The Three Bells

The Three Bells

Luke Pacioli (LP) was an excellent accounting student and was able to secure a job with a large CPA firm. After four years in practice he was a senior manager, and found that he enjoyed working with the firm’s smaller clients, but that he had grown to dislike the impersonal nature of the work on large clients. Moreover, LP liked the idea of developing his own practice. The culmination in LP’s feelings about the type of work he liked and disliked coincided with his employer becoming overstaffed. LP approached his employer about leaving the firm. The employer had no problem with LP leaving. Moreover, the firm agreed to release LP from his agreement to not practice public accounting for at least two years, provided LP did not contact the firm’s clients during that period.

After leaving the employer, LP became active in civic and charitable organizations where he met many owners of small businesses. These businesses were too small to employ an accountant and needed assistance with their payroll, sales, and income tax returns, as well as general bookkeeping and accounting. LP attracted some of these small businesses as clients, and prepared several individual tax returns.

By the end of his third year of practice LP’s net income was greater than his former salary ($100,000). Year 4 was a very good year for business and LP hired a full-time employee who was a very productive tax return preparer but had no capacity for attracting new, profitable clients.

After 4 years in his own practice, LP had become a very competent tax and accounting professional but he was behind the times in regard to technology. Moreover, the practice continued to grow, and LP was working more hours than he desired. Therefore, LP hired, Valerie (V), who was a CPA with excellent technology and personal skills. To attract V to the firm LP had to promise that after two years LP would consider making her a partner.

During the first five years, the LP practice moved from...