How Much Should a Small Business Accountant Cost?

Understand how much an accountant should cost your small business with answers to the following questions:

• How Much Does an Accountant Cost? 
• What Accounting Tasks Do You Need?
• How Are Small Business Accountant Fees Structured?
• Can You Lower Accounting Fees by Doing Some Work Yourself?
• Is the Cost of an Accountant for Your Small Business Too Much? 

Save time and energy when organizing the finances of your start-up or small business with a professional accountant. You can focus on growing your company as they take care of the financial necessities. Before you hire one, it’s important you know the cost of an accountant for a small business to ensure you’re getting a good deal.

Small business accountants help millions of business owners begin, run, and grow their start-ups into successful businesses. Their responsibilities range from collecting data to providing financial expertise, making an accountant an asset to your business operations.

It’s easy to just accept and pay whatever accounting fees they charge – whether on a weekly, monthly, quarterly, or yearly basis. However, if you’ve not dealt with accountants before you might have concerns that you’re paying too much. This article will help you work out if your small business accountant fees are too high.

Find more tips in our guide to managing your accounts as a small business.

How Much Does an Accountant Cost?

The average cost of a certified public accountant (CPA) can be between $150 and $450 per hour – depending on the type of work carried out¹. For bookkeeping services done by a less experienced professional, you might pay around $30 to $90 per hour².

How much an accountant costs your business is often based on factors such as the services they provide, their level of experience, location, and job requirements. It may also depend on how they charge (an hourly, monthly or flat fee) – which is one of the most important questions to ask your tax professional.

A good way to assess the average cost of an accountant for small businesses is to research your competitors to find out how much they pay in legal and accounting fees. No two businesses are alike, so your fees will vary based on factors like your industry and specific business needs. Knowing averages can give you a cost range for guidance though.

SCORE – a resource partner of the Small Business Administration (SBA) – worked out how much money small business owners spend on accounting each year. Here’s the data they found in 2015³.

• $1,000 or less: 23% of small business owners
• $1,000 – $5,000: 31%
• $5,000 – $10,000: 18%
• $10,000 – $20,000: 12%
• $20,000 or more: 16%

This data includes how much small business owners spend on:

• Accounting administrative costs
• Internal expenses
• Legal fees

Most small business owners said they spend between $1,000 and $5,000. If your accounting costs are above this, you might want to re-evaluate your needs.

What Accounting Tasks Do You Need?

Taking care of small business accounting can become more complex and time consuming as your company grows. Assess the tasks you need an accountant to complete. Certain accounting tasks take longer and cost more than others. Depending on what skills you require of an accountant, you might pay more in accounting fees.

Accountants can help with many of your business-related tasks. Common ones include:

• Managing your books
• Budgeting
• Choosing a business structure
• Financing your business
• Tax planning

According to one small business report, 71% of small businesses outsource at least one accounting task⁴. Whether it’s payroll, cash flow or tax challenges, the costs of each vary based on their complexity and hours required. 

Some small business owners who need accountants to handle all of their accounting tasks hire an in-house accountant. An in-house accountant could work part or full time – depending on your requirements – meaning they’d be added to your payroll and paid a salary. For others, outsourcing an accountant and working with them as needed – often paying per hour – can be more cost-effective.

At what point do you need a bookkeeper? 

If you only need help with simple accounting tasks, you could opt for hiring a bookkeeper. Their main role is to keep an accurate record of business transactions and daily finances – rather than offering the insights and advice of an accountant. Common tasks bookkeepers carry out include: 

• Managing and tracking payroll, bills, and invoices
• Monitoring cash flow
• Budgeting
• Handling customer and supplier transactions
• Data entry

A bookkeeper typically charges between $30 and $50 an hour⁵. This is significantly less than a CPA, so if your small business only needs its finances recording it may be a more cost-effective option.  

Discover more about how to find an accountant for your small business needs.  

How Are Small Business Accountant Fees Structured?

There are three main pricing structures accountants often use to charge small businesses: 

• Hourly rate – Your accountant charges your business for each hour they spend working on any agreed accounting tasks. 
• Per project – Ahead of completing one or more tasks your accountant will estimate how long it should take and the total cost, providing you with a flat fee before they begin.  
• Ongoing rate – An ongoing rate means you use the accountant throughout the year and pay the accountant fees on a monthly basis. This can make it easy to factor into your overheads. 

Comparing small business accountant fees can be challenging as they structure their fees differently. Look at your options and estimate how much you will spend with an accountant using each different pricing structure – some even offer free consultations first. Shop around if you think you can get a better price with a different accountant.

Can You Lower Accounting Fees by Doing Some Work Yourself?

Yes, one of the main ways to cut the cost of an accountant for a small business is to carry out some tasks yourself. This way you can ask fewer tasks of them, so they charge lower fees. Many start-up and small business owners begin this way, but as your company grows it can eat into your valuable time. 

There are many reasons to hire an accountant but some accounting tasks you may be able to do yourself. These can include basic bookkeeping jobs, such as:

• Chasing up invoices
• Tracking bills
• Monitoring cash flow
• Managing accounts payables and receivables 
• Monthly, quarterly, and annual budgeting

One way to do this is with accounting software. Almost 65% of small businesses use accounting software⁶. This is often employed to help manage the books, track expenses and income, create invoices, and more. It can eliminate some of the work accountants need to do, which could reduce your accountant fees. 

Instead of relying on an accountant or bookkeeper to determine figures for you, software can do it at a fraction of the cost. Then, you can pass your books along to your accountant when you need someone to handle the more complex work. Streamlining your accounting processes with software can save you time and money. 

Is the Cost of an Accountant for Your Small Business Too Much? 

It really depends on the amount of small business accountant fees you’re currently paying and the specific financial needs of your company. Some businesses need accountants to manage more aspects of their finances than others. Because your needs might change, you should evaluate your expenses periodically.

If you’re paying legal and accounting fees at the higher end of hourly or project rates – or your accountant takes up most of your expenses – you might be paying too much. Shop around and compare accountant costs and consider their experience, pricing structure and skills. Comparing the average cost of an accountant in your industry also highlights if you’re paying fees that are too high. 

Where possible, use software to handle some of your accounting responsibilities. This reduces the tasks you need an accountant to do, saving you money on accountant fees.

Sign up to Groupon Merchant today for more help and advice when it comes to covering your small business accounting costs.

References:

1. https://xendoo.com/what-do-accountants-charge-for-small-businesses/
2. https://xendoo.com/what-do-accountants-charge-for-small-businesses/
3. https://www.score.org/resource/infographic-small-business-credit-capital-and-cash-flow
4. https://www.waspbarcode.co.uk/buzz/small-business-report-accounting
5. https://smallbusiness.costhelper.com/accountants.html
6. https://www.ibisworld.com/united-states/market-research-reports/forensic-accounting-services-industry/