The Best Way to Fire Your Accountant or CPA
Can I fire my accountant?
Firing your accountant doesn't mean you can get out of paying this person. You must pay for services rendered up to the date of firing, even if you dispute those services or you feel the services were not adequate in some way.
Before you fire your accountant
Before you take the step of firing your accountant or CPA, consider why you are taking this action. Cutting off a relationship with a trusted business advisor can have negative consequences for you and your business. For example, if your accountant is in the middle of preparing your business tax return when you decide to fire him or her, this can cost more time and money and set back the progress on your tax return.
Consider answering these questions before you take the step of firing your accountant:
- What is the specific thing I'm upset with? Is is something that came out of a tax or financial issue, or is it a problem with this accountant? A problem with a tax return might be easily solved with better communication, while a problem with the accountant, in general, might be a personality conflict that can't be resolved.
- Is the accountant doing everything in a timely manner? Does my accountant respond to questions and concerns quickly and completely? Or does he/she not get back to me quickly when I have a question?
- Will firing my accountant have serious negative consequences for an in-process tax return or financial issue? Is it better to wait until after the issue has been resolved or the tax return filed?
Some reasons to fire an accountant
- If the accountant isn't acting in a professional or ethical manner. If your accountant is asking you to do things or telling you he/she is going to do things you feel are not ethical, you shouldn't work with that person.
- If the accountant isn't responsive to your needs, by not responding to concerns, answering questions quickly and completely, or ignoring phone calls or emails
- If the accountant doesn't seem to understand your case or your company.
- If the accountant makes promises and then doesn't fulfill them. An accountant who promises that a tax issue can be resolved in your favor is not being honest.
Before You Take That Final Step
Have a conversation with your accountant about your concerns. Explain why you are not satisfied with the accountant and lay out your expectations for the relationship. Talk about how both of you can work to make communications better. If your concerns relate to a specific tax or financial issue, talk about expectations and ask your accountant to be honest about the outcome.
If you think your accountant or CPA has committed an ethics violation, contact your state CPA association or accounting association for information. Remember the difference between a CPA and an accountant is that CPA's are licensed and regulated in all states, while accountants may not be.
Take charge of your business accounting information. Even if your accountant or tax person keeps all of your books online, you should have complete access to all of this information.
Make a backup copy of your files. You may want to print out the most recent year-to-date profit and loss, balance sheet, and accounts receivable files, so you don't have any down time while you make the transition.
Make a list of all passwords and sites that your accountant has access to, so you can quickly make changes to this information to shut out your accountant.
The Firing Process: Steps to Take
If you have definitely decided to fire your accountant, here are the steps you should take:
- First, you should hire a new accountant, especially if you are in the middle of a tax or financial issue. Ask your new accountant to get files from the previous accountant and to handle notification of the IRS, if applicable. Let the new accountant know your progress on the firing.
- Look in your business records to see what kind of agreement you have with your accountant. Most CPAs or accountants don't work from a retainer, but if you do have a letter or contract, follow the agreement in timing and notifications.
- Send a certified or registered letter (so you have a record of receipt) that states your intent to terminate the relationship effective immediately upon receipt of the letter and ordering your accountant to stop working on any matters in process. You don't need to give an explanation; it's not necessary. Request all your files or notify the accountant that your new accountant's office will be requesting those files, and request cooperation.
- In the letter, request a refund of fees paid for work not yet performed. Ask for an itemized bill detailing fees for all pending work and any expenses.
- Change all your passwords for all files your accountant has access to. This includes not only you accounting software, but any payroll records, electronic funds transfer passwords, billing accounts, and apps (like a mileage app) that your account has.
Firing someone is never pleasant or easy, but sometimes it's necessary. Your handling of the breakup in a businesslike manner will help everyone deal with the situation more easily.
For More Information
This article on Why You Shouldn't Trust Your Business Advisor might help you avoid issues in the future.