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When to Find a New Accountant in Canada?
When going in for heart surgery, it’s a no-brainer to want the best cardiac surgeon to conduct the operation. With your life on the line, choosing an orthopedic surgeon would be a mistake, no matter how good they are at what they do. Similarly, working with an accountant whose skills or expertise are not aligned with your needs can lead to frustration, costly mistakes, and a poor experience.
When it comes to your personal or business finances, you want the right accountant best suited to helping you reach your goals, improve your small business, and manage your tax obligations. So how do you know when it’s time to find a new accountant? Let’s go over the tell-tale signs.
7 Tell-Tale Signs You Need to Find a New Accountant in Canada
There are many potential reasons for needing a new accountant. You may have a great relationship with your accountant, but your needs change over time. The complexity of your financial and accounting tasks may outgrow their capabilities or your accountant may no longer be meeting your expectations.
If you’re not sure whether it’s time, here are some of the top signs that it’s time to find a new accountant in Canada:
1. Changes in circumstance and needs
If you’re a small business owner with a growing business, the amount and type of accounting tasks needed naturally increase and become more complex … there are more people on your payroll, your operations expand, you enter new markets, etc. Likewise, you may be facing major changes in your personal finances. If your requirements have surpassed your accountant’s capabilities and services offered, it may be time for a switch. Here are a few of those types of circumstances:
- Bank or investor requirements
Your bank or other financial institutions may ask for financial statements to give them a clearer picture of your business’ financial health. This information helps them determine your ability to pay back a loan or set your credit limit. Typically financial statements come with varying levels of assurance – compilation engagements, reviews and audits.
If your accountant is unable to provide financial statements with a level of assurance requested by the bank, or if banking rules change and require more assurance than your accountant is able to provide, you may need to find a professional who can meet their requirements.
The same situation applies if you have investors in the business that demand a certain level of assurance over the financial statements. If your accountant has typically compiled financial statements but your investor now requires audited statements, then you may need to find a new accountant if your existing one is not licensed to conduct audits.
- Major personal changes
Personal life changes that may require the services of accountant are:
- Getting married or divorced
Getting married has implications on how you file your taxes and depending on your personal circumstances, may provide certain tax planning opportunities.
On the other hand, a divorce involves the split of marital assets and potentially spousal or child support. This can get complicated quickly and typically requires professional involvement.
- Retirement
The primary purpose of retirement planning is to ensure you’ll live a comfortable life once you retire, especially since you still have to pay day-to-day bills, including utilities, groceries, and potentially mortgage payments.
Find a CPA who can help you plan for retirement, manage taxes and ensure a comfortable and diversified income in your twilight years.
- Asset purchases/sales
Buying major assets such as houses, vehicles, art or even businesses, can be complicated and have tax implications. Selling these assets can also trigger capital gains taxes and other required reporting. If you are selling property, you may also have land transfer taxes to consider depending on your location. An accountant can help you navigate through all of this.
- Moving to a new house
Depending on your circumstances, a move can be quite involved. A move across provinces may change your provincial tax reporting. You may be able to claim certain moving expenses if you are moving for work purposes. Lastly, any change in address must be updated on your tax return.
- Major business changes
Similar to your personal life, major changes in the business often mean it’s time to find a new accountant.
- Business growth
Accountants are crucial when expanding your business as they can advise you in managing growth and business decision-making. They can also help with ensuring the legal structure of your business is aligned with growth,, whether it be a sole proprietor, partnership, or corporation.
- Sales and taxes
Moreover, your accountant can also increase the profitability of your business by identifying and minimizing your expenses, improving your cash flow, managing debt repayment, and controlling costs.
On the other hand, they can ensure your business is compliant with all aspects of tax laws and regulations, while using tax planning to minimize the amount payable.
- Major asset purchase and sale
If you’re faced with having to assess different investment options, accountants can help. Their expertise in capital budgeting can assist with evaluating different choices.
Additionally, accountants can help identify and evaluate financing options if you plan to make a significant purchase. They’ll assess the pros and cons of different funding sources, such as bank loans, leasing, or equity financing. They can also provide valuable insights into the financial impact of each option, making it easier for you to make an informed decision.
As your business grows, operations become more complicated and your capital structure may even change. This may be to accommodate the purchase of new equipment, additional facilities, expanded inventory, new hires, digitalization, or a transition to e-commerce.
As operations expand, tax compliance becomes more complex, not to mention challenges in delivering your product or service if you’re entering new markets or scaling up. Oversights or mistakes if you’re issuing corporate debt or taking on new investor capital can create major problems down the road. Having an experienced accountant can prevent issues with growth, including unintended consequences, hidden costs, and unrealistic debt payments or covenants.
- Increasing volume or complexity of work
Growth often leads to more specialized skills or greater bandwidth. If you double or triple your staff, you’ll need to increase the time needed to manage payroll. If meeting your needs is beyond the abilities of your current accountant, you need to find an accountant with more resources. They can provide essential support to ensure financial stability and smooth operations.
When a business expands, it’s essential to consider that existing processes and systems may need to be adapted or developed to support the increased workload and complexity. It could involve streamlining workflows, implementing new software or tools, training employees, and ensuring effective team communication and coordination. However, these changes and adjustments will require additional effort and contribute to increased work.
From an accounting perspective, business growth also means more work in securing funding, analyzing financial projections, budgeting for growth, and managing cash flow. These financial tasks require additional attention and involvement from the finance team, resulting in an increased workload.
READ MORE: How to Find the Best Tax Accountant Near Me – The Complete Guide
2. Communication issues
Good communication is the key to every relationship, and that includes your relationship with your professional accountant. Your need to trust that they will relay information quickly, concisely, and effectively. Failures in communication can lead to significant trouble.
- Unable to explain complex topics
Accounting and finance professionals use their own unique jargon and terms that you may or may not understand.
A good accountant for your business will use clear and simple language and may even use visual tools such as charts to present financial information in a way you understand.
If you have to work to decipher what your accountant is saying, it may be time to reevaluate the relationship and find a new accountant.
- Inaccessible
Perhaps worse than not being able to understand your accountant is not being able to reach them. If your accountant offers radio silence in response to emails, phone calls, requests for virtual or physical meetings, it might be time to find a new accountant.
If you have a small business, frequent and productive communication with your accountant can help you make informed decisions in a timely manner. Though your accountant will likely not be available 24/7, they should ideally set response time expectations.
- Unapproachable or you’re not comfortable asking questions
Personal connection matters when working with an accountant. You must have good rapport to work together collaboratively and place your full faith and trust in their work. If your accountant is unapproachable, you will be more likely to hesitate about asking for explanations or advice. It can lead to misunderstandings and mistakes.
It is crucial to establish a comfortable and compatible working relationship with your accountant to ensure effective collaboration. It involves having a strong personality fit, which fosters open communication, trust, and mutual understanding.
When clients feel at ease, they are more likely to share complete financial information, ask critical questions, and provide an accurate picture. A good relationship is crucial in making decisions for your business. Just as is true when you’re looking for a lawyer or a doctor, work to find a CPA with whom you are comfortable.
- Mismatched working styles
Your working style must also be in sync with your accountant. For instance, some clients like in-person meetings with their accountants for face-to-face communication and instant answers to their inquiries. They may also be more comfortable with hands-on assistance, hence prefer an onsite accountant.
On the flip side, some clients take advantage of flexibility in terms of location by finding an accountant they can work with virtually. But despite the distance, they may require these accountants to have more flexible scheduling options.
Whatever working style you prefer, find a CPA who is on the same page as you, especially if you are collaborating with them frequently.
3. Lack of relevant experience
Ideally your accountant has experience with clients just like you. If you’re working with your accountant on a personal financial plan, then it’s ideal if they’ve done plans for clients in similar situations as you. If you’re a business client, then it’s best if they have some level of industry-specific knowledge relevant to your business.
An accountant who has expertise working with similar clients is typically able to offer deeper insight and value. A professional with industry expertise may be in a better position to help you navigate market factors, common pitfalls and opportunities and possibly even peer benchmarking. An accountant who uses a one-size-fits-all approach and who only offers generic advice may not add as much value.
While your accountant doesn’t have to be a specialist in your industry or have previously worked with hundreds of personal clients in your situation, some relevant experience and a solid understanding of your needs will facilitate a more customized, successful approach.
DISCOVER: 7 Questions to Ask Your Accountant Before You Hire Them
4. Missed deadlines and late filings
You rely on your accountant to file your tax returns accurately and on time. You hope that they file your payroll as required and respond to CRA requests before they are due. Failure to deliver on this most basic level of service indicates that it’s probably time to hire a new accountant. One or two missed or late filings may be forgivable, but if the issue is chronic, CRA penalties can get expensive.
Why might your accountant miss deadlines? There are a few possible reasons:
- Unclear scope of services
We’ll start with the most common one. It’s unclear what they are responsible for or what you want them to do
- You think they are responsible for something and they aren’t aware of it
- They think you’ll do something and you think they’ll handle it instead
The cure for this is clarity and all services should be documented in an engagement letter. Generally the more clear the services and better the communication the better the working relationship.
5. Disorganization
Accounting requires strong organizational skills. Your financial records should be complete, including all transactions and with all related documents accessible for quick and easy reference. Organization keeps things efficient, while disorganization derails the workflow. If it takes your accounting professional time to find the documents you need, they could be hurting your ability to move forward, or even cost you in fines and penalties.
- Too many clients, too few staff
Every successful relationship requires time and effort, and that’s as true with your accountant as with any other relationship. Your potential accountant should be willing to invest the time to understand your business, to navigate how to work with you, and to set aside enough time to prepare everything you need them to do. Failure to do so may indicate that they are working with too many clients beyond their capacity.
- Outdated technology
Your accountant may struggle to meet your deadlines as a result of using outdated technology. Modern accounting tools and software automate repetitive work, speed up the process, and deliver more efficient service. If your accountant is still using paper files as their primary tool, you may want to find a CPA who is more technically savvy.
RELATED: Useful Resources and Tools
6. Failure to be proactive
Some accountants focus on what’s in their lane and putting out fires rather than looking ahead to anticipate future needs. If you’ve ever heard your accountant say anything like this, then you know the difference between a proactive accountant and a reactive one:
- That tax return was due 6 months ago…I thought you knew. Would you like us to file it today for you? There will be interest and penalty of course.
- Do you realize you should have been collecting GST ever since you passed $30,000 in sales…which looks like 3 years ago. We just handle your corporate tax, not sales tax. That’s going to be quite the bill to CRA though.
- You’re retiring next year? You should have started retirement planning 3 to 5 years ago. Do you want us to create a plan for you?
A proactive accountant will not only anticipate and prevent potential issues and bottlenecks, they’ll also look for opportunities for you to make and keep more of your income. They’ll listen to your goals, provide guidance on tax planning, finances, and savings, and help you move forward with investments.
A proactive accountant can be invaluable for your finances, as well as peace of mind. If yours is constantly reacting, rather than looking ahead, it may be time to work with a new accountant.
LEARN MORE: The Complete Guide to Finding Accounting and Tax Services in Canada
- Ethical and legal issues
We don’t like bringing this one up, since we operate under the assumption that all accountants and clients out there have fantastic ethics and share the same moral compass. But it’s inevitable that sometimes people make bad decisions. If your accountant is suggesting you do something illegal, sign something fraudulent, or say something you know to be untrue, then that’s a good sign that you should probably find a new accountant immediately.
The world of tax is not black and white, so what about a difference in risk tolerance? If you’re working with an accountant and they are proposing a legitimate tax planning strategy that you’re not quite comfortable with, then it’s best to discuss your options with them and choose a strategy that falls within your risk tolerance.
If you get the feeling that your accountant is failing to act in good faith, it might be a good idea to check their discipline history. If there is a trend of disciplinary or legal actions against them, then it might be a good idea to find a new accountant.
What If My Accountant Has Just Retired or Sold the Practice?
There comes a time in every CPA’s life when it’s time to put away the calculator for the last time. Retirement or practice sale doesn’t necessarily mean find a new accountant, depends on who is taking over
- If you have a great replacement who otherwise meets all your needs and is already familiar with your situation, no need to move
- The best case scenario is when practitioners do a gradual transition out and provide warm handoff to their replacement, as opposed to simply assigning someone new
- When this happens, consider the other factors above to determine if a change in accountant makes sense
What If I Get Relocated?
Each province or territory in Canada has its own unique set of tax rules, rates, and benefits. So if you’re moving your business from one place to another, it’s important to consider this difference.
Keeping your old accountant might not be the best choice in this case. If they don’t know the specific tax laws of your new place, they might not be able to help you save money on taxes.
Also, an accountant from the area you’re moving to can have great insights about local business trends and practices, which can be a plus.
When switching to a new accountant, you’ll need to get your financial records moved over. This may require signing a form to give them permission. Also, be sure to let the Canada Revenue Agency and any other related groups know about your new accountant.
What Are The Steps To Take When I Switch Accountants?
- Review Your Current Agreement Terms and Conditions
Before you say goodbye to your old accountant, it’s a good idea to check the terms of your existing contract. There might be certain rules about ending the agreement, like a notice period or fees for early termination. Make sure to understand these conditions so you can avoid any surprise costs or issues. It’s like checking the fine print before quitting a gym membership – you want to avoid any last-minute surprises!
- Notify your current accountant
Once you’ve decided to switch, courteously inform your current accountant about your decision to change services and explain your reasons if you feel comfortable doing so.
- Transfer your records
Ask your former accountant to provide all your financial documents and files to your new accountant. You may need to sign a release form authorizing this.These records may include:
- Submitted Tax Returns
- Accounting Software Access
- Financial Reports
- Essential Documents for Your Business, Companies and Trust
- Copies of Receipts, Invoices, and Letters
- Notify the parties involved
Both civilians (for personal finances) and business owners need to notify certain parties when they change their accountant:
- Canada Revenue Agency (CRA): Whether you’re a civilian or a business owner, you should inform the CRA about your new accountant, especially if they will be filing taxes on your behalf.
For business owners, there can be additional parties to inform:
- Your Company’s Leadership: If you’re a business owner with partners, shareholders, or a board of directors, let them know about the change.
- Bank and Financial Institutions: If your accountant has access to your banking or financial information, inform these institutions about the change.
- Other Professionals: If you have other professionals, like lawyers or financial advisors, who collaborate with your accountant, let them know to ensure smooth operations.
- Clients and Vendors: Depending on your business setup, you may need to inform major clients or vendors about the change, particularly if your accountant had direct relationships or dealings with them.
- Payroll Service Provider: If your accountant handled payroll, let your payroll service provider know you’re changing accountants.
Should You Find a New Accountant in Canada?
Do any of these scenarios sound familiar? Perhaps you’ve seen the signs but couldn’t quite put your finger on it since you’ve been working with your accountant for such a long time. Maybe you’re afraid of change, or too busy to do the due diligence required to identify a new professional.
Not having a great working relationship with your accountant can have significant financial implications, not to mention your time and stress. It can complicate your business growth, lead to CRA penalties and interest, and negatively impact your credibility and reputation with family, friends and peers.
If this article has struck a chord, consider finding a new accountant in Canada who can truly level up your business or personal finances.
LEARN MORE: How to Find a Small Business Accountant Near Me
CPA Guide
If it’s time to find a new accountant in Canada, let CPA Guide help. We’ll connect you to the most reliable and reputable accountants and accounting firms in the country. Contact CPA Guide today and find the accountant who best suits your business needs.
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