How to Switch Accounting Firms Without Missing a Filing

Before you give notice, be sure the problem is the firm and not the inputs. Late documents from your team, unclear expectations or a mismatched scope can make any firm look bad.

Reasons that justify switching include repeated missed deadlines, unexplained errors that reappear after correction, no proactive advice as you grow, slow responses to routine questions and a service model that no longer fits, such as needing controller-level review from a firm that only files taxes.

Try a written conversation first: list the issues, ask for a corrective plan and set a date. If nothing changes, switch. If you are leaving because your books are in poor shape, the new firm will inherit the mess, so decide which layer of support you need, whether bookkeeping, controller review or CFO advice, before you sign with a replacement.

Do this first, while the relationship is still normal:

1. Build a calendar of every recurring deadline: payroll tax deposits and filings, sales tax returns, quarterly estimated taxes, information returns, annual state filings and extension dates.
2. Read your engagement letter for notice terms, fees owed and what happens to your records when the engagement ends.
3. Confirm you have your own admin access to the accounting system, payroll provider, bank feeds and tax portals. Accounts should be in your name, not the firm's.
4. Download current copies of your reports, including the trial balance and general ledger, as a safety net.
5. Decide who is responsible for each deadline during the overlap, and write it down.

Keep the overlap long enough to cover the next filing cycle. A clean cutover at the end of a quarter or a year is easier to verify than one in the middle.

Ask in writing for the following, and set a date:

• Trial balance and general ledger detail for the current and prior years.
• Bank and credit card reconciliations through the last closed month.
• Fixed asset and depreciation schedules.
• Accruals, prepaid and deferred revenue schedules with support.
• Prior-year tax returns, including state filings, and current-year workpapers where you are entitled to them.
• Payroll reports and sales tax filings, plus any notices from tax authorities.
• A list of open items, such as unresolved transactions and pending elections.

Firms may keep some of their internal workpapers, and rules vary, so ask your attorney if you meet resistance. Your own records, such as the books and the documents you supplied, generally belong to you. If you plan to change your chart of accounts, map old accounts to new ones before the cutover and keep that map with your files.

The new firm should tie the opening balance sheet to independent sources before it takes over:

• Cash to bank statements as of the cutover date.
• Loans to lender statements, including the current principal balance.
• Accounts receivable and payable to detailed agings.
• Fixed assets to the depreciation schedule and last tax return.
• Equity to the cap table or ownership records and prior returns.
• Payroll liabilities to filed payroll tax reports.

Say the ledger shows $84,200 of payroll tax liability, but the filed returns show $61,000 still due: the $23,200 difference is either a deposit recorded twice or a payment posted to the wrong account, and you want to find that before month-end, not at year-end. Ask the new firm to list every variance and its resolution.

Close software can hold this reconciliation trail in one place, and the close software comparison compares options.

Watch for these:

• Letting the old firm's access end before the new firm has connected bank feeds and payroll.
• Assuming the new firm knows about deadlines that were handled informally, such as annual state reports.
• Changing the accounting method or chart of accounts at the same time as the firm, which muddies comparisons. If you want to change methods, see accrual versus cash accounting and plan it separately.
• Skipping the opening balance check, so an old error becomes the new firm's error.
• Paying no attention to your bank relationship. If account signers or statements need to change, the bank account switching checklist covers it.

If the switch is part of an upgrade to a bigger system, the accounting system comparison can help you plan it.