaders, consider how they can wear different “hats” beginning three to five years out from their exit to in turn support the growth and career development of up-and-coming talent. These roles can be focused on mentoring and knowledge transfer, playing the role of advocate for high-potential leaders, and serving as a trainer, a peer group member with fellow older workers, and an advisor to junior staff and the organization.
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ACCOUNTING PRACTICE MANAGEMENT
The table below illustrates various potential activities and timing within this framework.
3-5 Years Out
1-2 Years Out
6 Months-Exit
Mentor & Info. Sharer: • Formal or informal mentoring • Introductions/networking support for staff • Host of roundtable events with staff • Host of job shadows or rotational assignments • Input on succession planning • Project sponsor • Presenter • Content contributor
Advocate & Trainer: • Serve as trainer • Champion of specific staff to move into leadership roles • Continued input on succession planning • Group coaching participant with fellow senior leaders re: retirement planning • Pre-exit 1:1 coaching with action plan; goals for post-exit
Peer & Advisor: • Continuing as a group coaching participant with fellow senior leaders re: retirement planning • Post-exit action plan refinement with coach • Client/customer transition work (could also start 1-2 years out from exit) • Informal advisor for junior leaders as needed
Rather than having clogged talent pipelines with younger staff possibly leaving out of frustration with nowhere to go and older leaders potentially being fearful of leaving due to an anticipated loss of routine, purpose, and identity, paving the way for both groups can make life easier for all. Notice that most of the above activities cost nothing but making time for them with a bit of structure put in place unless you choose to bring in an external coach or consultant.
Key Questions to Support Retiring Leaders Additionally, here are a few questions you can ask yourself or pose to your team as you begin to design your strategy to support those close to exit: • • • • •
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What can you provide to help them both plan for their time post-exit and remove fear of it through meaningful goals? How can they contribute to the firm or company pre-exit in a way that adds value and develops your talent pool? What information about services and life planning resources post-exit can you make available in a way that’s respectful? What’s possible in terms of a gradual exit process so it’s not as scary of a prospect for your retiring leaders? What’s a mechanism you can put in place, if one doesn’t already exist, to know when people may exit the firm or company to inform implementing a framework?
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The answers to these questions may lead to a need for research and additional leg work, though once solidified, can go a long way toward putting your organization on a path to truly being an employer of choice and an advocate for all, regardless of age, throughout the entire employee lifecycle. As humans, we don’t stop learning until or unless we choose to stop or brain health issues interfere, so focusing career development efforts only until employees reach a certain level in the organization may do more harm than good in the long run, especially if the exit process is painful for all concerned. It’s critical that we support not only younger and mid-career staff, but also those who are on the verge of retiring so they can create a vision of their life in retirement, craft a “new identity” beyond their current work, and feel confident in having a plan for how they’ll spend their days, allowing them to move on as needed. It can be a small price to pay for all they’ve given throughout their careers and probably much more meaningful than the proverbial gold watch. Lisa Downs is President of New Aspect Coaching and host of Reigniting You… with Lisa Downs, a podcast offering career transition support for professionals. You can contact her at lisa@yournewaspect.com. Illustration: © iStock/Rudzhan Nagiev
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Upcoming CPE A selection of WSCPA CPE events scheduled November - January are listed. To view the hundreds of course listings and complete details, please visit the CPE & Event Catalog at wscpa.org/cpe.
Not-For-Profit & Health Care Conference Webcast, November 17-18 16 Credits
Not-for-profit and health care professionals are masters of doing the most with limited resources. Get guidance on best practices from professionals in your industry, Plus, catch up on new and current regulations and connect with colleagues at this must-attend event!
Spark Technology Conference Webcast, December 8-9 12 Credits
Adopting mainstream technologies can increase your organization’s efficiency and even open doors to growth. At the same time, opportunities for fraud and cybersecurity are constantly evolving. Learn from real-life examples of streamlined processes and how technology enables better collaboration and communication between staff and clients. Plus, explore recent fraud and cybercrime trends. Learn how to identify the risks and best practices for protecting you and your clients from today's threats.
Washington Ethics and New Developments 2021 - ON DEMAND Self-Study, available through December 31 4 Credits
All the ethics you need to know! Award winning and entertaining discussion leader Mark Hugh will review the AICPA Code of Professional Conduct and key Washington differences; discuss new developments at the national and state level in ethics in the last three years; best practices for CPAs in public accounting and industry; highlight emerging issues; and discuss Washington administration and enforcement, including examples of recent Washington Board disciplinary actions. The Washington Society of CPAs is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of group-live and group-internet-based continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its web site: www.nasbaregistry.org For more information regarding refunds, complaints, program cancellations or other policies visit www.wscpa. org/cpe/cpe-policies or call 425.644.4800
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EDUCATION AND EVENTS
Online CPE DATE
COURSE TITLE
CREDITS
11/1
Becoming a Tax Ninja: Accounting Methods Part 1 WEBCAST
2
11/1
CFO Series: Be the Best WEBCAST Part 2
2
11/2
Becoming a Tax Ninja: Accounting Methods Part 2 WEBCAST
2
11/2
Member Exclusive: Deadlines and Deductions WEBINAR
1
11/3
Becoming a Tax Ninja: Accounting Methods Part 3 WEBCAST
2
11/3
Revenue Recognition: Mastering the New FASB Requirements WEBCAST
2
11/3
Becoming a Tax Ninja: Accounting Methods Part 4 WEBCAST
8
11/4
Leases: Mastering the New FASB Requirements WEBCAST
2
11/4
Washington Sales Tax WEBCAST
8
11/8
Accelerated 1040 with Art Werner WEBCAST
8
11/9
Federal Income Taxation of Estates and Trusts Update WEBCAST
8
11/9
Washington Ethics and New Developments 2021 WEBCAST
4
11/10 2021 Regional Accounting & Auditing Conference WEBCAST Hosted by the Colorado Society of CPAs
8
11/10 Forensic Accounting: Fraud Investigations WEBCAST
8
11/10 Practice Management WEBINAR - Members Only
1
FREE
11/11
Federal Tax Update -Individuals (Form 1040) WEBCAST
8
11/11
What Fraud Schemes Exist in Your Organization WEBCAST
8
11/12 Federal Tax Update - C & S Corporations, Partnerships & LLCs (Forms 1120,1120S & 1065) WEBCAST
8
11/12 Financial & Retirement Planning Conference presented by the Oregon Society of CPAs
8
11/15
CFO Series: Numbers Rule The World Part 1 WEBCAST
4
11/15
Washington Tax Audits WEBCAST
1
11/15
Washington Taxation for Service Businesses WEBCAST
2
11/18 Annual Update and Practice Issues for Preparation, Compilation, and Review Engagements WEBCAST
8
11/18 Becoming a Tax Ninja: Avoiding Phantom Income, and Everyday Tax Rules You Need to Know WEBCAST
2
11/18 Becoming a Tax Ninja: Loss Limitations -- Basis, At-risk, Passive Activity and 461(l) WEBCAST
2
11/18 U.S. GAAP: Review for Business & Industry and Public Accounting WEBCAST
8
11/19 Common Deficiencies in SSARS Engagement WEBCAST
4
11/19 Practical Strategies to Maximize Deductions from Passive Activities WEBCAST
2
11/19 Real Estate Professionals and Other Exceptions for Rental Properties WEBCAST
2
11/22 CFO Series: Numbers Rule the World Part 2 WEBCAST
4
11/22 Form 990: Mastering Its Unique Characteristics WEBCAST
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EDUCATION AND EVENTS
Register at www.wscpa.org/cpe
Online CPE DATE
COURSE TITLE
CREDITS
11/22 Innovative Forecasting and Budgeting: Moving Beyond the Traditional Techniques WEBCAST
4
11/22 Understanding Specific Risks in the Small and Medium-Sized Organization WEBCAST
4
11/22 Washington Ethics and New Developments 2021 WEBCAST
4
11/23 Hottest Tax Topics for 2021 WEBCAST
8
11/23 Project Management for Finance Professionals WEBCAST
8
11/24 Washington Sales Tax WEBCAST
2
11/29
2021 Rules, Regulations, and Ethics for CPAs in Washington by Thomas Neill (A WA Requirement) WEBCAST
4
11/29 Accounting & Auditing Update for Small Businesses WEBCAST
4
12/1
Hot IRS Tax Examination Issues for Individuals and Businesses WEBCAST
8
12/1
Washington Ethics and New Developments 2021 WEBCAST
4
12/2
Multistate Income Tax WEBCAST
8
12/2
Surgent's Handbook for Mastering Basis, Distributions, and Loss Limitation Issues for S Corporations, LLCs, and Partnerships WEBCAST
8
12/3
Taxation of Corporations WEBCAST
8
12/6
Employer's Handbook: Legal, Tax, and Health Care Issues WEBCAST
8
12/6
Federal Tax Update with Greg & George WEBCAST
8
12/7
Business Law Essentials for Practitioners and Controllers WEBCAST
8
12/9
Making the Best of Bad Situations WEBCAST
8
12/10 Addressing Common Documentation Deficiencies WEBCAST
2
12/10 Government GAAP Update WEBCAST
2
12/10 Integrated Estate, Financial, and Asset Protection Planning - A Breakthrough Approach WEBCAST
8
12/13 Washington Tax Audits WEBCAST
1
12/13 Washington Taxation for Service Businesses WEBCAST
2
12/14 Build a Crisis Communication Plan 4 Hours WEBCAST
4
12/15 Member Exclusive: WSCPA Year-End Update WEBINAR
1
FREE
12/15 The Best S Corporation, Limited Liability, and Partnership Update Course by Surgent WEBCAST
8
12/16 Guide to Payroll Taxes and 1099 Issues WEBCAST
4
12/16 Surgent's Essential Depreciation and Expensing Update WEBCAST
4
12/16 Tax Research I WEBCAST
4
12/16 Tax Research II WEBCAST
4
12/17 Intermediate Individual Taxation WEBCAST
8
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Register at www.wscpa.org/cpe
Online CPE DATE
EDUCATION AND EVENTS Courses denoted with this symbol are also available as a LARS course at the WSCPA office in Bellevue. LARS: Live Audience, Remote Speaker
COURSE TITLE
CREDITS
12/17 Washington Sales Tax WEBCAST
2
12/20 CFO Series: Preparing For Growth WEBCAST Part 1
2
12/20 Information Technology Workshop WEBCAST
8
12/20 Washington Ethics and New Developments 2021 WEBCAST
4
12/29 CFO Series: Preparing For Growth Part 2 WEBCAST
2
12/29
2021 Rules, Regulations, and Ethics for CPAs in Washington by Thomas Neill (A WA Requirement) MORNING WEBCAST
4
12/29
2021 Rules, Regulations, and Ethics for CPAs in Washington by Thomas Neill (A WA Requirement) AFTERNOON WEBCAST
4
12/30 Federal Tax Update with Greg & George WEBCAST
8
12/31 Washington Ethics and New Developments 2021 WEBCAST
4
1/6
Estate and Life Planning Issues for the Middle-Income Client WEBCAST
8
1/7
2021 Rules, Regulations, and Ethics for CPAs in Washington by Thomas Neill (A WA Requirement) WEBCAST
4
1/7
Surgent's Top 10 Tax Topics This Year WEBCAST
8
1/10
The Complete Guide to Washington Death Taxation WEBCAST
8
1/13
Annual Tax Update: Individuals and Sole Proprietors WEBCAST
8
1/14
Income Tax Accounting WEBCAST
8
1/18
Federal Tax Update with Greg & George WEBCAST
8
1/20
Filing Status, Tax Consequences of Marriage, Dependents, the Child Tax Credit and EITC WEBCAST
4
1/20
Tax Strategies to Maximize Itemized Deductions WEBCAST
4
1/24
Tax Advisors Update WEBCAST
8
Tax Advisors Update also available LIVE IN-PERSON in Bellevue (1/24) and Spokane (1/25)
8
1/25
Practical Strategies: Social Security Benefits and Medicare WEBCAST
4
1/25
Practical Small Business Retirement Planning: SEP-IRA's, , SIMPLE IRA's, Traditional and Roth IRA's WEBCAST
4
1/26
Cutting Edge Tax Strategies: S Corporations WEBCAST
4
1/26
Cutting Edge Tax Strategies: Partnerships WEBCAST
4
1/27
CFO Series: Developing Creditability Part 1 WEBCAST
4
ADDITIONAL LIVE IN-PERSON CPE 12/13
Federal Tax Update - Individual & Business Current Developments
Bellingham
8
12/14
Federal Tax Update -Individuals (Form 1040)
Lynnwood
8
12/15
Federal Tax Update - C & S Corporations, Partnerships & LLCs (Forms 1120, 1120S & 1065)
Lynnwood
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Visit the WSCPA Job Board! Job seekers, peruse the listings and find your next big break. Looking for talent? The WSCPA Job Board receives hundreds of visitors a month, all looking for new and exciting career opportunities. Post your opening and be seen by some of Washington's finest finance professionals. Learn more at wscpa.org/job-board.
ADVOCACY
The Seasons and Laws are Changing Mike Nelson While the profession continues to adapt to the changing business and social climate, the WSCPA Advocacy Team has spent the summer and fall working hard monitoring and participating in various rulemaking at different agencies which will impact the profession in the years to come. This work affects not only how CPAs maintain, and future CPAs obtain, their licenses but also the laws that CPAs need to consider when advising clients or their employers.
Illustration: © iStock/Svetlana Borovkova
Preparing for changes to CPA exam, hearings The Washington State Board of Accountancy (WBOA) has started the rulemaking process for two areas. The first would remove specific named references to sections of the CPA exam as well as a set number of sections within the exam. This will prepare Washington for the new CPA exam that will be rolled out in 2024 as well as make our laws flexible for any other changes to the exam in the future. The second rule they are actively working on affects the formal and brief adjudication proceedings licensed CPAs may have before the WBOA. There is still work to be done before they finalize language on this rule, but the intention is to make the administrative aspects of these hearings more efficient for the licensees involved and the Board members.
a tax ruling around the capital gains tax (or any other existing tax), you can send an email to rulings@dor.wa.gov and need not identify the specific client.
CPA-inactive In addition to this work around rulemaking, the Advocacy Team has continued to work with the WBOA and others on the legislation we are planning to introduce next Legislative Session that would add a new license status titled “CPA-inactive.” This piece of legislation will set a timeline to finish the phaseout of certificates that had been started in 2001 when the last certificate was granted by WBOA. Current certificate holders who have not completed the experience requirements to become active CPAs will be moved to this new inactive status in July of 2024. Under this new status, the roughly 700 current certificate holders will retain the ability to conduct the same functions that they have legally been permitted to do with the certificate. The new status, however, will also give another option to CPA licensees who may prefer to step back from their active status without retiring or letting their license “lapse,” which are the only two current options. This will also bring Washington into parity with other states that do not have certificates and also have the CPA-inactive license status, and further relieve confusion related to mobility.
DOR and the capital gains tax The team has also been monitoring and meeting with the Department of Revenue (DOR) on a number of rule changes they are proposing and reviewing for both new and existing tax laws. Most notably, WSCPA and several of our members were asked to participate in an ongoing series of meetings with the DOR around the newly passed capital gains tax and areas of ambiguity or issues within the new law that may need to be addressed with rulemaking. These talks are ongoing, and the formal rulemaking process has not been set (as of mid-September). DOR has not been issuing guidance on specific circumstances or fact patterns within the new law yet. However, if you or a client would like
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If you have any questions or would like to get more involved with the Advocacy Team and shape the future of the profession, please feel free to reach out to us and we can find ways for you to participate moving forward.
Mike Nelson is the WSCPA Manager of Government Affairs. You can contact him at mnelson@wscpa.org.
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CLASSIFIED ADS Mergers & Sales
Volunteer Opportunities
Considering Selling Your Practice? Consider all your options. We do the work. Confidential. We have buyers actively seeking practices. Visit our website at www.accountingpracticesales.com Accounting Practice Sales. We make dreams happen!
The following organizations need a CPA to serve on the board of directors and/or provide other guidance on financial matters. Learn more about these and other organizations that need your help online at wscpa.org under community.
IBA Sells Privately Held Companies. Do you represent a client who is ready to retire or has taken a company as far as they want to or can? IBA is the Pacific Northwest’s oldest business brokerage (M&A) firm. We are professional negotiators with over 4000 completed transactions. Please contact us if we can be of assistance at 425.454.3052, 509.907.9406, or www.ibainc.com
AAUW-WA Special Projects Fund AMA Puget Sound, Seattle Arivva Center for Arts & Technology Cedar River Montessori School Children's Campaign Fund Ecologists Without Borders Facing Homelessness Grassroots Projects Helping Link / Môt Dâu Nôi The Max Foundation
Are You Buying or Expanding a Tax Practice? Double your revenue by adding investment services, safely and profitably, per Prudent Practices for Investment Advisors from AICPA. Talk to us early in the process and long before you call a business broker. At this link you'll find our website and a 5-minute PowerPoint that spells things out clearly, https://www.pnw-assetmanagement. com/cpas-tax-preparers/ 110% Realization Rate Established & Reputable Tax Compliance Practice for Sale: 14-year old tax and accounting practice that has experienced an average of 11% revenue growth, each year, over the past five years. 54% of tax preparation work are business and the remaining are individuals. Average business tax return preparation fee is $1,500; individual is $860. Seller is retiring. Practice is located in Thurston County. Looking to retire and no exit plan? I'm a 14 year public accountant, current tax partner at a top 25 size firm. My experience is with middle market clients in real estate and professional services. I'm looking for practitioners looking to exit soon on a mutually agreeable solution for purchase. Contact clarity659@yahoo.com for more. Practice for Sale Seattle: Perfect opportunity for your aspiring CPA. You become the owner of a tax practice from day one. The ready-made situation in a beautiful office location with views of Puget Sound. Gross billings fiscal year ending June 30th, 2021 $156,000 in annual billing and growing. You acquire a 99.5% interest in an established CPA firm. The seller focuses on financial planning and will refer all new accounting and tax clients to you. Office includes conference rm, scanning and copying equipment, phone number, and secure parking for $165 per month. Access to experienced contract staff is available at $25 per hr reimbursed to the seller as contract labor. No need for payroll and associated costs. The opportunity to learn and buy into a lucrative financial planning price in the future. Accounting Practice Exchange: free weekly buyer email alert service: The Accounting Practice Exchange is the online marketplace for CPA practices. Get the latest opportunities available in Washington via our free weekly email alert service. Sign up for it here: www. accountingpracticeexchange.com Have an owner ready to explore the sale process? We help business owners confidentially explore the sale process. Transaction expertise, market knowledge, and results. No upfront fees - pay only at closing. Contact Washington Business Brokers and put our experts to work for you!
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Detailed advertising information is available online at wscpa.org/classifieds. Contact Sharon Olene-Marander at smarander@wscpa.org for more information.
Volunteer Opportunities Continued People's Memorial Association Seattle's Giving Garden Network Tilth Alliance
want to miss. To learn more about this listing, call us at 253.509.9224 or send an email to info@privatepracticetransitions.com with "1173 Trusted Portland Tax and Accounting Practice" in the subject line.
Profitable King County Tax and Accounting Firm: Established in 2009, this tax and accounting firm is a one-stop-shop for all tax and accounting services. The Practice owes its success to its established name, loyal clients, and collaborative staff amenable to helping the Practice continue to thrive. The Practice’s service by revenue breakdown is 86% Tax Preparation, 26% Bookkeeping, 9% Managerial Accounting, and 5% Other. Of its ~2,424 active clients, ~500 are business client groups and ~1,924 are a mixture of high-net-worth individuals, young professionals, investors, and community leaders. The Practice has incredible workflow efficiency, is entirely paperless, uses cloud-based software, and has an efficient remote working environment. With a great reputation and such a robust client base, this is an excellent opportunity for any buyer. If interested, call us at 253.509.9224 or, send an email to info@privatepracticetransitions.com" in the subject line. Trusted Portland Tax and Accounting Practice: Over the past 20+ years, this Multnomah County tax and accounting firm has offered a wide range of tax and accounting services to both business and individual clients. The Practice is highly respected in the community and prides itself on providing top-notch customer service. The Practice’s service by revenue breakdown is 71% Tax Returns, 26% Financial Statements, and 3% Bookkeeping. Over the past three (3) years, the Practice has averaged gross revenue of approximately $328,212 (20182020). As of September 2021, the Practice has ~236 active clients with ~300 in the Practice’s database. The Practice has three (3) loyal staff who are amenable to helping the Practice continue to thrive. The Owner is willing to provide transition assistance and help with goodwill transfer, business development, and other “mentoring” functions for a period to ensure the new owner’s return on investment is realized. With an established name and loyal clients, this is an opportunity that you don’t
Successful King County Tax and Accounting Firm: Established in 2003, this King County tax and accounting firm is highly respected in the community and prides itself on providing top-notch personalized customer service. The Practice’s service by revenue breakdown is 68% Tax Services, 26% Accounting Services, 3% General and 3% Consulting Services. As of September 2021, the Practice has approximately 804 active clients and four dedicated staff. Over the past three (3) years, the Practice has averaged gross revenue of approximately $909,167 (2018-2020). In 2020, the owner’s seller’s discretionary earnings (SDE) were over $580,000! Additionally, the Practice has experienced year-over-year (YoY) growth each of the last two years, and 2021 projections are showing another great year! The Owner is willing to provide transition assistance and help with goodwill transfer, business development, and other “mentoring” functions for one to two tax seasons to ensure the new owner’s return on investment is realized. With impressive revenues, stellar SDE, and YOY growth, this is one opportunity you don’t want to miss. If interested, call us at 253.509.9224 or, send an email to info@privatepracticetransitions.com, with "1174 Successful King County Tax and Accounting Firm" in the subject line. Kitsap County Tax and Accounting Firm: Established in 1979, this Washington tax and accounting firm is highly respected in the greater Kitsap County community. The Practice has developed good long-standing relationships with local law firms that have proven to be terrific referral sources. The Practice’s service by revenue breakdown is 80% Tax Preparation and Planning, and 20% Accounting and Bookkeeping. In 2020, the Practice brought in approximately $770K in gross receipts and has grown every year since inception. The Practice has nine loyal staff members proudly serving its 1,222 active clients. The Owner is willing to provide transition assistance and help with goodwill transfer, business development, and other “mentoring” functions for one to two tax seasons to ensure the new owner’s return on investment is realized. With dedicated staff and proven YoY growth, this is one opportunity you don’t want
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CLASSIFIED ADS to miss. If interested, call us at 253.509.9224 or send an email to info@privatepracticetransitions. com, with "1150 Kitsap County Tax and Accounting Firm" in the subject line. Lucrative King County Tax and Accounting Firm: Established in 1993, this Bellevue tax and accounting firm has provided tax preparation and planning, and other accounting services to countless clients. The Practice’s service by revenue breakdown is 65% Tax Preparation & Planning and 35% Accounting Services. Over the past three (3) years, the Practice has averaged impressive gross revenue of approximately $862,560 (2018-2020). As of July 2021, the Practice is up 11% YoY as compared to July 2020, and it is expected that 2021 revenues will exceed 2020 revenues. The owner is willing to provide transition assistance and help with goodwill transfer, business development, and other “mentoring” functions for an agreed-upon period up to one (1) to two (2) years to ensure the new owner’s return on investment is realized. With ~700 loyal clients and proven YoY growth, this is one opportunity you don’t want to miss. If interested, call us at 253.509.9224 or, send an email to info@privatepracticetransitions.com, with "1175 Lucrative King County Tax and Accounting Firm" in the subject line. King County Tax and Accounting Firm with Incredibly High SDE: For over 28 years, this King County tax and accounting firm has provided tax, accounting, and financial services to countless clients. The Practice’s service by revenue breakdown is 74% Tax, 20% Accounting, and 6% Financial and Consulting. The Practice is known for its incredible staff of six (6) who continually deliver excellent customer service to its ~1500 active clients. As a result, the Practice has a very strong client base and receives many word-ofmouth referrals. The Practice has an incredibly high percentage of seller’s discretionary earnings (SDE) to revenue (57%) which makes this a lucrative opportunity for any buyer. The weighted projected gross revenues are over $1M with over $575,000 in SDE. The Owners are willing to provide transition assistance and help with goodwill transfer, business development, and other “mentoring” functions through one (1) tax season to ensure the new owner’s return on investment is realized. For more information, call us at 253.509.9224 or, send an email to info@privatepracticetransitions. com, with "1170 King County Tax and Accounting Firm with Incredibly High SDE” in the subject line. Thriving Northeast Seattle Tax Book of Business: Well-established CPA selling tax book of business. Founded in Northeast Seattle, this book of business consists of 238 active clients, representing 33 businesses and 205 individuals. In 2020, this tax book brought in revenues over $90,000. The majority of the clients (63%) are entirely virtual and handle all business remotely. The owner is willing to mentor the purchaser on all client-related issues as needed for an agreedupon period to maximize the transfer of goodwill. If you are a CPA looking to expand your current book of business or a CPA looking to start your own business, this is the perfect opportunity for you. . If interested, call us at 253.509.9224 or, send an email to info@privatepracticetransitions.com, with "1169 Thriving Northeast Seattle Tax Book of Business" in the subject line.
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Successful Tax and Accounting Firm in SoughtAfter Clark County, WA: For over 29 years, this Clark County, Washington tax and accounting firm has offered a wide range of tax and accounting services to both business and individual clients. The Practice’s service by revenue breakdown is 58.8% Tax Prep and 42.8% Accounting. The Practice has experienced year-over-year growth each of the last two years with an incredible 19.6% increase from 2018-2019 and a 6.7% increase from 2019-2020 even amidst the pandemic. Of its ~548 active clients, it is estimated that 95% will remain with the Practice after transition to new ownership. Including the owners, the Practice has five experienced and dedicated staff members. The owners are willing to provide transition assistance and help with goodwill transfer, business development, and other “mentoring” functions for an agreed-upon period of up to one year to ensure the new owner’s return on investment is realized. To take advantage of this opportunity, call us at 253.509.9224 or, send an email to info@privatepracticetransitions.com, with "1166 Successful Tax and Accounting Firm in Sought-After Clark County, WA” in the subject line. Trusted Seattle Tax and Accounting Firm: Established in 1977, this Washington tax and accounting firm has built an outstanding reputation due to its integrity, service, and the personal attention that is paid to each client. The Practice’s service by revenue breakdown is 94% Tax Preparation, 3% Consulting, 2% Financial Statement Review and 1% Bookkeeping. In 2020, the Practice reached an impressive gross revenue of $694,920. Of its ~550 active clients, it is estimated that 95% will remain with the Practice after the transition to new ownership. The owner is willing to provide transition assistance and help with goodwill transfer, business development, and other “mentoring” functions for an agreed-upon period of up to two (2) years to ensure the current clientele is happy and well taken care of and the new owner’s return on investment is realized. Additionally, there are four (4) loyal staff members who are amenable to helping the Practice continue to thrive. With dedicated staff and proven YoY growth, this is one opportunity you don’t want to miss. If interested, call us at 253.509.9224 or, send an email to info@privatepracticetransitions. com, with "1135 Trusted Seattle Tax and Accounting Firm" in the subject line. Esteemed Washington Tax & Accounting Firm: Private Practice Transitions is assisting a client located in Bothell, Washington with the sale of a well-established tax and accounting firm providing services to individuals and businesses in the Greater Seattle area. The Practice owes its success to its established name and loyal clientele who trust the services it provides. The Practice’s active client count of 650 speaks volumes about its reputation in the community. The service by revenue breakdown is 44% Tax Preparation Individual, 28% Tax Preparation – Corporations, 8% Bookkeeping, 7% Tax Return – Partnerships, 6% Quarterly Tax Returns, 4% Management Advisory Services, and 3% Other. Over the past three years, the Practice has averaged an impressive gross revenue of approximately $761,000. One owner is willing to stay on as an employee for a year or more post-transition if desired. If you are interested in this opportunity, call us today at 253.509.9224 or send an email to info@privatepracticetransitions. com with “1167 Esteemed Washington Tax & Accounting Firm” in the subject line.
Successful Tax and Accounting Firm for Sale in Portland: Private Practice Transitions is assisting a client located in Portland, Oregon, with the sale of a busy tax firm. With an established name and loyal clientele, this tax and accounting firm has created a trusted customer base. Conveniently located in Portland, the Practice is easily accessible from several freeways. The Practice’s service by revenue breakdown is 88% Tax Preparation, 8% Consulting, 2% Financial Statement Preparation, and 2% Bookkeeping. The Practice prepared and filed 120 returns in 2020 for its 120 active clients. It is estimated that of its current clientele, 90-95% will remain with the Practice after the transition to new ownership. With business services tailored to meet the needs of the greater Multnomah County community, this practice is a great opportunity for any buyer. For more information on this listing, call us today at 253.509.9224 or send an email to info@privatepracticetransitions.com with “1164 Successful Tax and Accounting Firm for Sale in Portland” in the subject line. Tax Book Comprised of Medium to High-NetWorth Clients: Well-established attorney/tax practitioner selling entire tax preparation and planning, bookkeeping, and registered agent book of business. Located in the heart of Seattle, the prosperous business has seen 5% (2019-2020) YOY growth the last two (2) years while having an impressive 100% retention rate. As of June 2021, the business has approximately 350 active tax clients, many of which are high-net-worth individuals and closely-held businesses. There is currently one key staff member with tax preparation and bookkeeping skills who has developed an outstanding reputation with the business’s current clientele, and she would like to stay on with the new owner if desired. The business’s service by revenue breakdown is 88% Tax Preparation and Consulting, 8% Bookkeeping & Ancillary Services, and 4% Registered Agent Fees. The current owner is willing to mentor the new owner on client-related issues, provide transition services, and/or be on-call for an agreed-upon period of time to maximize the transfer of goodwill. With highly attractive gross revenue average of $725,000 and Seller’s Discretionary Earnings (SDE) of $600,300 (2020), this is an opportunity you don't want to miss. If interested, call us at 253.509.9224 or, send an email to info@privatepracticetransitions.com, with "1165 Tax Book Comprised of Medium to High-Net-Worth Clients" in the subject line. Lucrative Snohomish County Tax and Accounting Practice: Private Practice Transitions is assisting a client located in Snohomish County, Washington with the sale of a busy tax practice. The firm’s service by revenue breakdown is 70.6% Tax Preparation, 26.7% Bookkeeping & Payroll and 2.7% Consulting. The firm was established in 2006, has over 428 active clients and an excellent reputation in the community. The Practice’s extremely high client retention rate has resulted in approximately 79% of its revenue from repeat clients. The Practice’s success can largely be attributed to its established name and loyal clients who have grown to trust the services it provides. With a solid client base and a large amount of word of mouth referrals, this is one opportunity that you don’t want to miss. To learn more about this opportunity, call us at 253.509.9224 or send an email to info@privatepracticetransitions.com with “1160 Lucrative Snohomish County Tax and Accounting Practice” in the subject line.
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CLASSIFIED ADS
Maria Wasserman: 888-783-7822 X3 Maria@APS.net | WWW.APS.net
Whidbey Island Area CPA Practice (WA1148) Established in 1983, this practice located on the beautiful Whidbey Island area, offers all the traditional services of a CPA practice. The firm has long-term employees who assist the Seller and require little supervision which allows the seller worry free time out of the office. The revenues for this practice are Income Tax 52%, Write Up 30%, Audits and Reviews 9%, and the balance is Consulting equaling 9%. This practice offers the opportunity for rapid growth due to an underserved client community. All of this from a Seller willing to assist in the transition of the practice and who will consider any reasonable offer. Puyallup CPA Practice (WA1158) Established in 1998, this practice has approx. 10 bookkeeping clients generating $26,941 in revenue. The income tax service mix consists of 50% from individual returns with an average fee of $331, 19% from business returns with an average fee of $1070 and 6 other tax returns with an average fee of $138 per return. In addition, $60,000+/- in revenue is generated via payroll, reporting, other tax matters, etc. Annual cash flow including owner's salary and benefits, personal vehicles, and any other nonoperational expenses of the business is approx. $152,511 (2020) with a projected annual cash flow of approx. $161,550 for 2021. This practice uses Lacerte, & QuickBooks. Centralia Tax & Tax Resolution Practice (WA1157) Established in 1990, this is the only Tax Resolution practice located in 5 surrounding Washington counties. The Tax Problem Resolution makes up approx. 57% gross revenue and is derived from tax resolution cases averaging $1262 per case. The remaining service mix consists of approx. 16% individual returns with an average fee of $271, approx. 14% business returns with an average fee of $895, and approx. 13% General Ledger prep with an average fee of $248. The projected 2021 Annual Cash flow including owner’s salary and benefits, personal vehicles, and any other non-operational expenses of the business is $178,206. This practice uses Drake software and Pitbull. East Snohomish County CPA Practice (WA1156) Established in 2010, the practice has 38 bookkeeping clients generating approx. $136,700
in gross revenue. The Income tax service mix consists of approx. 23% from individual returns with an average fee of $708, approx. 14% from business returns with an average fee of $1680 and 2 other tax returns with an average fee of $1000 per return. Approx. $73,000 in revenue is generated from business consulting and another $9800 from auditing and review. The projected 2021 Annual Cash flow including owner’s salary and benefits, personal vehicles, and any other nonoperational expenses of the business is $140,000. Seller is open to selling the building to the buyer as a separate transaction or leasing the office space to the buyer, as needed. This practice uses UltraTax, Workpapers CS, QuickBooks, MS Office. Everett (Snohomish County) CPA Practice (WA1149) Established in 1990, this CPA practice generates approx. 57% gross revenue from Income tax and 39% revenue from write up. The balance of the revenue consists of Compiled Financial Statements of approx. 4%. One of the most important qualities of this firm is a strong staff that assists in providing these professional services to a varied client base. The practice has continuously invested in technology and is equipped to provide appropriate services to the client base. Any firm seeking a presence in Snohomish County or a firm looking to move to the next level of gross revenues will do well with this solid base of clients and the opportunity this firm provides. Olympia CPA-Tax Practice (WA1154) Established in 2011, this practice generates approx. 73% gross revenue from individual returns with an average fee of $425 per return, approx. 26% gross revenue from business returns with an average fee of $1400, and the remaining 1% from other returns averaging approx. $550 per return. The projected 2021 Annual Cash flow including owner’s salary and benefits, personal vehicles, and any other non-operational expenses of the business is $276,000. This practice uses Drake, QuickBooks and MS Office. Vancouver CPA Practice (WA1152) Established in 2002, this CPA practice has a service mix consisting of approx. 57 bookkeeping clients generating $197,000 in revenue; 225 individual tax returns with an average fee of $387 per return; 110 business tax returns with an average fee of $382 per return. $106,000 +/- in revenue is generated via payroll. The 2020 Annual Cash Flow including owner’s salary and benefits, personal vehicles, and any other non-operational expenses of the business was $188,269. This practice uses Drake and QuickBooks.
Bellingham CPA-Tax Practice (WA1151) Established in 2002, this CPA tax practice generates approx. 57% gross revenue from individual returns with an average fee of $567, approx. 37% gross revenue from business returns with an average fee of $1209 and another 2% from other returns with an average fee of $635. Another $7,466 +/- in revenue is generated via tax planning and misc. accounting services, etc. The projected 2021 Annual Cash flow including owner’s salary and benefits, personal vehicles, and any other non-operational expenses of the business is $115,040. This practice uses Drake software. South King County CPA Practice (WA1150) Established in 2016, this practice generates approx. 53% of gross revenue from Bookkeeping ($172,500). The income tax service mix consists of approx. 20% from individual returns with an average fee of $351, approx. 19% from business returns with an average fee of $1600 and other $30,000 +/- in revenue is generated from consulting. The 2020 Annual Cash Flow including owner’s salary and benefits, personal vehicles, and any other non-operational expenses of the business was $199,749. This practice uses Lacerte Software. Marysville/Everett Area CPA Practice (WA 1145) Established in 2006, this practice’s gross revenue is generated with approx. 71% Income Tax with Write Up being the balance. The firm has a flex staff that assists the Seller with the busy season workload. Otherwise, the practice is operated by the owner in the day-to-day operation of the firm. This firm fits a variety of Buyers by having a solid growth and revenue potential whether as a starter practice or an excellent addition to a new or existing practice looking to make a jump to the next level of revenue. All of this is found in a firm made strong by the excellent service provided by the Owner. To assist in the sale, the Seller will provide financing but will require excellent credit and collateral be a part of the transaction. Centralia/Chehalis/Olympia Area CPA Practice (WA 1143) Established in 2011, 100% of the revenue from this CPA practice is generated by income tax preparation providing the opportunity to grow by either adding write up services or continuing the rapid growth experienced in tax services. The profit of the practice is excellent with approx. 75% of fees being realized by the owner. In addition, the fees are excellent and allow for this firm to fit nicely into any practice regardless of the size of the firm. The practice is an ideal opportunity for any individual or firm looking to start or expand a firm with little to no changes. This practice uses Intuit Tax Services and QuickBooks.
STATEMENT OF OWNERSHIP, MANAGEMENT, AND CIRCULATION (REQUIRED BY 39 U.S.C. 3685) 1. Publication Title: The Washington CPA 2. Publication No.: 0000-9754 3. Filing Date: 24 September 2021 4. Issue Frequency: Quarterly 5. No. of Issues Published Annually: 4 6. Annual Subscription Price: $12 7. Complete Mailing Address of Known Office of Publication: 902 140th Avenue NE, Bellevue, Washington 98005-3480 Contact Person: Jeanette Kebede, Telephone: 425.586.1120 8. Complete Mailing Address of Headquarters or General Business Office of Publisher: Same as #7 9. Full Names and Complete Mailing Addresses of Publisher, Editor, and Managing Editor: Publisher: Washington Society of Certified Public Accountants, Editor: Jeanette Kebede, Managing Editor: n/a, Washington Society of Certified Public Accountants, 902 140th Avenue NE, Bellevue, WA 98005-3480 10. Owner: Washington Society of Certified Public Accountants, 902 140th Avenue NE, Bellevue, WA 98005-3480 11. Known Bondholders, Mortgagees, and Other Security Holders Owning or Holding 1 Percent or More of Total Amount of Bonds, Mortgages, or Other Securities: None 12. Tax Status Has Not Changed During Preceding 12 Months 13. Publication Name: The Washington CPA 14. Issue Date for Circulation Data Below: 07/23/2021 15. Extent and Nature of Circulation (Avg. No. Copies Each Issue During Preceding 12 Months, Actual No. Copies of Single Issue Published Nearest to Filing Date). a. Total No. Copies (Net press run): 6,850, 6,300. b. Paid Circulation (By Mail and Outside the Mail): (1) Mailed Outside-County Paid Subscriptions Stated on PS Form 3541: 3,655, 3,494. (2) Mailed In-County Subscriptions Stated on PS Form 3541: 2,759, 2,585. (3) Paid Distribution Outside the Mail Including Sales through Dealers and Carriers, Street Vendors, Counter Sales, and Other Paid Distribution Outside USPS: 0, 0. (4) Paid Distribution by Other Classes of Mail Through the USPS (e.g., First-Class Mail®): 0, 0 c. Total Paid Distribution [Sum of 15b (1), (2), (3) and (4)]: 6,414, 6,079. d. Free or Nominal Rate Distribution (By Mail and Outside the Mail): (1) Free or Nominal Rate Outside-County Copies included on PS Form 3541: 34, 35 (2) Free or Nominal Rate In-County Copies included on PS Form 3541: 0, 0. (3) Free or Nominal Rate Copies Mailed at Other Classes Mailed Through the USPS: 24, 22. (4) Free or Nominal Rate Distribution Outside the Mail: 35, 0. e. Total Free or Nominal Rate Distribution (Sum of 15c and 15e): 58, 57. f. Total Distribution (Sum of 15c and e): 6,472, 6,136. g. Copies not Distributed: 378, 164. h. Total (Sum of 15f and g): 6,850, 6,300. i. Percent Paid: 99.10%, 99.07%. 16. Electronic Copy Circulation n/a 17. Publication of Statement of Ownership If the publication is a general publication, publication of this statement is required. Will be printed in the 10/22/2021 issue of this publication. 18. Signature and Title of Editor, Publisher, Business Manager, or Owner: Jeanette Kebede, Editor, Date 09/24/2021
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PEAK FIRMS
WSCPA PEAK FIRMS The WSCPA Peak Firm program recognizes and awards special benefits to firms that sign up 100% of their eligible staff for WSCPA membership. Being a Peak Firm establishes you as a leader in the profession and provides an array of discounts and benefits. Learn more and enroll your firm at wscpa.org/peak-enroll
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NON-PROFIT LEGISLATION
Washington’s New Nonprofit Corporation Act: Is Your Nonprofit Ready?
In May, Governor Inslee signed into law an all-new Washington Nonprofit Corporation Act (New Act). The New Act will completely replace the current Washington Nonprofit Corporation Act, which has seen only minor updates since its adoption in 1967. Nearly all of the New Act's provisions will take effect January 1, 2022. While the New Act makes changes to many different aspects of Washington nonprofit corporate law, it makes major, overarching changes in three areas: •
•
•
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Modernization: Many provisions of the current Act are out-of-date or do not reflect currently recommended practices in nonprofit governance. The New Act modernizes those provisions. Charitable Assets Held by Nonprofit Corporations: The New Act adds a new set of provisions intended to protect charitable assets held by nonprofit corporations. Such assets are currently regulated under trust law in Washington, the application of which is not always straightforward in the context of nonprofit corporations. Membership Organizations: The New Act adds a comprehensive set of rules governing the relationship between membership nonprofits and their members, an area in which the current Act has skeletal provisions that often raise more questions than they answer.
The Washington CPA Fall 2021
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NON-PROFIT LEGISLATION
What It Means for Existing Nonprofits Non-Membership Organizations Most Washington nonprofits that do not have members will not need to amend their governing documents (either articles of incorporation or bylaws) to be in compliance with the New Act when it takes effect. The New Act will nevertheless present opportunities to many nonprofits to streamline and improve their governance if they wish to do so. Some of those opportunities are described more completely below. Nonprofits may wish to have legal counsel review their articles of incorporation and bylaws to ensure that they are compliant with the New Act and positioned well to take advantage of its improvements. Membership Organizations Nonprofits that have members may need to amend their documents to address new rules governing membership qualifications, powers, notices, meetings, and voting. The New Act also presents opportunities for many membership nonprofits to improve their membership structures. Donor-Restricted Assets The New Act's rules governing use and management of charitable assets are significantly different from those found in Washington trust law. The new rules instead conform to Washington's Uniform Prudent Management of Institutional Funds Act (UPMIFA, Chapter 24.55 RCW), which applies to all nonprofit corporations that hold charitable assets. Nonprofits that hold assets subject to donor-imposed restrictions (such as endowments and assets subject to donor-imposed restrictions on use) should work with legal counsel to review their policies and procedures governing the use, investment, and management of those assets, to ensure compliance with the New Act. Out-of-State Corporations Nonprofit corporations formed outside of Washington that operate within the state will likely face little change as a result of the New Act. The rules governing registration and operation of out-of-state nonprofit corporations do not change substantially in the New Act.
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Key Provisions of the Act While the New Act contains too many new and revised provisions to describe in a single advisory, some provisions are likely to have immediate real-world effects. We list some of those key provisions below. Electronic Notices and Meetings The current Act has antiquated rules requiring members, directors, and officers to opt in affirmatively, in writing, before they may receive any email notices from the corporation. The New Act permits email notices by default, with an opt-out option in case a particular member, director, or officer does not want to receive them. The New Act also clarifies that meetings of members, directors, or officers may be held either fully or partly online, unless the corporation's articles or bylaws expressly prohibit electronic participation in meetings. Online meetings may take place by videoconference, telephone, or in any other real-time medium through which participants may simultaneously understand one another. (This does not include asynchronous media such as email.) Membership Corporations The current Act has only skeletal provisions concerning the relationship between a nonprofit corporation and its members. The New Act includes a comprehensive set of provisions on the topic including rules governing members' rights and duties, notices to members, membership meetings, voting by members, and inspection rights. It also expressly provides for delegates of members to carry out some of the members' duties, an organizational concept that is particularly common in religious organizations. The New Act clarifies that members generally do not have fiduciary duties to the corporation and sets out complete procedures for membership voting by ballot. Because of the incomplete nature of current law in Washington governing membership, our experience suggests that many nonprofits have bylaws that will not comply in all respects with the New Act. Membership corporations should work with legal counsel to ensure that their governing documents are consistent with the New Act.
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NON-PROFIT LEGISLATION Board of Directors • Board Size: Organizations that are classified for federal tax purposes as Section 501(c)(3) organizations and as public charities are required under the New Act to have at least three directors on their boards. That rule is consistent with informal IRS policy regarding public charities. Section 501(c) (3) organizations that are classified as private foundations for federal tax purposes may continue to have one or two directors. • Fiduciary Standards: The New Act clarifies that directors of charitable nonprofits have the traditional fiduciary duties of corporate directors rather than the substantially stricter duties that apply to trustees of a charity formed as a trust—and arguably to nonprofit directors as well, under some interpretations of current law. This change should reduce potential liability exposure for directors of charitable corporations and encourage service on boards. Finally, the New Act expressly allows organizations to have youth representation on their boards, subject to a number of specific conditions.
corporations to convert from for-profit to nonprofit status, or vice versa, without reincorporating if certain conditions are met and other applicable laws allow the conversion. Transition Provisions On the effective date of January 1, 2022, all nonprofit corporations currently governed by Chapter 24.03 RCW will automatically be subject to the New Act. Other types of nonprofit corporations governed by other chapters of Title 24 RCW, including Chapter 24.06 miscellaneous corporations, will continue to be subject to existing law. Corporations that have assets subject to donor restrictions on use or management may elect to use and manage their giftrestricted assets under current law (including current procedures for modification under charitable trust law) during a one-year grace period, ending on January 1, 2023, but will still be subject to the New Act in all other respects on January 1, 2022.
Supervision of Charitable Assets The New Act significantly revises the rules governing how organizations must handle charitable assets, including all assets held by Section 501(c)(3) organizations. The rules introduce new procedures for managing assets subject to donor restrictions that are designed for consistency with UPMIFA. The New Act establishes specific procedures for modifying gift restrictions, preventing charitable assets from being distributed improperly, handling charitable assets in transactions such as mergers and dissolutions, and reporting certain major changes in a charitable organization's activities or purposes. It also provides new procedural guidance to the Attorney General's office with respect to investigations of potential misuse or mishandling of charitable assets.
Conclusion The New Act is the culmination of over a decade of work by a Washington State Bar Association committee, and also reflects extensive input from stakeholders across Washington's nonprofit sector as well as Washington's nonprofit regulators. David Lawson is Counsel with Davis Wright Tremaine LLP in Seattle. David became the recorder for the New
"Fundamental Transactions" The New Act has all-new provisions governing so-called "fundamental transactions"—mergers, dissolutions, dispositions of assets, and other similar transactions. The new provisions are intended to guide nonprofits through the process of a fundamental transaction with more clarity, including especially how to treat charitable assets throughout the process. The New Act also adds for the first time provisions expressly allowing corporations to "redomesticate," or change their state of incorporation if the other state allows such transactions as well. Finally, the New Act will allow
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Act project in 2013 and is the primary drafter of many provisions, and other DWT attorneys provided significant input. You can contact him at davidlawson@dwt.com. Copyright Davis Wright Tremaine LLP. Reprinted with permission. Illustration: © iStock/ Rudzhan Nagiev
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