young black couple hires new accountant because of retiring accountant

Help, My Accountant Is Retiring! What Do I Do?

June 18, 2024

When your long-time accountant says, “I’m retiring in six months,” it’s understandable to feel a bit of panic. Suddenly, your mind is filled with questions like, “Who will handle my bookkeeping now?” and “How can I find a suitable replacement?.” These concerns are valid, but instead of spiraling into panic, I am going to explain how you can prepare for when and if your accountant says they’re retiring. 

You’re not alone in trying to replace your accountant

Roughly 75% of CPAs in the United States reached retirement age in 2019, which aligns with a 2016 report by the American Institute of Certified Public Accountants that revealed 84% of firm owners were concerned about succession issues over the next decade. As aging accountants retire, their clients are looking for a new accountant. 

There’s just one problem…

Many accountants are exiting the accounting industry. A 2022 Wall Street Journal article estimated that 300,000 accounting professionals had left their jobs in the previous two years. While the role of an accountant may have job security, several other factors are impacting both new and experienced accountants so much that they decide to leave the profession altogether. Here is a quick overview of the top reasons why accountants are leaving the industry:

  • Long hours and unsustainable overtime: The accounting profession is notorious for demanding long hours, particularly during tax season or at fiscal year-ends. This consistent requirement for extended work periods often leads to unsustainable over time, which can result in burnout, decreased work-life balance, and ultimately, a reconsideration of career choices.
  • Declining interest among college students: A 2023 EY report revealed that there was been a 7% decrease in students completing a bachelor’s degree in Accounting between 2015 and 2020. This dwindling pool of new talent means there is increased pressure on existing staff to meet the increasing demand. Firms that don’t invest in support systems staff are seeing high turnover rates.
  • Toxic leadership practices: Leadership within accounting firms significantly influences retention. Practices such as always saying “yes” to client demands without considering staff capacity and providing poor or unconstructive review notes for staff can create a toxic work environment. Such conditions not only demoralize staff but also discourage them from making a long-term career investment in the industry.

Why does this matter to you as the client?

At first glance, it might seem that industry problems shouldn’t matter to clients. However, clients must understand the atmosphere in which their new accountant is operating so they can avoid wasting time and resources on a bad accountant. After all, it’d be horrible to leave a great accountant and end up with a bad one just because you weren’t aware of toxic accounting firm behaviors.

Step 1: Choose a firm that is addressing industry problems

It’s vital to select a firm that acknowledges and actively remedies common industry problems. Avoid the pitfall of leaving an unfortunate situation, such as your accountant retiring, only to find yourself in a worse scenario—partnering with a firm struggling or doomed to fail because of internal problems. A firm that prioritizes sound operational practices and client-centric strategies will deliver higher quality service and can be relied on to be there for years to come.

Step 2: Realize unhappy staff make unhappy clients

If your accounting firm’s staff doesn’t want to be there, you won’t either.
Cassidy Jakovickas, CPA

Many accounting firms still bury their staff in unreasonable workloads and unrealistic timelines for work, which impacts the quality of work that those staff members deliver to you. While work will naturally have its challenging points, the strain of excessive and unreasonable demands always leads to errors, missed opportunities, subpar financial advice, and a toxic workplace culture. 

Step 3: Understand that saying yes to everyone means we all suffer

Desperate firms aren’t best-fit firms. When accounting firms say yes to everyone, they are bound to underserve someone. It might be you.
Cassidy Jakovickas, CPA

Firms that are desperate for clients tend to say yes to every potential client, even if that client is within the firm’s areas of specialization. While seems like a good thing (after all, who doesn’t want to help as many people as possible), the truth is that we can’t help everyone. This is true in our personal lives and it’s true in business as well. Plus, accepting everyone means that there’s one big internal problem: You aren’t rock solid on the value of your work and who can benefit most from it. 

Step 4: Invest in an accountant that builds processes & works smart

Saying yes to every client stretches the firm’s resources too thin since processes are continually changing and adapting to accommodate new industries or types of clients. There can be no standardization when there is no standard. Having no standard leads to a gradual decline in service quality and personalized attention until one day you realize you’re one of the underserved clients who drew the short straw. 

There can be no standardization when there is no standard.
Cassidy Jakovickas, CPA

Firms that depend too heavily on individual knowledge (tribal knowledge) rather than a collective and accessible database (scalable knowledge) struggle with consistency and reliability when key personnel leave on vacation or retire. We’ve talked about this more in our article about over-relying on top performers and also in our Karbon Magazine article about the dangers of workplace favoritism.

How to replace your retiring accountant

Your transition from a retiring accountant is a critical time for your business because you want to prevent or minimize business disruptions but also choose the right professional to fill the vacancy. Here are my recommendations on how to replace your accountant:

  1. List your current accountant’s duties: The first step is to put together a comprehensive list of all your current accountant’s responsibilities and tasks. This will give you a clear understanding of the role’s requirements and help you discuss the scope of services with potential new accountants.
  2. Assess current challenges and opportunities: This transition is a great opportunity for you to evaluate your existing accounting processes to identify any challenges or opportunities. Getting a clear idea of these opportunities will help you find a new accountant who can help you with them.
  3. Determine the type of professional needed: If all you need are tax returns, you may be okay with hiring an enrolled agent (EA). On the other hand, if you need bookkeeping and accounting work, you should hire an accounting firm or accountant. If your business does a lot of work with lenders and investors, you may want to hire a Certified Public Accountant since the CPA title is widely recognized and respected by banks, investors, and regulatory agencies, which adds credibility to financial reports and audits.
  4. Start your search for a new accountant: After you’ve clarified the kind of help you need, it’s time to start looking for an accountant. Many times, you can put together a shortlist of great professionals with only recommendations from friends and business partners. But you can add to your list by googling for accountants near you, asking on LinkedIn, or looking at “top 10” websites that rank professionals based on their quality of service, their online presence, pricing, and other factors.
  5. Be thoughtful as you interview accountants: It’s critical to remember that just because someone comes highly recommended doesn’t mean they’re the right fit for your needs. That accountant may be ideal for your friend’s needs but not understand or specialize in your industry. It’s best to develop specific questions that help you decide whether an accountant can handle not just the existing duties of your retiring accountant but also address the challenges and opportunities you identified earlier. 
  6. Consider their culture and work practices: It might seem strange to ask about the work practices and culture of a business partner, but the truth is that your company will grow to depend on this company to deliver top-tier service consistently. You can’t afford to have them shut down on you because of toxic leadership or deliver subpar work due to bad HR processes or bad company culture. Find out how they handle delegation when key personnel are unavailable, their approach to work-life balance, and ask about any noteworthy work practices that will enable them to work efficiently for you.
  7. Plan for an efficient information transfer: Organize a detailed handover from your retiring accountant to the new one. This involves transferring knowledge about unique financial processes related to your business, such as bank logins, critical financial documentation, and any personalized financial reporting procedures.

Tips to help you prepare for when your accountant retires one day

“Fail to plan and you plan to fail,” said Benjamin Franklin, and this concept is very applicable when your accountant retires. Proactive preparation minimizes disruptions to your business and ensures a smooth transition from your retired accountant to your new one. Here are my recommendations on how you can prepare for the day when your accountant retires:

  • Set up your online IRS account: Establish an online account with the IRS for your business. An IRS account lets you authorize professionals, access tax documents, and manage other tax-related activities. With a good IRS account, you ensure you remain in control and informed about your tax matters.
  • Set up your online state tax account: Just like an IRS account, set up an online account with your state’s tax agency, if available. For example, California taxpayers can set up a MyFTB account to access tax information, stay informed about tax obligations, and delegate access to their tax professionals. If you don’t have a MyFTB account, it’s worth setting one up for yourself so you can stay informed and collaborate with your tax professional efficiently.
  • Own your accounting software: It’s best to ensure that you have ownership access to your accounting software, such as QuickBooks Online (QBO). Many accounting firms manage access to such platforms for clients, but having control of your subscription allows you to add or remove accountants as needed without disruption to your business operations.
  • Keep copies of prior year returns: Maintain copies of all prior year tax returns. These documents are crucial for historical reference and can be invaluable during transitional periods or when resolving disputes or clarifications in your tax records.
  • Maintain an ongoing list of accounting duties: Keep a detailed list of all tasks your accountant performs, including how often they perform each task. This scope of service document will be crucial when transitioning to a new accountant because it provides a clear outline of expected duties and responsibilities.
  • Communicate often with your accountant: Speaking with your accountant often will mean you receive early notice about your accountant’s decision to retire, which means you will have more time to prepare and plan for a smooth transition.

Your accounting doesn’t have to stop when your accountant retires

If you’re in the middle of navigating how to keep your accounting running smoothly despite your accountant retiring, I hope the tips in this article have helped you. Planning for this is critical and helps you avoid a mess when and if that day comes for you. If you’re looking for the kind of great accounting firm I described in this article, contact MBS Accountancy and we’ll help you keep your accounting systems intact and address any opportunities we see during the process. Our goal is to help you gain and maintain financial clarity throughout all of your business. After all, growth only happens when you have clarity.