A Small Business’s Guide to Finding a New CPA

In fact, making the transition to a CPA who properly supports your needs can result in greater tax savings, added clarity, and overall ease in your accounting and tax obligations. Taking the leap of faith and changing CPAs can feel daunting, which is why we've put together this small business guide. We'll cover five signs it's time to change CPAs, what to look for in a new provider, and strategies to make the transition seamless.  

When is it time to change CPAs? While there isn't a foolproof answer, there are a few common indicators to look out for. Here are five signs you need to look for a new CPA:  

Poor Communication and Transparency 

The first indicator that it's time to change CPAs is poor communication and a lack of transparency. Tax and accounting work is often time-sensitive. If you can't get in touch with your CPA or they don't respond timely, you may need to look elsewhere. Similarly, if there is little transparency in fees, processes, or unexpected items, that can be a sign to change CPAs. You don't want to be blindsided by an unexpected tax bill or an unusual loss on your financials.  

Reactive Advice Instead of Proactive 

Tax planning is a crucial component of running a tax-efficient small business. If you notice that your tax advice is reactive instead of proactive, it's time to change CPAs. Reactive advice might be last-minute planning solutions to get your tax bill down once the year ends, while proactive advice involves planning throughout the year going into tax season. Proactive tax advice helps you make accurate estimated tax payments, adds clarity to your business decisions, and makes tax time less stressful.  

Errors and Accuracy Issues 

CPAs are still human, meaning errors and mistakes can happen from time to time. However, if you notice your CPA making frequent mistakes, it's time to switch. Mistakes can be small, like forgetting to accrue an expense, or they can be major, like misstating your taxable income. While some mistakes may seem harmless, they can cause major headaches when others, such as lenders, investors, and the IRS, rely on the information.  

Unprofessional Behavior  

CPAs are held to a high standard. In fact, they are required to complete ethics continuing education and follow a rigid code of conduct. This doesn't mean that all CPAs properly follow these requirements. If you notice any unprofessional behavior, it's time to find a new CPA. Unprofessional behavior might look like a lack of accountability, constantly feeling uncomfortable, or having questionable ethical practices.  

Your Needs No Longer Align  

CPAs can be selective in the services they offer. Even if they are exceeding your expectations with your current needs, that doesn't mean they are the right fit in the long term. For example, as your small business grows, you may need to produce formal financial statements for lenders and investors. If your current CPA doesn't offer that service, it's time to find a new CPA that can support you as your business grows.  

If you've decided it's time to change CPAs, you want to select the right professional for your small business. Let's explore the key aspects to consider when choosing a new CPA.  

Credentials  

If you conduct a quick Google search of CPAs near you, you will likely have a laundry list of accounting firms to sift through. It's important to note that not all accountants are CPAs. If your business is in need of certain services, like assurance financials or complex tax filings, it's essential that you choose an accounting firm with CPAs. Before you move forward with a CPA or CPA firm, ensure their licenses are current and in good standing with your state. This can be done with a quick online check.  

Experience  

Evaluating the CPA's experience is also important. Verify that their clientele generally includes small businesses. If they prefer to work with large businesses or focus on individual tax needs, you may notice limited benefits. Similarly, inquire about what industries they have experience with. For example, some CPAs may prefer to work with manufacturers, while others might focus on ecommerce or nonprofits. Choose a CPA who has applicable experience in your industry to maximize your benefits.    

Services and Scope  

As we touched on in the prior section, CPAs can limit their service scope to specific industries or types of services. Make a quick list of your needs and verify that the prospective CPA offers each of those services. If your business is growing, add items you may need in the future, like formal financial statements or multi-state tax returns. This will prevent you from having to switch CPAs again in a few years.  

Fees and Charges 

While the experience and expertise of a CPA often outweigh the cost, it's still important to inquire about potential fees and charges. Does the CPA charge hourly rates or based on the project? It's common for CPA firms to charge hourly for general bookkeeping and accounting work and have set fees for formal financials and tax returns. Ask your CPA about their fee structure, including when they may adjust their quoted prices.  

Moreover, ask about annual increases. Can you expect the fee to increase each year, or does the amount stay relatively consistent? You don't want to start a new CPA relationship and have your costs double within a few years. If the CPA isn't honest and transparent with their fee structure, that can be a red flag. 

Reputation and References  

If everything checks out with a potential CPA, verifying their reputation by checking references is your next step. Look at online reviews from past clients. Are the reviews positive, or do past clients have complaints? Any complaints should be brought to the CPA's attention. For example, if a client complained about the fee structure, as the CPA, how did they address the issue? Did the client continue their relationship with the CPA, or did they move to another firm?   

Transitioning CPAs can be a time-intensive process. In fact, it can take anywhere from a few weeks to a few months for everything to be properly transitioned over to your new CPA. Here are five strategies to help facilitate a smooth transition process:  

Have a New CPA Lined Up 

Before you notify your current CPA that you are switching, have a new CPA lined up. Even if you are on the last straw with your current CPA, you don't want to strain the relationship until you know you have your accounting and tax work covered. One of the worst-case scenarios is leaving your CPA during peak busy time and not being able to find a new CPA to handle your work by the deadlines. Find a new CPA and have an agreement in place before starting the transition process.  

Know the Terms of Your Current Agreement  

As you are starting your search for a new CPA, be sure you know the terms of your current agreement. Did you already sign an engagement letter for work that has yet to be completed? If so, you might be on the hook for the expected costs even if the CPA does not complete the service. Sometimes, you can exit an engagement without financial repercussions, but it's essential that you double-check to avoid double-paying.  

Notify Your Current CPA 

Once you've selected a new CPA and reviewed your agreements, it's time to notify your current CPA. Send a formal letter informing them of your decision to hire another CPA. This letter should be in writing to have a clear record that reduces confusion for both parties. The notice of separation is substantiating evidence against any future liability issues and can help the transition process flow smoothly. Keep the notice professional and straight to the point.  

Ensure Data Transfers are Authorized  

Within your letter or as a separate document, you will need to authorize data transfers to your new CPA. The current CPA needs your consent to send the sensitive account and tax information to another third party. While they may have a formal form that you need to fill out, oftentimes, a simple verbal authorization is sufficient. Your new CPA will need historical information, including past tax returns, financial statements, and other documents.  

Prioritize Collaboration  

Transitioning to a new CPA can be complex, especially if it's at the last minute before a deadline. This makes it crucial to prioritize collaboration. If your new CPA emails or calls you, respond promptly. Delaying communication can extend the transition process. Additionally, your CPA should have a clear understanding of your mission, goals, and values. Collaboration is also important with your old CPA. If you strain the relationship before you leave, you might have difficulty getting information and documents over to your new CPA.  

Switching CPAs is manageable and beneficial when service quality, communication, or advisory needs fall short. If you're in the market for a new CPA, contact one of our team members today to explore how we can help your small business.