Your accountant runs one of the most sensitive parts of your business. While you can fire them anytime, you must be professional and ensure that all your financial records remain intact.
Approaching the matter correctly can make it simple for everyone involved and even end your professional relationship amicably.
You must ensure that you pay for all services rendered even if you feel they were not provided or dispute some. So, how do you know when it is time to fire your accountant?
Signs That You Should Fire Your Accountant
Over 71% of businesses hire accountants to prepare their taxes. However, an unprofessional accountant can ruin your business financially.
Accounting is one of the most essential responsibilities in running any company, and the person you choose must play their role efficiently.
Before firing your accountant, consider why it is the best step for your business. Firing them could negatively impact your business, especially if they are in the middle of an important task such as filing your business tax returns.
Some reasons to fire your accountant may include the following:
- They are reactive rather than proactive: If your accountant is often rushing at the last minute to solve problems rather than planning to prevent them, it may be time to fire them. Your accountant should plan for the financial year ahead and stay updated on all the latest changes in tax regulations.
- Their office is disorganized: Your accountant must have good organizational skills to keep your books in order and keep track of your tax statements and budgets. If your documents get lost, and some forms are not filed, it may be a sign that your accountant cannot keep your books in order.
- They do not help you create record-keeping systems: While no one is perfect, your accountant should guide you on how to keep records. They should help you improve your record-keeping systems to make your business run more efficiently.
- They do not have relevant industry experience: Even if you hire an experienced accountant, they may not be able to offer you their best if they do not understand your industry. You must hire an accountant with a background in your sector who understands the loans, deductions, and other financial products available for your business. An accountant with relevant industry experience can help you make significant savings.
- You do not understand their role clearly: You must clearly understand an accountant’s role in your business. They should outline their responsibilities and action plan to add value to your business.
- They do not fulfill their promises: If your accountant does not fulfill their promises, it may be time to let them go. In addition, an accountant who always promises to resolve issues such as tax in your favor is dishonest and should not be working for your business.
- They are not responsive: If your accountant does not respond to concerns or answer your questions quickly, it may be time to fire them.
- They are not ethical: An accountant who uses unethical means to complete their tasks or asks you to take actions you feel are not right is unprofessional and should not work for your business.
Firing Your Accountant
Terminating an accountant can be complicated if they have a legal contract. You do not want to end up defending your business for a breach of contract in court, as it could result in a costly settlement.
However, if the contract states specific parameters for dismissal, the process can be easier. Here are the steps to take to fire your accountant.
1. Hire a New Accountant
If you are in the middle of any financial issues, such as tax, you should hire a new accountant to ensure your business continues to run smoothly.
The new accountant should get your business files from the previous accountant and handle IRS notifications. Keep your new accountant updated on the progress of firing the previous accountant.
2. Check Your Contract
If you have a contract, follow the outlined termination procedure. This includes notifications and timing before termination.
3. Send a Registered/Certified Letter
This letter states your intent to terminate the contract immediately upon receipt and informs your accountant to stop working on any ongoing issues. You do not need to explain why you are terminating your accountant.
In the registered letter, you can request to have your files transferred to your new accountant or instruct your previous accountant to cooperate with any requests from your new accountant.
You may also ask for a refund of any fees paid in advance or for work not done. We recommend requesting an itemized bill that details pending work and any expenses incurred.
4. Change Your Passwords
Change all passwords to your accounting software, billing accounts, payroll records, apps, electronic funds transfers, and any other files your previous accountant has access to. This ensures that all your financial information is secure.
Before Firing Your Accountant
Firing an employee is never pleasant. Before firing your accountant, talk to them about your concerns. Explain why you are dissatisfied and outline your expectations. Ask your accountant for clarification if you have concerns about a specific issue.
However, if your concerns are about the accountant committing ethics violations, you should contact the CPA association in your state. Contact your local accounting association for guidance if your accountant is not licensed.
Remember, even if you have an accountant, you are responsible for your business. Always ensure you have complete access to your business accounting information and have backup copies.
As you hire a new accountant, print out your balance sheet, accounts receivable information, and profit and loss statement for the recent financial year to make the transition easier. List all your passwords that your previous accountant may have to ensure you can change them quickly if necessary.
Terminating your accountant professionally ensures the situation goes smoothly for everyone involved.