Changing accountants could very possibly be the best thing you do all year. It’s something that happens for several reasons, ranging from having an accountant retire to going through a change in your business that requires something more or different than what the present accounting firm offers. Assuming the decision to switch has been made, there are several points to consider.
What should a company look for when trying to find a new accountant?
By following the steps below, you will begin to have an idea of what you need to do to find the best accountant for your company. Every company is different. Industries vary. One CPA firm will be terrific for a company but not wonderful for another. There should be some hard, objective factors to consider, but there should be a “personality fit” as well. Sometimes these kinds of changes help firms learn more about themselves—their mission, vision, culture, etc. That knowledge is valuable, especially for doing business in these challenging times.
What are the first steps to switching over?
Seeking a new accountant will take some time. Some of the pieces are done one after another, but many steps can be done simultaneously. These will get you started.
- Ask your referral sources. Get recommendations from your attorney(s), banker, brokers, and trusted advisors. Ask business colleagues who they use for their accounting services. Armed with several companies to explore, check out each one’s website. Is it focused on addressing challenges and providing solutions? Does the accounting firm appear to put out a lot of helpful content such as blog posts, webinars, and guides?
- Know your reasons. What are your current pain points? Make a list of the specific areas that drove you to seek a new accountant and ask the prospective CPA firms how they would address those needs. Here are some complaints.
- “I have to get a new banker, and my current accountant is not helping me find one.”
- “I’m not getting updated information on the new tax law changes.”
- “They are not giving me strategic advice on business issues and long-term challenges and opportunities.”
- Interview at least three firms. Ask these questions, and be sure to create some of your own.
- How do you interact with and communicate with your clients—phone call, email, Zoom?
- Do you also communicate through newsletters, alerts, and webinars?
- How do you keep your clients updated with important financial, tax, and decision-making issues?
- After reviewing how we process our accounting info, do you recommend any changes that could be made?
- What is your fee structure and what services are provided?
- Can you tell me the names of your other clients (references)? [Then call them and ask them about the prospective firm.]
- Be sure the firm is an Industry Expert – someone who has experience in your specific industry.
- Be prepared to share financial information. You should have two to three years of business and personal tax returns and two to three years of financial statements. This will help the CPA you are interviewing to understand your overall situation and possible areas where they can add value and solutions to current challenges. For example: Are you taking all allowable deductions? Are you engaging in effective tax planning? On a more proactive side, do you think your financial statements are telling your full story to the right people?
How long should a changeover take?
The time it takes to change over is an important topic. Your business continues even as the switch is transpiring. To minimize disruption, the entire process should not take more than thirty (30) days.
Who does what?
After you’ve decided on a new accountant, you will only have to do a few things.
- Send your current accountant a disengagement letter. Not sure what to say? Ask the new CPA you’ve selected for a template type of letter that you can make your own.
- Authorize communication between your old accountant to release data to your new accounting firm.
- Ensure the new firm has access to everything (like the accounting software program with Tax Returns and Financial Statements, etc. They can take it from there.
What happens next?
Depending on the new firm and its policies and approaches, you may see variations of each of these steps:
- Some firms have an onboarding process with systems and procedures to make this switchover as seamless as possible.
- Expect to get an engagement letter that defines what they are going to do for you.
- Establish communications. How often do you want them to communicate with you? What are your expectations? What are the communication expectations of your new accountant’s perspective? For example: Do you want calls in June when there is not a lot going on? What is your busy season? How about quarterly meetings to ensure your estimated taxes are spot-on? Monthly reviews? Do you want newsletter updates? Do you only want to talk to the accountant when you need something?
- Specify Authority Levels – Be clear on who it is in your organization you want your CPA to speak to about your financial information. If you don’t want certain employees accessing financials, sales data, and revenue, make sure you tell your new CPA. It’s easier for everyone concerned to know ahead of time.
There are many reasons to change accountants, and you’ll know when it’s time to act on whatever those reasons may be. And then, it must be done swiftly. Dragging it out will be as painful as pulling that band-aid off slowly. Leaving it on (staying with the wrong accountant) will let the ‘wound’ fester, and your business will be increasingly infected the longer you wait.
Research well. Get a good fit, and just do it.
Contact LSL CPAs if you have questions. We’re here to do more than accounting. We help people make better decisions.