Switching accounting service providers might sound like a tedious job, particularly when your business relies on the services of the accounting department in areas such as bookkeeping, tax preparation, payroll services, and advice among others. Switching accounting firms is not something that has to affect the running of your business.
There could be various reasons why a business might decide to switch accountants. Your business needs could have grown, communications could have been hard, services offered could no longer fit your needs, or you simply needed a different financial advisor.
In case you are looking for an accounting firm near me, then knowing what takes place during the transition could ease things for you. You need to know the documents to transfer, duties to outline, and the deadlines to consider.
Why Businesses Switch to a Different Accounting Firm Near Them
In most cases, businesses do not move from one accounting firm to another unless they have a valid reason.
A small-scale business may first seek an accounting firm to help with simple bookkeeping and preparing taxes each year. The firm may, at some point, need help in payroll management, financial statements each month, budgeting, and other related services.
The search for an accounting firm near me is thus not just about physical location but rather finding a firm that suits the financial demands of the business among others.
Common Reasons for Making a Change
One of the most common reasons for changing accountants is business growth.The more number of employees, customers, transactions or location a business entity has, the more accounting support might be needed.
Another factor that can prompt businesses to move on to another accounting service is the communication problem. When questions are not answered on time or there is a lack of clarity regarding responsibilities, the business owners might think of switching.
Some other reasons for switching are:
- Limited accounting or advisory services
- Increasing service cost
- Unprompted response
- Poor bookkeeping or reporting
- Lack of experience in particular industry
- Outdated technology or processes
- Poor tax planning services
- Inaccessible financial data
- Changing business needs
Before switching to another accounting service provider, businesses need to determine what is wrong with their current provider. This will help them to identify what to expect from the new firm.
How an Accounting Firm Near You Handles the Transition Process
Once an organization is ready to change their service provider, the next step taken by the new accounting firm is to analyze the accounting process of the organization.
This may involve reviewing the accounting process, financial records, the organization's status with respect to tax filing, payroll arrangement, reporting, and accounting tasks outstanding.
Some common actions involved in the accounting firm transition include the following:
- Define the services to be transferred
- Determine the transfer date
- Define which records need to be transferred
- System access needed
- Review opening balances and financial records
- Tasks outstanding in accounting process
- Deadlines outstanding
- Reporting/communication schedule
The new accounting firm may also communicate with the old firm to obtain any necessary records where possible depending on the situation.
After obtaining the required records, the new accounting team will analyze the records in order to make sure they are complete and accurate. This will include analyzing reconciliations, outstanding transactions, account receivables, account payables, and many other financial statements.
The transfer of accounting firms takes into consideration several issues such as the size of the business, quality of the records, accounting complexity, and services transferred among others.
What Records and Access Need to Transfer
One of the most important parts of transferring accounting records is ensuring that the new provider receives enough information to continue the work accurately.
Depending on the services to be performed, the exact documents that need to be provided will vary; however, companies should transfer:
- Accounting files and financial data
- Chart of accounts
- General ledger information
- Bank and credit card account details
- Information for bank reconciliations
- Accounts receivable documents
- Accounts payable documents
- Previous financial statements
- Tax filings and supporting documents
- Payroll documents
- Outstanding invoices and bills
- Fixed asset records
- Relevant business reports
It may also be necessary to provide the new accounting firm with access to the systems being used by the company.
These might include:
- Accounting software
- Payroll software
- Expense management software
- Payment processing software
- Bank feeds
- Document management software
- Invoicing software
Keeping the security of information a high priority, companies should grant access through relevant user permissions instead of simply providing passwords.
Once there is no further need for the previous accounting firm to access the systems, user permissions should be revoked if necessary.
Companies should also keep copies of all the financial and tax documents for themselves.
The new accounting firm may conduct a review of transferred documents before assuming full responsibility.
How to Avoid Gaps in Service During the Switch
The problem of missing significant work during the transfer is one of the major concerns during the process.
The most effective strategy is to conduct the transition on the basis of business and finance deadlines.
Prior to changing the accountant, it is necessary to prepare the list of future deadlines that includes such tasks as:
- Tax submission deadlines
- Payroll deadlines
- Reporting deadlines
- Loan/lender reporting requirements
- Audits
- Accounts payable
- Accounts receivable
- Reconciliations
It is also necessary to determine which party is responsible for each of the listed tasks.
In some cases, it is beneficial not to arrange the transition immediately prior to tax filings or other deadlines. This will give the new accounting firm enough time to study the records.
Effective communication is also essential.
In order to arrange the transition successfully, the business should supply the new accounting firm with the following information:
- Current accounting practices
- Recurring deadlines
- Existing financial problems
- Transactions that are pending
- Existing reporting requirements
- Payroll deadlines
- Customer invoices
- Vendor unpaid invoices
This list can be compiled into a transition checklist.
Some overlapping could also occur in the process of transferring from the old accounting firm to the new one. For instance, the old firm could finish some of the work that it has started before the transfer of responsibilities.
The approach will depend on the nature of the service provided and the agreed date for the transfer.
What matters most in this situation is setting clear boundaries of responsibilities.
A switch from one accounting firm to another does not have to be problematic. It is possible to transition smoothly by having a plan of how to transition the company’s records, respect the deadlines, and create a workflow with the new provider.
The main points in the transition include the reasons for the change, choosing a fitting provider for the company, transferring all the necessary information, looking at system access rights, and assigning responsibilities for future work.
Businesses that are looking for an accounting firm near me should take into account the process of transition from one provider to another when considering an accounting firm to hire. Contact The Fino Partners to get the best accounting services for your business.
