There is a time in the life of a business when it is likely to be forced to change its accounting service provider. The reasons for this can vary, such as a lack of quality, a lack of proactivity, or the fact that the business has outgrown its current accountant and needs a more complex service provider. In all cases, the question arises as to when would be the best time to change. We would like to help you with this question and dispel some stereotypes.
When to switch, mid-year or end of the year?
A change is necessary when we feel that the current cooperation is not in the best interest of the business.
It is important, however, not to wait until the current situation causes more and more problems, but rather to look for a new service provider based on your expectations.
Many people fear a mid-year change because they have not completed a full year of business with the previous accountant and believe that this will create uncertainty. However, these arguments are not enough to put off switching. It is also possible to close on a monthly basis and there is a well logged administrative side to the bookkeeping so that the periods of responsibility can be well separated.
The disadvantages of switching at end of the year:
If the change is made on 1 January, the previous accountant must close the company by 31 May. This means that the new accountant will have to wait for the previous accountant to complete his/her work, which usually takes up all the time available. As a result, the company management does not have a true picture of the company's situation for 5 months because the new accountant has not yet received the opening data, so without historical data, no true financial, management report, etc. can be prepared until then.
The advantages of switching mid-year:
Fundamentally, there is a benefit to switching when the new service provider takes an independent outside view of the accounting processes and tax benefits previously applied during the initial period. In this "opening up" process, problems and unused opportunities and tax advantages may come to light.
At the mid-year accounting changeover, the new accountant will close the year. This means that the previous accountant has less work to do, as he/she only has to settle the fractional period. The previous accountant will not have to prepare full-year tax calculations, prepare accounts and statutory notes, deal with annual corporation tax returns or transfer pricing documentation, and will not have to agree all of this with the auditor.
The mid-year changeover gives the new accountant the opportunity to identify and correct any errors or omissions in the accounts. The new accountant can bring a fresh perspective to the process and introduce new approaches and systems to improve efficiency and accuracy.
Overall, a mid-year changeover is less work and smoother than a year-end changeover. There's no need to wait 5 months, which can hamper the smooth running of the business, and the year-end is already closed with a new perspective.
It is important to note that every business is different and the benefits of a mid-year or year-end change of accounts will depend on what is best suited to the particularities and capabilities of the business. Before deciding to change accounts, it is worth considering carefully the specific needs of the business and the potential impact of the change.
Author: Gábor Vasas, key account manager of ICT Európa Finance Zrt.
