How Much Does an Accountant Cost for Small Businesses?

About 40% of business owners feel that the costs of accounting and taxes are the worst part of running a business. Businesses spend at least $1,000 a year on bookkeeping and tax administration.

These burdens are part of the cost of running a business. You can choose to handle them yourself, or you can hire an accountant to help you with the administrative burden.

How much does an accountant cost? Read on to find out how much an accountant costs and how to make sure you hire the best one.

How Much Does an Accountant Cost?

The answer really depends on what the accountant is doing for your business. Other factors that weigh into the equation include your location and the accountant’s experience.

You’ll pay top dollar for an accountant with 20 years of experience in a big city because the cost of living is higher and the accountant earned the right to get paid for their expertise.

Accountants can do a wide range of work for your business. They can give you a consultation and advise you on taxes. They can audit your books. They can do your taxes for you, prepare financial reports, and much more. They’ll charge different rates for the type of work they do.

Another factor that goes into the cost of an account is whether or not the accountant is a CPA.

An accountant isn’t automatically a CPA. A CPA is a Certified Public Accountant, a designation that is earned by passing a state board exam. A CPA will cost more than an accountant without the CPA designation.

How Accountants Bill Clients

Accountants usually charge by the hour for their services. The average hourly rate for an accountant is anywhere between $90 – $400 an hour. For a small business accountant, you should expect to see rates ranging between $90 – $250 an hour.

If you have an accountant prepare your taxes, they may charge you by each form prepared. For example, if an accountant prepared a Schedule C and 1040 you’ll get charged $100 for the 1040 and $75 for a Schedule C. If you have a simple return, an accountant may charge a flat fee.

When to Hire An Accountant

Did you know that the IRS encourages small businesses to hire an accountant? They do, and that’s because small business owners make preventable mistakes on their taxes. The IRS will assess penalties and fines for many of these mistakes, which can cost more than you were trying to save by doing your finances on your own.

Before you hire an accountant, you want to make sure that it’s the best move for your business. That can start by understanding the differences between an accountant and a bookkeeper.

A bookkeeper does the daily tasks related to company finances. They’ll enter expenses, reconcile accounts, process payments, and send out invoices. The bookkeeper keeps your financial records in good order to hand them off to an accountant.

The accountant will create financial reports, analyze them, and advise you on how to manage your cash flow. They will also do your taxes and audit your books.

You’ll want to hire an accountant if you have questions about tax-related issues or you need someone to prepare your taxes.

If you want to stay organized and don’t want to spend the time on your books, then hire a bookkeeper. Many business owners decide to do both, which saves time.

How to Hire the Best Accountant for Your Business

A small business accountant can be a valuable resource for your business. These are some of the tips you can use to find an accountant for your small business.

Find One That Matches Your Needs

You’ll want to see if the accountant has experience in your particular industry. This is important because you want to hire an accountant that can handle your unique situation.

For example, e-commerce companies are facing a lot of changes as states try to adopt laws to charge sales taxes where e-commerce companies do business.

Reviews and Testimonials

Another sign of a top accounting firm is whether or not they have a steady stream of accolades from their clients. Look online at the reviews that an accountant has. You’ll want to visit the website of the accountant to see if they have testimonials from their clients right on their site.

A Single Accountant or a Team

Some accountants work on their own and there are accounting firms that work as a team. The advantage of working with an individual is that you have one person who works on your business.

With a team, there could be advantages and disadvantages. A disadvantage may be that your account gets passed around from accountant to accountant, and you’re unable to establish rapport with anyone at the firm.

A firm may take a team approach, where you work with one person as your primary contact. They’ll consult with the other team members or have them review your tax documents for errors before filing them.

Fees and Payments

An accountant who charges by the hour won’t be able to come up with a concrete number until the job is complete. What they will do is give you an estimate or a range for the work performed.

For example, your taxes may cost between $350 – $450. This will at least give you an idea as to what you should budget for.

Be sure to ask the accountant when they accept payments and what types of payments they accept.

Hire A Qualified Accountant

How much does an accountant cost? It depends on the level of services they provide, and a few other factors. Keep in mind that whatever you spend on an accountant, you’re saving in time and reducing your stress when it comes to your small business’ finances.

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