If you’re thinking about changing accountants, you may or may not have heard of the phrase ‘professional clearance’. A sort of courteous protocol between two accounting firms, it’s something the new accountant will have to do if you’ve made the decision to switch. This might feel like a big deal but it’s standard practice. Also, a big well done! It’s crucial to get your accountant right when you run a small business. We manage the foundations; the finances.
Here’s some handy bits of information to guide you through the process of hopping from one accountant island to another.
What actually is professional clearance and why do we do it?
Brief and formal, it’s simply a letter from the new accountant to the old one asking for any relevant information pertaining to yourself and your business. This can range from accounting documents to any relevant background information. From our standpoint as the new accountant, it’s an opportunity to check things are all above board too. We’re happy to accept complicated books (we love a glow up) but we wouldn’t be so happy with anything indicating fraud. It’s our chance to get everything we need to expertly handle your accounts. It’s also to confirm that your records line up with everything you have told us up until this point.
Put simply, it’s a request between two accountants to ensure a smooth handover and make sure everything is in ship-shape.
So, what do I need to do?
There’s two easy-peasy things you have to do first. Your old accountant will need your formal authorisation to hand over any personal information to the new accountant for the transition; you’re obliged to send them a notice of the change. You’ll also need to settle any outstanding fees with them too, if there are any. Fortunately, both these things can be done in one simple email. Tick, tick and your bit is done!
Here’s an example of what you can say:
I’m writing to inform you that I will be changing to a new accountant from DD/MM/YY and I’m authorising the transfer of any relevant information that will assist the transition.
Please let me know if there are any outstanding fees that I need to settle. In the meantime X from X Accounting will be in touch shortly. Thank you for your services.
Once you’ve done your bit, we do ours.
When you have sent your email or letter, we’ll send a formal note introducing ourselves and ask for certain historic information that’s been submitted to Companies House and/or HMRC. After we have received everything that was requested, we’ll review the information and work out if we have everything we need to be set up as your new agent. We’ll also look over your accounts and check for any issues. Following that, we’ll get in touch with you to confirm we are good to go. Super easy!
If you’re in the process of changing your accountant, now’s the time to check they are absolutely right for you (so you only need to go through this transition once). Check out this blog to see what questions you should be asking and what to do to make the process work best for you.
Get in touch if you have any questions, we would love to chat. You can do that here!