How To End A Relationship With A Bookkeeper

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Your bookkeeper isn’t working out. Maybe the reports are consistently late. Maybe you’ve found errors three months running. Maybe the relationship has simply run its course and your organization has outgrown what they can offer. Whatever the reason, you’ve decided it’s time to make a change – and now you need to do it professionally, protect your organization’s financial data, and ensure a clean transition.

This guide walks you through every step of ending a bookkeeper relationship, from making the decision through onboarding a replacement. Follow this checklist and you’ll avoid the most common mistakes nonprofits make during this transition.

Step 1: Confirm It’s the Right Decision

Before you pull the trigger, make sure the problem is actually the bookkeeper and not a systems issue, a communication gap, or unclear expectations. Run through this quick diagnostic:

• Are deliverables clearly defined? If you never established what reports you need, when, and in what format, the bookkeeper may be guessing.
• Have you communicated concerns? A direct conversation about specific issues – late reconciliations, miscategorized expenses, unresponsive communication – gives them a chance to correct course.
• Is the problem recurring? One missed deadline is forgivable. A pattern of errors, missed deadlines, or poor communication after you’ve raised the issue is a legitimate reason to move on.
• Has your organization’s complexity outgrown their skills? A bookkeeper who was perfect for a $500K budget may struggle with a $3M multi-grant operation. That’s not failure – it’s growth.

If you’ve worked through these questions and the answer is still “we need to make a change,” move to Step 2.

Step 2: Review Your Contract and Engagement Terms

Before you say a word to your bookkeeper, pull out the engagement letter or contract. Look for:

• Termination clause: Most bookkeeper agreements require 30 days’ written notice. Some require 60. Know your obligation before initiating the conversation.
• Data ownership provisions: Your financial data belongs to your organization. Make sure the contract confirms this, and understand what format you’ll receive it in.
• Outstanding invoices or prepaid fees: Settle any financial obligations to avoid disputes that delay the handover.
• Non-compete or non-solicitation clauses: Rare for bookkeepers, but check. You don’t want surprises if you’re hiring one of their staff members.

If there’s no written agreement (more common than you’d think with smaller nonprofits), you’ll rely on professional courtesy and clear written communication to define the terms of separation.

Step 3: Prepare Before the Conversation

Don’t have the termination conversation until you’ve done the following prep work:

Secure Access to Your Financial Systems

Verify that someone on your team – your Executive Director, CFO, or board treasurer – has independent admin-level access to:

• Your accounting software (QuickBooks, Xero, Sage, etc.)
• Your bank accounts (online banking credentials)
• Payroll systems
• Any cloud storage where financial documents are kept
• Tax filing portals and state registration accounts

If your bookkeeper is the sole person with login credentials to any of these systems, fix that before the conversation. This is the single most important step in the process. Organizations that skip this step sometimes find themselves locked out of their own financial systems during a contentious separation.

Identify a Replacement (or Interim Solution)

You don’t need to have a new bookkeeper hired before ending the current relationship, but you should have a plan. Options include:

• Interim bookkeeper from a temp agency specializing in nonprofit accounting
• Your CPA firm may offer bridge bookkeeping services during the transition
• A board member with accounting experience who can handle basics for 30-60 days
• A new bookkeeping firm you’ve already vetted (ideal, but not always realistic timeline-wise)

Document the Current State

Before the transition, create a snapshot of where things stand:

• Date of last completed bank reconciliation
• Status of accounts payable and receivable
• Pending payroll runs or tax filings
• Grant reporting deadlines in the next 90 days
• Upcoming audit dates

This documentation becomes your transition checklist and protects you if there are disputes about what was and wasn’t completed.

Step 4: Have the Conversation

Keep it professional, direct, and brief. Here’s a framework:

1. State your decision clearly. “We’ve decided to transition to a different bookkeeping arrangement.” Don’t hedge or leave room for ambiguity.
2. Provide the effective date. Honor the notice period in your contract. If there’s no contract, 30 days is standard professional courtesy.
3. Don’t argue or relitigate past issues. This isn’t a performance review. You’ve made the decision. Explaining every error or frustration just creates conflict.
4. Express gratitude. Even if the relationship was difficult, acknowledge their service. “We appreciate the work you’ve done for us over the past [X] years.”
5. Outline next steps. Tell them you’ll follow up with a written summary of the transition timeline and what you need from them.

Whether you have this conversation by phone, video call, or in person depends on the nature of the relationship. In-person is ideal for long-term relationships. For remote bookkeepers, a video call works fine. Avoid doing it purely by email – it’s too impersonal for a professional relationship, even a strained one.

Step 5: Send Written Confirmation

Follow up the conversation with a formal letter or email. This creates a paper trail and sets clear expectations. Include:

• The effective termination date
• A list of all deliverables you need before that date (see checklist below)
• Instructions for returning any organizational property, keys, or access cards
• A request to revoke any access they have to your systems after the transition date
• How and when you’ll settle any outstanding invoices

Transition deliverables checklist – request all of the following:

• [check] Completed bank reconciliations through the transition date
• [check] Updated general ledger
• [check] Accounts payable aging report
• [check] Accounts receivable aging report
• [check] Year-to-date financial statements (balance sheet, income statement, cash flow)
• [check] Payroll records and any pending payroll tax filings
• [check] List of recurring transactions, scheduled payments, and auto-debits
• [check] Chart of accounts with explanations for any custom categories
• [check] Login credentials for any systems they manage on your behalf
• [check] Backup copy of your accounting file (QuickBooks backup, Xero export, etc.)
• [check] Any original documents in their possession (bank statements, invoices, receipts)

Step 6: Manage the Transition Period

The 30-day notice period is your transition window. Use it well:

Week 1: Verify all system access. Change passwords on shared accounts. Ensure your accounting software backup is current and you can restore it independently.

Week 2: Have the outgoing bookkeeper walk through their processes with you or your replacement. Document recurring tasks: when vendor payments go out, payroll schedule, monthly close procedures, grant billing cycles.

Week 3: Review all deliverables against your checklist. Flag anything missing immediately – don’t wait until the last day.

Week 4: Final handover. Revoke system access. Settle final invoices. Send a brief, professional thank-you note.

Step 7: Protect Your Organization During the Gap

Even with a smooth transition, there’s usually a gap between the old bookkeeper and the new one getting up to speed. Protect your organization during this period:

• Implement dual authorization for any financial transactions over a threshold amount (e.g., $500 or $1,000)
• Review bank statements personally during the transition – don’t let this task fall through the cracks
• Hold off on major financial decisions until your new bookkeeper is in place and has reviewed the books
• Notify your auditor about the transition so they’re aware when audit time comes
• Alert your bank if you’re changing authorized signers or contact information

Step 8: Onboard Your New Bookkeeper Right

Don’t repeat the mistakes that led to the breakup. When you bring on a new bookkeeper:

• Get a written engagement letter that specifies scope of work, deliverables, timelines, fees, termination terms, and data ownership
• Establish a reporting schedule upfront – what reports you need, when, and in what format
• Set a 90-day check-in to evaluate the relationship early, before small problems become entrenched
• Maintain independent system access – never let a bookkeeper be the sole person with credentials to your financial systems
• Have your new bookkeeper review the previous work – a fresh set of eyes often catches issues the previous bookkeeper missed or created

When to Terminate Immediately (Without Notice)

In most cases, the 30-day notice approach is the right move. However, there are situations that warrant immediate termination:

• Suspected fraud or embezzlement: If you have any reason to believe funds are being misappropriated, terminate access immediately. Contact your attorney and auditor before confronting the bookkeeper.
• Breach of confidentiality: Sharing your organization’s financial information with unauthorized parties is grounds for immediate termination.
• Refusal to provide access: A bookkeeper who won’t give you admin access to your own systems is a red flag that requires immediate action.
• Discovery of gross incompetence: If an audit reveals that months of records are fabricated or fundamentally wrong, the trust is broken. End it immediately and bring in a forensic accountant to assess the damage.

In these situations, change all passwords first, then notify the bookkeeper. Document everything. Consult legal counsel if fraud is suspected.

Common Mistakes to Avoid

After working with dozens of nonprofits through bookkeeper transitions, here are the pitfalls I see most often:

• Waiting too long. Organizations tolerate poor bookkeeping for years because the transition feels daunting. Meanwhile, the bad books create bigger problems – failed audits, missed grant deadlines, IRS issues.
• Not getting a backup before terminating. Always have a current backup of your accounting file before the conversation. If the relationship goes sideways, you need that data.
• Burning bridges unnecessarily. The nonprofit world is small. Your bookkeeper may have relationships with donors, board members, or funders. Keep it professional, even if you’re frustrated.
• Hiring the next bookkeeper too quickly. Take the time to vet your replacement properly. Check references, review sample work, and make sure they have nonprofit-specific experience. Government grants, fund accounting, and donor restrictions aren’t something a general bookkeeper understands automatically.
• Skipping the overlap period. If at all possible, have a brief overlap where the outgoing and incoming bookkeepers can connect. Even a single handoff meeting saves weeks of detective work later.

What to Look for in Your Next Bookkeeper

Since you’re making a change, use this as an opportunity to upgrade. Here’s what to prioritize:

• Nonprofit experience: Fund accounting, grant tracking, restricted vs. unrestricted funds, functional expense allocation – these are nonprofit-specific skills. Don’t assume a great small-business bookkeeper can handle them.
• Software proficiency: Make sure they’re skilled in whatever accounting software you use, or be prepared to switch during the transition.
• Communication style: The best bookkeeper in the world is useless if they can’t explain financial reports to your board in plain English.
• References from similar organizations: Ask for references from nonprofits of similar size and complexity.
• Clear pricing structure: Hourly, monthly retainer, or per-project – understand exactly what you’re paying for and what’s included.

The Bottom Line

Ending a bookkeeper relationship doesn’t have to be dramatic or contentious. Approach it like any professional transition: plan ahead, communicate clearly, document everything, and keep your organization’s financial health as the top priority. The short-term discomfort of making the change is always preferable to the long-term damage of keeping a bookkeeper who isn’t meeting your organization’s needs.

Your nonprofit’s financial integrity is too important to leave in the hands of someone who isn’t delivering. Make the change, do it right, and move forward with confidence.