If nobody inside your practice can buy it, succession planning in California means choosing an outside path early enough for the filing calendar to cooperate. There are four: a sale to an individual practitioner, a local firm, a platform or a capital-backed buyer; a merger into a larger firm for an interest in it; a staged sale to a senior employee, which in a CPA firm works only while licensees hold more than half of the equity and the votes (BPC 5079); or a discontinuance under 16 CCR 54.4, which returns the files and realizes nothing for goodwill. A sale that should put the files with the buyer before a season is signed in September, with the written client notice out by October 1, because 16 CCR 54.3 holds every file for 90 days. The plan therefore works backward from your last season: about 24 months of preparation before that signing for a sale or a merger, 36 for an employee buyout, 12 for a wind-down. Without a plan the clock is short. A sole proprietor’s staff may keep preparing returns only under a licensed signer (BPC 22258), and a deceased shareholder’s shares in an accountancy corporation must reach a licensed person within six months or the Board of Accountancy may suspend or revoke the corporation’s registration (Corporations Code 13407). In the AICPA’s 2020 succession survey, 44% of solo practitioners and sole proprietors planned to retire within five years, and fewer than 10% had a practice continuation agreement.
The rules come from the Business and Professions Code, the Corporations Code, the Board’s regulations, licensee pages and November 2025 licensing report, and guidance from the AICPA, NASBA, CAMICO and two advisers to accounting firms, each read October 21, 2026 and linked at the end. The sale itself is in how to sell a CPA practice; the notice calendar in selling confidentially; the client letters, including the discontinuance letter, in letters for selling a CPA practice; the staff side in what happens to your staff; and how the price is paid in holdbacks and earnouts.
- 01Four paths when nobody inside can buy: an outside sale, a merger for an interest in a larger firm, a staged buyout by an employee (a non-CPA owner can hold less than half of a CPA firm’s equity and votes, BPC 5079), or a discontinuance under 16 CCR 54.4 with no price for goodwill.
- 02The calendar runs on the 90-day notice. Sign in September, mail the 54.3 notice by October 1, and the files can move on December 31, before the season. Each plan works back from the last season you want to work.
- 03Without a plan: staff who prepare returns under the owner’s signature keep their exemption only while a California CPA, a licensed firm, an attorney or an EA signs (BPC 22258); a deceased shareholder’s shares in an accountancy corporation must go to a licensed person within six months (Corporations Code 13407).
- 04A practice continuation agreement is the stopgap for the years before a sale. The AICPA and NASBA kit lists what one covers, and describes payment for a practice taken over this way as five to seven years of installments after a 10% to 20% down payment.
- 05After the last season, retired status lets you receive a share of profits or other compensation from a firm while you no longer practice: 20 years licensed, five of them active with the Board, a one-time $75 fee.
How many California owners are planning without a successor?
California does not require a sole proprietorship to hold a firm license, so nobody counts one-owner practices. The Board of Accountancy does publish its licensees’ ages. Its November 2025 licensing report counts 88,565 active and inactive CPAs at a median age of 48; 14,931 are in their sixties, 6,469 in their seventies and 1,356 are 80 or older, so 22,756, about one in four, are at the age when an owner decides what happens to a practice. It also counts 4,275 accountancy corporations and 1,257 partnerships with a firm license at June 30, 2025. County and size counts are in California CPA firms by the numbers.
The pool of possible successors is shrinking. California first-time CPA Exam takers fell from 6,547 in 2016 to 3,444 in 2024, and California candidates passing the whole exam from 3,582 to 2,063. The AICPA’s 2025 Trends report counts 55,152 accounting graduates nationally in the 2023 to 2024 academic year, 6.6% fewer than a year earlier, though enrollment rose 12% the next year. A newly licensed California CPA was 30.8 years old on average in the 2024 to 2025 fiscal year. For a ten-person practice the shortage means fewer employees on track to hold the license that owning a CPA firm requires.
Little of this is planned. In the AICPA Private Companies Practice Section’s 2020 survey, 44% of solo practitioners and sole proprietors planned to retire within five years and 31% more within six to ten, and fewer than 10% had a practice continuation agreement. Among multi-owner firms, 57% had no written and approved succession plan and 40% had not addressed how clients would be handed over.
Plan the dates backward from your last season
Three inputs give the dates each path needs. The calendar is the one the 90-day notice imposes on every California sale; the lead times are planning assumptions, stated under the results.
Start preparing
Sign by
Mail the 54.3 notice by
Your last season ends
A sale, buyout or merger is signed September 24 and the 54.3 notice mailed October 1 of the year before your first season under the new owner, so the 90-day window closes December 30 and the files can move December 31. Lead times are assumptions: preparation 24 months before signing for a sale or a merger and 36 months for a staged buyout, with a written buy-in plan at 24; buyer conversations twelve weeks before signing; merger talks twelve months before. A discontinuance is dated October 31 of the last season, after the October 15 extensions, with the 54.4 notice a month earlier; the regulation sets no lead time. “Now” means the date has passed. Not legal advice.
What are the paths when nobody inside can buy?
The rows differ in how you are paid, what the buyer needs from you and which California rule shapes the deal. Prices and terms by buyer type are in how much CPA firms sell for and how to sell a CPA practice.
| Path | How you are paid | What it needs from you | California rule that shapes it | Start |
|---|---|---|---|---|
| Sale to an individual CPA or EA | Cash at closing and a balance over several years, adjusted for retention; often an SBA loan behind it | A transition long enough for one person to meet every client | NDA before client data (BPC 5063.3(a)(4)); 90-day notice before files move (16 CCR 54.3); your non-compete holds because goodwill is sold (BPC 16601) | 24 months |
| Acquisition by a local or regional firm | Cash plus a payout tied to retention | Acceptance that your office and systems usually fold into theirs | Same as above | 24 months |
| Merger for an interest in a larger firm | An ownership interest in the combined firm, bought out later under its agreement | Several more years inside someone else’s governance | No 54.3 notice while you keep an ownership interest; it applies when the interest is bought out | 24 months |
| Platform or consolidator | Priced on earnings, with an earnout and rollover equity in the platform | Enough earnings to be priced on EBITDA | Same notice and NDA rules; BPC 5079 limits what a nonlicensee owner may hold | 24 months |
| Capital-backed buyer with a CPA successor (WIN) | Cash at closing, a retention-linked holdback or seller note where the deal calls for one, optional rollover | Two or three seasons beside the CPA who becomes the owner, or a shorter stay | Same notice and NDA rules; the firm keeps its name, office and people | About twelve weeks from first call to closing |
| Staged buyout by a senior employee | Installments from the practice’s own profits, with equity moving in tranches | A successor who wants the job and can carry the payments | Nonlicensee owners must materially participate, and licensees must hold more than half of the equity and votes (BPC 5079); 54.3 applies at the last tranche | 36 months |
| Discontinuance | Nothing for goodwill; you collect receivables and work in progress | A last season and a notice to every current client | 16 CCR 54.4: notice with the discontinuance date and how records are returned | 12 months |
The rows can follow one another. A continuation agreement signed now covers the years before any of them, a merger can end in a buyout of your interest, and a staged buyout that the successor cannot carry still leaves the outside sale. Every sale that ends your ownership runs on the 90-day notice, which is why the September signing recurs in each.
Thirty-six months out: decide whether anyone inside can buy
Three years before the signing you are aiming for, ask the one or two people who might take over, and fix the documents that decide what happens if you stop working first.
- Ask the candidate directly. Poe Group Advisors, which brokers practice sales, reports owners who spent years grooming a successor only to learn that the person did not want the responsibility or would not pay a reasonable price. An answer in year one leaves time for the other paths.
- Check the license against the structure. A senior preparer who is an EA or registered with CTEC can own part of a CPA firm under BPC 5079 only as a minority. Nonlicensee owners must materially participate, which the statute defines as regular, continuous and substantial activity; licensees must be a majority of owners (a two-owner firm may have one nonlicensee) and hold more than half of the equity and the votes; and a nonlicensee’s interest reverts to the firm when the participation stops. A buyout that leaves a non-CPA as the only owner ends the practice as a CPA firm. It continues as a tax practice under the buyer’s own credential, and attest and compilation engagements stay with a CPA, since BPC 5079(a)(6) requires one to hold ultimate responsibility for each.
- Put the buy-sell terms in writing. An accountancy corporation’s bylaws and share certificates must carry the Corporations Code 13406 and 13407 restrictions on who may hold shares (16 CCR 75.9), and the Board must be told of a change in shareholders within 30 days. A shareholder agreement with a price formula and a payment schedule turns those restrictions into a plan.
- Collect email consent now. The 54.3 notice can go by email only to clients who agreed in writing to electronic delivery and gave the address to use (16 CCR 54.3(f)). Add that consent to this year’s engagement letters and the notice in year three goes out in a day instead of by mail to every address on file.
- Sign a practice continuation agreement for the years before the sale, as described below.
Twenty-four months out: make the practice transferable
Two years before signing, the work is making the practice look to an outside buyer the way it looks to you.
- Know the number. Run the practice valuation calculator or the valuation quiz, and put three years of fees and expenses in a form a stranger can read. The AICPA and NASBA continuation kit asks for the same client summary a buyer will: each client’s type of business, years with the firm and billings by type of service.
- Reduce what depends on your signature. Count the returns only you review and sign. If an employee holds an EA or a CPA license, that person can sign through any transition; if nobody does, every return in the practice depends on your signature until the buyer’s preparers take over, and the transition plan has to cover that.
- Decide how long you will stay. The planner above takes one, two or three seasons after signing, and each additional season moves the signing date back a full year. The sale readiness check scores the rest.
- Look at the tax side with the structure. The allocation of the price on Form 8594, the installment treatment of a seller note and the California rate on the gain decide what you keep; they are worked through in how the sale of an accounting practice is taxed.
- Check your license plan for afterwards. If you will want retired status once you stop signing, confirm the 20 years of licensure and the five years of active California license it requires (below).
Twelve months out: choose the buyer and sign in September
The last year is the transaction. A direct sale on WIN’s process runs about twelve weeks from the first call to closing. Each step below has a fixed place in the calendar.
- Before any client data leaves the office, sign a written nondisclosure agreement. BPC 5063.3(a)(4) permits disclosures by a licensee or the licensee’s duly authorized representative to a prospective buyer or merger partner only on that condition. The blind profile, the NDA clauses and the coded diligence that keep the sale quiet are in selling confidentially.
- Sign in September. A notice mailed October 1 clears the 90-day objection window on December 30, and the buyer can open the files before the season starts. A November signing leaves most files closed until February.
- Tell staff after signing, in person, before the client letters go out. The closing-day mechanics are in what happens to your staff.
- Mail the notice to every client subject to the sale, by first-class or certified mail or by email where the client has consented, asking consent to transfer the records and stating that consent is presumed after 90 days without objection. Keep a copy of every notice and every reply for four years. The text is in the letters article.
A discontinuance has a shorter last year. Section 54.4 requires a written notice to each current client stating the date the practice discontinues and, if you hold the client’s records, the date and method of their return; records go back without delay or as agreed. Former clients need no notice. Records of a client you cannot reach are kept at least four years, longer for audit documentation, then shredded or erased. The letter is letter 5 in the letters article. A discontinuance realizes nothing for goodwill, which is the reason to test the other rows first.
Can a senior employee buy the practice over time?
Sometimes, when the practice’s own profits can carry the payments. A staged buyout moves equity to the employee in tranches and pays you from the practice’s own profits, so the employee’s salary, the payments to you and your reduced draw all come out of the same fees. It works when the practice can carry all three and the successor already runs client relationships, because a client who has dealt only with you is one the successor has to win in the first season. In the deals we see, the staged buyouts that hold are the ones where the successor already signed returns and ran the largest client relationships before the first tranche.
California adds two constraints. The first is BPC 5079: while the firm holds a Board license, licensees keep more than half of the equity and the votes, so a buyout by an EA or another non-CPA either brings in a CPA owner or ends the practice as a CPA firm at the last tranche. The second is the notice. Section 54.3 applies to a licensee who sells or transfers all or part of the practice and will no longer retain any ownership in it, which in a staged buyout is the final tranche, so the 90-day notice and the September calendar attach to the last signing. Counsel should read the rule against the structure; a sale of shares in a corporation that keeps its own records may be treated differently from an asset sale.
What a practice continuation agreement covers, and where it stops
A practice continuation agreement is a contract under which another CPA or firm takes over your practice, temporarily or permanently, if you become disabled or die. The AICPA and NASBA kit Practice Continuation Agreements: A Practice Survival Kit describes three forms: a one-on-one agreement between two practitioners, usually a buy-sell or cross-purchase agreement; a group agreement under which several CPAs succeed each other and the clients choose among them; and a state society plan that helps a spouse or heirs dispose of a practice when the member made no arrangement. The contract should cover:
- definitions of temporary disability, permanent disability, death and retirement;
- a temporary takeover: assignment of staff, the successor’s compensation and how the arrangement ends;
- a permanent takeover: the client list, working papers, files, work in process and receivables, equipment, leases, employee records, liabilities and malpractice insurance;
- payment for the practice, a non-competition clause, client notification, termination and arbitration.
Because a takeover after death or disability is negotiated without the seller, both parties agree the valuation method in advance. The kit puts payment at five to seven years of installments, sometimes three or ten, after a 10% to 20% down payment, and calls outright cash uncommon unless heavily discounted, because the successor pays your staff long before your clients’ fees arrive. CAMICO, a professional liability insurer of CPA firms, adds two points: draft the client and referral-source notifications in advance, and consider a buy-back provision, since a CPA can be disabled for months and return to full-time work.
The agreement has limits that the owners we talk to underestimate. Marc Rosenberg, a consultant to CPA firms, notes that many potential successors will not sign one unless the solo accepts a discounted price and adopts the successor’s software, standards and processes at once, since the successor commits to buy a practice it has not examined, at a moment it cannot choose; many reason they might as well buy the practice now. Treat the agreement as insurance for the years before your exit. For California, add three clauses the AICPA and NASBA list does not name: your duly authorized representative for disclosures to a buyer under BPC 5063.3(a)(4); who holds the keys, passwords and engagement calendar; and who sends the 54.3 notice. The regulation is written for a licensee who sells; when the seller is an estate, counsel decides how it applies, and sending the same notice and waiting the same 90 days is the conservative reading.
What happens if the owner dies or cannot work and there is no plan?
It depends on how the practice is organized, and in each case the clock is short. CAMICO’s loss-prevention guidance warns that a CPA who becomes ill or disabled without a continuation plan may be inviting lawsuits against themselves or their estate, and leaves the family to decide what to do while client deadlines run.
| Structure | What happens to the practice | Deadline | What a plan would have settled |
|---|---|---|---|
| Sole proprietorship | The license is personal and there is no firm license. Staff are exempt from CTEC registration only while a California CPA, a licensed firm, an attorney or an EA reviews and signs every return they prepare (BPC 22258(a)(7) and (b)); without that signer, only staff who are CPAs, EAs or CTEC-registered may prepare returns for a fee | Immediate for any return due | Who signs from the next morning, who may see client files under what NDA, the price formula for a sale by the estate |
| Accountancy corporation, one shareholder | Shares may be held only by licensed persons. If the deceased shareholder’s shares are not transferred to a licensed person, or acquired by the corporation, within six months of death, the Board may suspend or revoke the corporation’s registration, and the corporation must stop rendering professional services (Corporations Code 13406, 13407) | Six months from death; 30 days to notify the Board of a change in shareholders | A named licensed buyer, a price formula and a payment schedule, so the estate is not selling on a six-month deadline to whoever appears |
| Accountancy corporation, several shareholders | The corporation may buy back the deceased shareholder’s shares as long as at least one share remains outstanding. The same six months apply, and 90 days for a shareholder disqualified from practice (Corporations Code 13407) | Six months from death; 90 days from disqualification | The buyout price and terms in the shareholder agreement, and who funds them |
| Partnership | Governed by the partnership agreement; the firm continues under its license while the remaining owners meet the licensee-ownership rules (BPC 5079) | As the agreement sets | The buyout price, the payment terms and who may hold the departing partner’s interest |
Disability is harder to plan for than death, because the Corporations Code starts its clock only on death or disqualification. An owner out for four months in the season leaves a practice that is legally intact and without a signer. That is the case a temporary-disability clause exists for, and the one fewer than one solo practitioner in ten has covered in writing.
What your license can do after the last season
While you stay and sign returns for the buyer, your license must be active. After the last season the Board offers retired status. A retired licensee may receive a share of the net profits of a public accounting firm or other compensation from one, may not otherwise practice public accountancy, and writes “retired” after the CPA designation. Retired status requires 20 total years of licensure as a CPA or PA in the United States, at least five in active status with the California Board, and a one-time $75 fee on Form 11R-48. It renews every two years with no fee and no continuing education, can be restored to active with 80 hours of CE in the prior 24 months, and can be granted no more than twice. The rule matters if the buyer keeps paying you a share of profits or a fee after you stop signing; installments of the purchase price are payment for the practice itself, a distinction to confirm with counsel when both are paid. The other statuses are in the license renewal article.
Succession by sale to WIN
Wilshire Intelligence Network buys established CPA and tax practices across California and pairs each one with a practicing CPA who becomes its owner, which is the succession an owner without an internal successor is otherwise trying to arrange. The equity capital is committed before we make an offer, so there is no SBA loan and no financing contingency. The process is five steps and about twelve weeks: an introductory call, an indication of value from high-level figures, a written offer, a finite diligence list, then closing and a transition on your schedule. Terms follow the deal: cash at closing, a retention-linked holdback or a seller note where the deal calls for one, and optional rollover equity. The firm keeps its name, its office and its people, and your clients and staff hear about the sale from you, when you decide. You stay two or three seasons at meaningful compensation and introduce your successor client by client, or step back sooner. The first step is one call with our CPA team; we send a written valuation, with terms, within 24 hours of it, and the call commits you to nothing.
Sources
- 16 CCR 54.3 (sale or transfer of a licensee’s practice: the 90-day notice, email consent, four-year retention) and 16 CCR 54.4 (discontinuance), both operative April 1, 2024; 16 CCR 75.9 (share restrictions in an accountancy corporation’s bylaws and certificates). Read October 21, 2026.
- Business and Professions Code 5063.3 (confidentiality, disclosure under an NDA in a proposed sale or merger), 5079 (nonlicensee owners) and 22258 (CTEC exemptions, as amended by SB 788, effective January 1, 2026). Read October 21, 2026.
- Corporations Code 13406 and 13407 (who may hold and receive shares in a professional corporation; the 90-day and six-month transfer periods). Read October 21, 2026.
- California Board of Accountancy, Accountancy Corporations (30-day notice of a change in shareholders, at least one actively licensed California shareholder) and Retired Status; Report on Long-Term Licensing Data Trends and the AICPA’s 2025 Trends Report, Board meeting of November 20 to 21, 2025 (licensee ages, firm counts, exam takers and passers). Read October 21, 2026.
- AICPA, Accounting Firms Report Strong Hiring Outlook (2025 Trends report, October 27, 2025); 5 steps to a great succession transition (2020 PCPS survey retirement figures); Get Up to Speed on Small Firm Succession Trends (AICPA article on the 2020 PCPS and Succession Institute survey, September 12, 2023). Read October 21, 2026.
- AICPA and NASBA, Practice Continuation Agreements: A Practice Survival Kit (types, contents, payment methods). CAMICO, Plan Ahead: Practice Continuation for Small Firms (October 26, 2023). Read October 21, 2026.
- Marc Rosenberg, Practice Continuation Agreements: the succession solution for solos?; Poe Group Advisors, CPA Firm Succession Planning (revised June 24, 2025). Read October 21, 2026.
This article is general information for California practice owners and is not legal or tax advice. The structure of a buyout, the terms of a continuation agreement and the handling of a practice by an estate should be settled with counsel admitted in California, and the license status questions confirmed with the California Board of Accountancy.
Denis is a practicing tax and accounting professional and the principal of VistaTax, a practice serving individuals and closely held businesses: individual and business tax preparation, tax planning, bookkeeping, financial reporting and payroll. As WIN’s founding CPA he anchors the licensed side of the structure and sits at the table for every transition. More about WIN’s team.