If – like many company directors – your accountant provides FreeAgent or Xero as part of your monthly package, what happens to your account if you decide to change accountants?
If you’re thinking about changing accountants, this is an easy detail to overlook.
You’ve probably used the same software for years, with all your invoices, expenses, bank transactions and tax records sitting there, but your accountant may be the one paying for the subscription, either as part of your monthly package or as an optional add-on.
In this guide, Christian Hickmott, Managing Director of Integro Accounting, explains what happens to your subscription if you change firms.
Firstly, who pays for the software?
Some contractors set up a FreeAgent or Xero account directly and simply give their accountant access. Moving firms won’t affect your subscription at all. You can remove the current accountant and provide the new firm with access to your account.
It’s actually more common for specialist contractor accountants to include accounting software in their monthly fee.
Your accountant may therefore be paying for the subscription and managing it through their own practice account.
If this is the case, you don’t have to set up a new account when you switch firms, but there are a few steps you need to take to ensure a smooth transfer or access.
If you’re thinking of moving firms, read our guide to changing contractor accountant.
What happens to FreeAgent when you change accountant?
If your accountant manages your FreeAgent subscription through its Practice Dashboard, you can still log in and use your account as normal. When you change accountants, the old firm removes your account from its dashboard.
You’ll then have two weeks to either transfer the account to another FreeAgent partner or start paying for the subscription yourself.
If your new accountant is also a FreeAgent partner, they can arrange to transfer the account to their Practice Dashboard. You’ll be asked to log in and approve the transfer.
You can also choose to pay FreeAgent yourself instead, which means you can carry on using the same account without having an accountant manage the subscription.
Read more about the transfer process on the FreeAgent site.
Your accountant may only have access to FreeAgent
Not every accountant who uses FreeAgent with a client pays for their subscription.
You may have subscribed to FreeAgent yourself and simply given your accountant access. FreeAgent partner firms can also connect your account to their Practice Dashboard while you continue paying the subscription yourself.
If you already pay FreeAgent directly, there is no subscription to transfer when you change accountants. You simply remove your old accountant’s access and give your new accountant access instead.
If you’re not sure how your account was set up initially, check with your accountant before you tell them you’re leaving.
What happens with Xero?
Xero uses a slightly different system. Each Xero organisation has a subscriber, who is responsible for the subscription and payments.
If you’re the subscriber and pay the Xero subscription yourself, your accountant is simply another user of the account. You can give your new accountant access and remove the old firm’s access when the time comes.
Your accountant may be the subscriber, particularly if Xero is included in your accountancy package. In this case, the subscription needs to be transferred when you leave.
The existing subscriber can transfer it to another user. Once the transfer is accepted, that person assumes responsibility for the subscription and future payments.
The subscription and user access are separate in Xero, so transferring the subscription doesn’t automatically remove your old accountant from the account. Their access can be removed separately once they no longer need it.
You can find the current procedure in Xero’s subscription transfer guidance.
What happens to all your old accounting records?
You shouldn’t need to create a new FreeAgent or Xero account simply because you’re changing accountant.
Your existing account contains the financial history of your business, which may go back several years. Your new accountant will need access to previous accounts, Corporation Tax and VAT records, payroll information and the underlying transactions.
Before you move, download copies of any important documents you want to keep, especially if your old accountant currently manages the subscription.
You have to retain certain company records for several years anyway. Find out how long you need to keep your company and tax records.
Do you need to change accounting software as well?
There’s no reason to change software simply because you’re changing accountant if you’re happy with what you already use.
Ask your new accountant whether they’re happy to work with your existing FreeAgent or Xero account before you join them.
Most specialist contractor firms will be familiar with at least one of the main accounting packages, although some prefer their clients to use a particular platform.
Moving your accountant and changing your accounting software at the same time also creates more work, so there needs to be a good reason to do both simultaneously.
Work out your software situation before giving notice
Before giving notice, find out who pays for the software and what needs to happen to the subscription when you leave.
Your new accountant should also know which software you use and how the existing account is managed. The two firms will exchange records and information through the professional clearance process, but the software subscription may need to be dealt with separately.
If you’re still looking for a new firm, take a look at this contractor accountant comparison guide, which also covers what core services you should expect an accountant to provide.
If you’re looking to take out your own software subscription, you can get a 30-day trial + ongoing discount as an IT Contracting visitor. Simply visit these links for more details: FreeAgent | Xero