How do you know when it’s time to change accountants for your limited company? For most SMEs, a great accountant does much more than just keep the books. They can act as trusted business advisor, working tirelessly to propel your startup business to new heights.

Take this quick survey to see if switching accountants can unlock new opportunities for your business.

Do you feel that your accountant:

  • Ensures your cash flow and liquidity is optimised to take advantage of new opportunities?
  • Quickly provides you with accurate financial data?
  • Assesses your financial health by comparing it against industry benchmarks?
  • Is proactive and provides you with information about your business?
  • Is always readily available and provides personalised service?

If you answered “no” to any of the questions above, it’s time to consider switching accountants. It’s important to have confidence in your accountant’s ability to keep the heart of your business ticking as its needs grow and evolve.

Read on to discover all the ways a new accountant can bring added value to the table, and learn the nitty-gritty behind leaving your accountant.

Consider the needs of your business

Every limited company is different. Your financial needs will vary based on the size of your company, the industry you serve, the state of your balance sheet, and more.

When you hired your accountant, you undoubtedly found their services to be adequate and their value to be fair considering your situation. But if your needs have changed with time, begin your search for an accountant that is a better fit for your business.

There are accountants that specialise in your industry or line of work, for instance, as well as bigger accountancy firms that are better equipped to handle the increasing complexity of your financial situation.

You ought to change accountants if you feel like your small business finances are being given the cookie-cutter treatment year after year, instead of adapting to your unique business opportunities and threats.

Thanks to automated bookkeeping and payroll software, accountants have more time to devote to being your trusted advisor. Find an accountant that is eager to use their expertise to add value in ways a machine cannot.

Give strikes based on performance

The measure of a good accountant is their ability to efficiently deliver what they promise without raising the ire of HMRC.

If your accountant has made mistakes in the past as a result of being disorganised, ignorant, or careless, this is costing you unnecessary resources and you should consider switching accountants.

Some of the best value a good small business accountant can give is via tax planning and tax saving strategies, proactive advice and insights and the reduction of business costs. If they are not proactively identifying tax-saving opportunities, they are falling short of their mandate.

Change business accountants if your current one fails to respond to your queries in a time you feel is reasonable, and if they lack the initiative to find solutions to your niggling issues.

Always hunt for value

Hourly or fixed rates? This is something you need to negotiate in your favour, so do the math and see which scenario benefits your small business the most.

Another essential thing to do when switching accountants is to discuss your expectations with the new accountant you have chosen. Sit down with them as you would with a new employee and make sure that they can provide the level of service that was otherwise lacking with your former accountant.

What’s more, when you change accountants, your new firm is obliged to provide you with a letter of engagement that outlines the work that is to be performed, as well as their fee structure.

Read it carefully before signing, making sure it’s consistent with your expectations for what is ideal small business accounting.

Timing is key when switching accountant

Assessing the timing of the switch can ensure a smooth transition. End-of-month/quarter/year and tax season are some of the busiest times for accountants.

You will also want to wait for a time when there is little active business between you and your limited company accountant. This way, nothing gets in the way of the changeover, which requires the undivided time and attention of all parties involved.

Many people who have poorly timed the switch have experienced drawn-out delays and needless aggravation because the accountant cannot devote the hours needed to carry out the transfer.

Changing accountants process

Here’s the master plan for switching accountants:

1. Inform your current accountant

No one enjoys firing someone. While it’s a very serious matter, it’s also a normal part of conducting business. Minimise the awkwardness by preparing for this discussion in advance.

You’ll want to handle the talk professionally and stress that you’re switching accountants because your business needs are not being met.

If you don’t provide specific evidence of the responsibilities that they neglected, it can begin to look like a personal attack. Keeping things strictly business will minimise this risk.

You can even seek help from your new accounting firm and have them draft a letter of notice on your behalf.

2. Receive your Disengagement Letter

While it is a professional document, the Disengagement Letter you will receive from your former accountant is quite simple in scope. Its main purpose is to provide legally-binding evidence that the relationship between you and your accountant has terminated.

It will also outline any work-in-progress and how this will be delivered, as well as a breakdown of outstanding fees and accounting items for you to follow up on.

3. Your new accountant will send your former one a Professional Clearance Letter

Your new accountant will now set the wheels in motion on their end to obtain what they need to begin work. One behind-the-scenes formality they follow through with involves sending a Professional Clearance Letter to your former accountant.

This letter asks whether there are any professional reasons why your new accounting firm should not take you on as a client. It also requests that all relevant financial documents be forwarded to your new accountant.

There should be no hiccups at this stage, but your former accountant may charge you an administrative fee to complete this process.

The fee should not exceed one hour’s work, and they must deliver all documents within a reasonable time as determined by their professional governing body.

4. Assign authority to your new accountant

Formally grant permission to your new accountant to file returns and handle financial matters on your behalf by contacting HMRC.

Your new firm can complete this process online, or you can complete Form 64-8 and mail it in. Don’t forget that assigning authority does not imply transfer of responsibility – it’s still up to you to ensure your financials are accurately reported.

Switching accountants is worth the trouble

Switching accountants is no small feat, but if it can benefit your bottom line in the long run, it’s more than worth it. Startups have the odds stacked against them as they face highly competitive business environments and limited timeframes to turn a profit.

By hiring a small business accountant who understands your unique needs and is eager to save you money while investing it wisely, you can gain the much-needed competitive edge you need to thrive.

If you’re considering switching and are looking for a London accountant contact us today to discuss your situation with one of our business advisors or request a quote here to start the conversation.