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NY & NJ Dissolution and Non-Compete Obligations for Accountants

Charles Internicola

by Charles Internicola
National Business and Franchise Lawyer

Date: 02/11/2013 | Category: Partnership Disputes | No comments

Many times‚ especially before and after "tax season" (yes the time of year when we pay for the government's inefficiency) there is a serious uptick in shareholder and partnership disputes involving New York and New Jersey Accountants.  Accountants‚ like other professionals – including doctors and lawyers – are no strangers to partnership disputes and‚ many times‚ they are faced with serious issues concerning valuable customer lists and client contact information.

Setting aside the stress and long hours that many accountants face‚ when it comes to a dispute with your accounting partner‚ you can't just dissolve your business and move on.  Rather‚ you must reach an agreement with your business partner about the orderly dissolution of your accounting firm assets and how clients will be allocated among one another.  Some basic thoughts here if you are faced with this type of dispute:

  1. There are many IRS regulations respecting the privacy of tax records and the transfer of records – from one accounting firm to another (even if you are a principal in both) – that you must be aware of during your partnership dispute and any transition.  Violation of these privacy rules and IRS regulations‚ many times will lead to significant claims agaist the party taking the records;
  2. Many times‚ accountants prepare their own shareholder agreement which may be good or it may be bad.  My point here is that if you dont have a well drafted shareholder or partner agreement‚ dont get stuck with assumptions about what your agreement says or requires.  There may be loopholes.
  3. Courts are reluctant to restrict an accountant from working and they will not‚ naturally‚ require a cleint to work with a particular accountant.
  4. When it comes to accountant partnership disputes‚ consider that a significant factor will relate to enforceability of "non-solicitation" obligations that may be imposed contractually (based on your agreement) or legally (based on your fiduciary obligations as a partner.
  5. Just "dissolving" your accounting firm does not solve your problem and‚ many times‚ may expose you to liability from your accounting partner.

LEARN MORE: To learn more about New York and New Jersey Business and Partnership Disputes‚ Order a complimentary copy of "The New York and New Jersey Partnership Dispute Guide".

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