Ed. note: an earlier version of this story had the word “rumor” in the headline. One day after publication, Bloomberg Tax confirmed that BDO USA LLP will form a professional services corporation, to be named BDO USA P.A. Said BT: The new structure allows the firm to realize certain tax benefits and other advantages that “position our firm for ongoing success as we continue to grow and transform,” BDO said in a statement.
For those who have been paying attention and noticed us teasing a big story coming out of BDO for months now I’m sorry to say this is not it. I’d also like to say that while I totally understand the accusations of “clickbait” and “bullshit” (I see you, Fishbowl), that’s not why we can’t report on it yet. Just getting those ducks in a row, thank you for understanding.
Anyway here’s some buzz I can report: multiple sources have told us BDO is switching from a partnership structure to a corporate one on July 1. From what we’re told by two sources, this was announced on a partner call a week or two ago. A Fishbowl post that was reported and removed shortly after it was posted also mentions this announcement and the avenue through which it was communicated. Screenshots or it didn’t happen. Oh wait.
Said one of our tipsters:
The junior partners are likely getting screwed and looking to jump.
Let you know if we hear more. /notclickbait For now, BDO USA, LLP is a Delaware limited liability partnership.
How is paying taxes on the dividends, in lieu of draws, on top of paying PIT on it equalizes to “lower taxes”?
The tax rate on earned income for partners is roughly similar to the tax rate on wages. It reduces the state tax burdern for partners in low tax states. All income is distributed every year, so the partnership never pays any income tax. State franchise tax burden should be similar in both structures. Lots of law accounting firms are organized this way. It reduces compliance costs for partners, and simplifies joining the firm.
Junior partners are not getting screwed. That is totally Fake News. Whoever tipped you on this doesn’t know what they are saying.
Definitely not getting screwed, it’s actually really good for new partners.
Taxes aren’t driving this. The Trump tax cuts expire in a few years. If they do this would be a huge mistake.
Watcha think happens to the pension??? A thing of the past?
This was a great move by the partners and had almost unanimous support. It significantly reduces our tax burden. It was negotiated throughout April and the partners voted on April 25. It wasn’t “announced on a partner call a week or two ago”, ha!
confused abt how they can become a corporation with publicly-traded stock and continue with public accounting work? i always thought this was a major no-no?
Look up “alternative practice structure”. CBIZ-MHM is an example of one.