How much does an accountant cost? Well, that depends on what you’re looking for and the expertise you require.
Accountancy fees are not regulated or determined by local governments. Instead, prices depend on factors like the size of your business, the services required, the accountant’s expertise, and the length of time you plan to work with them.
Accountants charge using three common fee structures: hourly, project-based, and fixed fees.
Hourly rates are common, and they vary based on the accountant’s experience, training, and certifications. An accountant’s hourly rate can range from $150 to more than $400 per hour.
If you only need an accountant for an occasional project, like tax preparation or an audit, you can ask for an estimate of the total cost before they begin work. Often, the project rate will be the accountant’s hourly rate multiplied by the number of hours they believe it will take to complete the project.
Fixed or monthly fees
If you require ongoing accounting services, like bookkeeping or payroll, it usually makes more sense to ask for a fixed-fee structure. Since you pay the same rate each month, fixed fees are easy to budget for, and they often end up being a better deal in the long run.
Note: You can find quotes below and above those brackets, and rates vary depending on your needs. For a more accurate figure, try to set up an appointment with an accounting professional—most accountants offer free consultations.
Why do you need an accountant?
Accurate accounting records help you maximize your tax deductions, track money coming in and out, and plan for the future. While larger companies may be able to afford salaried accountants on their payroll, not every business has that luxury.
As a small business owner, chances are you’re filling every role within your company, so hiring an accountant might be last on your list of priorities. But staying on top of your financial information can be time-consuming, and long-term financial forecasting requires a certain level of expertise.
If you’re unfamiliar with tax laws and bookkeeping in general, you may find yourself making expensive financial mistakes, like improperly categorizing your expenses, neglecting sales tax, and failing to track reimbursable expenses.
Outsourcing your accounting may seem unnecessary or expensive at first, but by doing so, you’re likely to save money in the long run.
When do you need a small business accountant?
If you do your own accounting and bookkeeping, you’re in good company. Many small business owners use accounting software to help them manage their receipts, invoices, and bank statements.
We get it: the DIY route can seem tempting, especially if it will save you money in the short term.
But doing your books is easily one of the most difficult parts of running your small business—and it happens to be one of the most important, too.
Your small business needs an accountant if:
- You’re spending a lot of time and energy on payroll, bookkeeping, and tax prep
- You’re profitable but struggle to make payroll or pay bills on time
- You’re not sure how to cut operating costs
- You don’t know how much cash you need to have on hand or how to improve your liquidity
Continuing to operate under these conditions can hurt your bottom line and make it challenging to grow your business.
When you hire an accountant, you’re also paying for their knowledge, experience, and industry know-how. Their expertise can give you a better chance of maximizing profits during prosperous periods and surviving turbulent times.
Does every small business need an accountant?
If your business is relatively small (or more of a side hustle), you may be able to handle your accounting on your own.
Over the last few years, online bookkeeping services have grown in popularity among small business owners. DIY accounting software, like QuickBooks or Xero, can ease the hassle of managing your books manually (though they’ll still require some work on your part).
DIY software allows you to import transactions from your bank accounts so you can categorize and track your income and expenses. They can also automatically prepare important financial statements, like a balance sheet or cash flow statement, based on the information you enter. The only catch? The software is only as reliable as the information you enter.
If you enter a number incorrectly and fail to notice it, you’ll end up with inaccurate financial reports and no clear insights into your business’s performance.
What services can an accountant provide?
Certified Public Accountants, or CPAs, are more than bookkeepers or number-crunchers: they can perform a wide range of finance-related tasks for your business.
While there are some basic financial tasks you can handle yourself, there are others that it’s best to leave to a professional.
An accountant can help you:
Pick a business structure that suits your needs
If you’re just starting your business, you might need help selecting a business structure. Whether it’s a sole proprietorship, partnership, or corporation, your business structure will define how you protect assets, leverage costs, and pay taxes.
Different structures have different tax implications, and while it’s possible to convert your business to a different structure in the future, certain restrictions will apply. If you need help determining which is best for you, a good accountant can provide valuable guidance.
Create a business plan
It can be difficult to predict your future financial performance when you’re just starting your business, but investors will expect you to put in the work. Solid financial projections are an essential part of your business plan: they can help you plan your budget and set timelines for when you expect to become profitable.
Your financial projections can help convince potential investors of your business’s growth potential. However, if you’d like an expert to review your numbers, an accountant can help.
Helpful resource: How to Write Your First Business Plan
Prepare and file business taxes
Income tax returns become more complicated when you run your own business. Instead of paying your taxes at the end of the year, you’ll need to set up quarterly estimated tax payments. You’ll also need to track tasks like calculating capital gains, asset deductions, and fringe benefits tax.
If you’re not up to speed with current regulations for business taxes, it’s possible to fill out your taxes incorrectly and make costly mistakes. An accountant will prepare your tax returns to make sure you’ve minimized your tax liability. They can even represent you before the IRS in the rare case that you’re audited.
Learn more: How to Calculate & Pay Estimated Taxes
Help you save
Your CPA knows your income sources as well as your financial outgoings. By helping you monitor where your money is going, they can advise on where you can cut costs.
They will also assist with budgeting, internal controls, cash flow management, pricing, inventory strategies, lease-or-buy decisions, and other financial decisions to help your small business grow.
Helpful resource: 25 Ideas for Cutting Costs (Checklist)
Plan for the future
Your accountant can help you create the financial projections necessary for your business plan, but they can also use real data to help you track your progress and plan for the future. An accountant can use the insights gained from monitoring your financial records to help you set goals and determine your key performance indicators (KPIs).
By translating your financial data into business information, they will be able to provide expert advice on how to improve your performance and grow your business for the next fiscal year.
Should you hire a CPA? A cost-benefit analysis
If you’re still don’t know if you should hire an accountant for your small business, we’ve created a cost-benefit template to help make your decision easier.
Think of this as a business-friendly list of pros and cons: you add up the expected rewards and subtract the associated costs to decide if hiring an accountant will be worth your while.
Benefits of hiring a CPA
Save your time
By hiring an accountant focused on your accounting and financial needs, you’ll be able to focus more on your business’s core goals and grow your brand.
For this benefit, multiply the hours you spend on bookkeeping (plus the overhead costs of any benefits) by your hourly rate.
Better financial planning
When you hire a CPA, you’ll have a detailed record of all financial transactions. This will help you to forecast any potential financial losses or gains.
Using a professional accountant can help you run your business smoothly and avoid big financial problems in the future.
For this benefit, calculate the potential financial gain you could earn by using the CPA’s planning advice. An accountant can help you pinpoint wasteful expenditures as well as opportunities for you to save cash. They will scrutinize every component of your business to ensure it is as cost-effective as possible.
Avoid tax mistakes or fines
If you go the DIY route, you might accidentally commit a serious tax mistake that could result in a hefty fine.
Hiring a tax professional to manage your finances removes financial risks because the chances of making grave mistakes are almost none.
If you’ve ever experienced tax filing mistakes or fines, you probably have some estimate of how much these can cost.
Costs of hiring a CPA
Some costs are easier to quantify than others. In most cases, you’ll be using averages or estimates.
Start by finding the average hourly rate for a CPA in your city. Will you hire them on an hourly basis, or would it make more sense to pay a monthly fee? Remember that accountant fees will vary depending on their years of experience and the type of work they offer.
Your time working with them
Calculate the cost of your time working with an accountant. Don’t forget: you’ll still be responsible for getting documentation together, providing required records, and occasional meetings.
The accountant might require you to invest in new software to help facilitate the job.
How Bench can help
If you’re looking for a service to bridge the gap between DIY accounting software and a full-time accountant, Bench has you covered. In addition to monthly bookkeeping, we also offer tax filing and advisory services. Our in-house Tax Advisors are always on hand to answer your tax questions and make a custom plan for your business. To learn more, check out our How It Works page.
Is it worth it to hire an accountant for your business?
Your CPA will play a key role in the future of your business. Whether you want to stay (or get) on track with bookkeeping, business payments and expenses, cash flow, or financial development, don’t underestimate the value an accountant can bring to your business.