How to Switch Accountants Without the Drama

Switching accountants in Australia is mostly an administrative job, not a confrontation. You settle any outstanding fees, tell your current accountant you’re moving on, nominate your new tax agent in ATO Online services for business, and transfer your Xero file across. Done properly it takes one to two weeks, and your lodgements never miss a beat.

The reason it feels harder than that is the awkward conversation people imagine having. In practice, accountants gain and lose clients constantly, and yours won’t be shocked. Here’s the real sequence, including the ATO step that catches out most business owners.

When is the right time to switch accountants?

The cleanest moment is straight after a lodgement is done. Once your quarterly BAS is in, or your annual return has been lodged, there’s a natural gap where nothing is half-finished. Switching in the middle of a lodgement is possible, but it means two firms handling the same period, and that’s where things get dropped.

That said, don’t wait for a tidy moment if things are genuinely broken. A few signs it’s time to move:

• You email a question and hear nothing for a week or more
• Invoices arrive that you weren’t expecting and can’t reconcile to any work
• You only hear from them once a year, at tax time
• Your books still live in a desktop program or a spreadsheet
• You’ve been told a lodgement was late, and found out after the fact
• You can’t actually explain what you’re paying for

If two or three of those sound familiar, the cost of staying put is higher than the hassle of moving.

What are the six steps to switch accountants?

The whole process comes down to six things, in this order. Do them out of order and you create gaps in your ATO authorisations.

Step 1 – Check what you’ve actually signed

Dig out your engagement letter. Most Australian accounting engagements run month to month with no fixed term, so you can leave whenever you like. Some larger firms include a notice period, usually 30 days. Some bundle a year of work into monthly payments, which means leaving mid-year can leave a balance owing.

Read the termination clause specifically. You’re looking for a notice period and whether anything is billed in advance. If there’s nothing in writing at all, which is common with smaller operators, you’re free to go.

Step 2 – Settle anything outstanding

Pay off what you owe before you ask for your records. This is the single biggest cause of a switch turning ugly. An accountant with an unpaid invoice has far less reason to be helpful, and in some circumstances can hold on to documents until the bill is paid.

If you dispute the invoice, deal with that as its own conversation. Don’t tangle it up with the handover.

Step 3 – Tell your current accountant

A short, plain email is enough. You don’t owe anyone an explanation or a critique of their service. Something like: “We’ve decided to move our accounting to another firm. Could you please confirm what’s outstanding and provide a handover of our records?”

Professional standards require your new accountant to contact your previous one before taking over, so this conversation is going to happen either way. Better that they hear it from you first.

Step 4 – Nominate your new tax agent with the ATO

This is the step nobody expects, and the one that stalls most switches. Your new accountant cannot simply add you to their client list. You have to nominate them yourself, inside ATO Online services for business. Full detail on how this works is in the next section.

Step 5 – Sort out your Xero file

Your accounting file and your accountant are two separate things, and untangling them matters. Who pays the Xero subscription determines how easy this is. More on that below.

Step 6 – Get the records handed across

Your new accountant will request a handover pack from the old firm: prior year financial statements, tax returns as lodged, the depreciation schedule, any franking account or division 7A records, and details of carried-forward losses. Chase this until it arrives. Rebuilding a depreciation schedule from scratch is slow and avoidable work.

How does ATO agent nomination actually work?

Since November 2023, all entities with an ABN, excluding sole traders, have to nominate a registered agent before that agent can be added to their client list. It’s a fraud control measure, and there’s no way around it. Your agent cannot do it for you, and they can’t legally ask you to hand over your login code or Digital ID.

If you’re a sole trader, good news: this doesn’t apply to you. Your new agent adds you using standard identity checks and you skip this whole section. Companies, trusts, partnerships and SMSFs all need to do it.

What you need before you start

You need a myID (this was called myGovID until late 2024) at Standard or Strong identity strength, and your ABN linked to that myID through Relationship Authorisation Manager, or RAM. The person doing this has to be the principal authority for the business, meaning the director, trustee or partner who is responsible for it. If you’ve logged into Online services for business before, this is already set up and you can skip straight ahead.

Setting up myID and linking the business in RAM is a one-off. It’s tedious the first time and takes about 20 minutes with your ID documents in front of you.

The nomination steps

You’ll need your new agent’s registered agent number, so ask them for it before you log in. Then, in Online services for business:

• Select Profile, then Agent details
• At the Agent nominations feature, select Add
• Choose Search for agent and enter their registered agent number
• Select the agent and check the details match the firm you’re engaging
• Complete the declaration and select Submit

Then do the part everyone forgets: tell your agent you’ve done it. The ATO sends them no notification at all. Your nomination just sits there quietly expiring while both sides wait for the other.

The 28 day clock

Your agent has 28 days from the nomination to add you as a client. Miss that and it expires, and an expired nomination can’t be revived. You have to start again.

There is a safety net. An Extend feature appears the day after you submit, and it adds another 28 days from whenever you use it. It’s available at any point during the original 28 day window, sitting next to your agent’s name on the Agent nomination screen. Use it if your new accountant needs more time, then let them know you’ve extended.

Quick tip: Submit the nomination and message your new accountant the same day. The ATO never notifies them, so the 28 day clock is already running while they have no idea they’ve been nominated. A one-line text is all it takes.

One thing to be aware of: nominating an agent at an account level where another agent is already authorised will remove that existing agent from it. That’s usually what you want when switching. It’s not what you want if you’re keeping your old firm for one service and adding a new one for another, so say so upfront if that’s the plan.

If you hit errors, the ATO business line is 13 28 66. Have the registered agent number ready so they can look up the firm.

What happens to your Xero file when you switch?

This depends entirely on whose name the subscription is in, and it’s worth checking before you give notice.

If you pay Xero directly, nothing needs to move. You go to your organisation settings, invite your new accountant as an adviser, and remove the old firm’s users once the handover is finished. Your history, bank feeds and reconciliations all stay exactly where they are.

If your accountant holds the subscription and bills you for it, the subscription needs to be transferred to you or to your new firm. Your current accountant has to initiate that from their end. Ask for it in the same email where you give notice, because chasing it separately adds a week.

If you’re not on Xero at all, this is the moment to move. Migrating from MYOB, QuickBooks or a shoebox is a normal part of onboarding, and our Xero setup and migration service handles the chart of accounts, historical data and bank feed connections. Switching accountants and switching software at the same time is less painful than doing it twice.

Whatever you do, don’t cancel the old subscription before the file is safely in your name. Xero keeps data for a period after cancellation, but recovering it is a headache you don’t need.

Will anything get missed while you’re between accountants?

This is the fear that keeps people with a bad accountant for another year, and it’s manageable. The gap only becomes a problem if nobody has agreed who is handling the next lodgement.

Settle that in writing before the old firm stops work. Either they finish the current quarter’s BAS lodgement and the new firm starts fresh from the next one, or the new firm takes it on from day one. Both work. What doesn’t work is assuming.

Realistically, expect one to two weeks for a straightforward switch. The nomination itself takes 10 minutes. What stretches the timeline is waiting on the handover pack from the outgoing firm, and how quickly you get through the myID and RAM setup if you’ve never used Online services for business.

If your books are already behind, the switch is a good time to fix it rather than a reason to delay. Catch-up bookkeeping is a normal starting point for us, and there’s no advantage in carrying a backlog across to a new firm untouched.

What usually goes wrong?

Five things account for nearly every messy switch we see.

The nomination expires unnoticed. The client nominates, tells nobody, and 28 days later the whole thing has to be redone. Fixed by a single message.

Unpaid fees stall the handover. Records get slow to arrive, and the switch drags for a month over a few hundred dollars.

Nobody owns the current lodgement. Both firms assume the other has it, and a deadline passes with penalties attached.

The depreciation schedule never turns up. Easy to overlook until the first tax return, at which point it has to be reconstructed at your cost.

The Xero subscription stays with the old firm. Months later you’re still being invoiced by an accountant who no longer does your work.

None of these are hard to avoid. They just need someone tracking the sequence, which is why we run the whole thing as a checklist rather than leaving clients to work it out. Our monthly bookkeeping clients across Melbourne and the rest of Australia go through this same process, and it’s genuinely routine. You can see exactly what ongoing work costs on our pricing page before you commit to anything.

Frequently Asked Questions

Do I have to tell my old accountant I’m leaving?

Yes, and it’s better coming from you. Professional standards require your incoming accountant to contact the outgoing one before taking over the engagement, so they’ll find out regardless. A two-line email is enough, and you don’t owe anyone reasons or feedback.

Can my accountant refuse to hand over my records?

Documents you own, like your bank statements, invoices and source records, should be returned to you. An accountant’s own working papers are a different matter, and in some circumstances records can be held until outstanding fees are paid. This is why settling the account first makes everything smoother.

Do sole traders need to do the ATO agent nomination?

No. Client-to-agent linking applies to entities with an ABN excluding sole traders, so companies, trusts, partnerships and SMSFs need to nominate but sole traders don’t. Your new agent adds you using standard identity verification instead.

How long does the agent nomination stay valid?

Your nominated agent has 28 days to add you as a client. You can use the Extend feature in Online services for business to add another 28 days, and it’s available from the day after you submit. Once a nomination has actually expired you can’t extend it and will need to submit a new one.

Will switching accountants trigger an ATO review?

No. Changing your registered agent is a routine administrative update and isn’t a risk flag on its own. What does attract attention is late or inconsistent lodgements, which is usually an argument for switching sooner rather than staying put.

Can I switch accountants if my books are behind?

Yes, and most businesses that come to us are behind in some way. Being behind isn’t a reason to delay the switch, because the backlog doesn’t improve while you wait. We assess how far behind things are, agree a fixed price for the catch-up work, and get the lodgements current.