How Much Does a CPA Cost?

A real estate records her numbers for the week on a laptop,

How much is your business currently spending on accounting costs? According to the small business organization known as SCORE, roughly 1 in 5 small businesses are sinking as much as $10,000 in bookkeeping costs and other fees. Roughly 1 in 6 are spending $20,000 or more!

How much does a CPA cost? Do you really need a CPA as well as a bookkeeper? 

Before you start hiring financial staff, you should consider the needs of your business. Let’s take a closer look at the costs and benefits of these financial services, as well as how outsourcing might be a good solution for your small business.

What Does a CPA Cost?

How much does a CPA cost? The typical rate for a CPA is $40 per hour, according to the U.S. Bureau of Labor Statistics, though in 2017, the Journal of Accountancy claimed that the average salary for a CPA was $119,000 per year, which translates into roughly $60 per hour.

Actual accountant pricing tends to vary widely and will depend on the actual needs of your business. Additionally, what accountants charge is often based on their experience or specialization.

Some basic factors to consider are:

  • The accountant’s fees
  • The tasks you ask them to perform
  • The frequency with which you use their services

Hiring a full-time accountant may seem like a logical step for many businesses, but keep in mind that your accounting needs might not be uniform throughout the year. 

For example, some companies might have a greater need for professional help when preparing their taxes, but less during the remainder of the year. 

At the same time, handling your own accounting might seem like a convenient way to cut down your business expenses, but that can be a dangerous approach to take. You may soon discover that tax preparation takes a considerable amount of time and attention, both of which could be better spent on growing your business.

What Does a Bookkeeper Cost?

According to the U.S. Bureau of Labor Statistics, the average annual salary for a bookkeeper was $42,410 in 2020, which translates into roughly $21.00 per hour. Since the services of a bookkeeper tend to be more uniform, bookkeeping costs tend to be a bit more predictable than expenses associated with a CPA.

Part of the reason for this lower cost is that a bookkeeper doesn’t require the same level of specialized training as a CPA. A bookkeeper may be an affordable staff position for some small businesses, though there are some distinct advantages to outsourcing these needs to an accounting firm instead.

The Difference Between a CPA and a Bookkeeper

Not sure of the difference between a CPA and a bookkeeper? You’re not alone. While these positions may have some overlapping responsibilities, each role has a unique focus. We’ll explore each of these in depth below.

What is a CPA?

A certified public accountant is a specialized role that is responsible for the analysis and communication of financial data. If this sounds broad, that’s because modern CPAs can be responsible for a broad range of financial tasks. These trained professionals typically have an area of specialization that can be a valuable asset to a company.

At a minimum, a CPA must possess a bachelor’s degree, though it’s not at all uncommon for CPAs to have a master’s degree or higher. As the acronym indicates, a certified public accountant is someone that has successfully passed an official certification exam. 

Modern CPAs can specialize in a variety of areas, including:

  • Tax preparation
  • IT auditing
  • Non-profit or 501(c)3 organizations
  • Managerial accounting
  • Forensic accounting
  • Personal financial assistance or planning

When a CPA works directly for your company, they will bear responsibility for the company’s finances, including bookkeeping methods and policies.

 A CPA can also prepare a company’s financial statements and represent the company when dealing with the IRS. Both of these skills go beyond the scope of a regular accountant, which partially accounts for the higher certified public accountant pricing shown above.

This list of specialties raises an important question:  How many modern CPAs can boast all of these skills? 

Increased regulation has often driven the need for increased specialization, which means that many businesses find that they need a variety of specialists to serve their needs. 

For this reason, outsourcing to accounting firms can provide access to industry specialists that can provide the required services on an as-needed basis. 

If, for example, you require the services of a forensic accountant to investigate fraud, you will likely have to proceed with a third-party forensic accountant to ensure that your business is secure, rather than bringing someone in-house.

What is a Bookkeeper?

While a CPA is responsible for analyzing data and preparing reports, a bookkeeper is responsible for managing a company’s existing data. This includes everything that relates to a company’s income and expenses, which are usually recorded using some type of accounting software.

Because of this movement toward digital platforms, modern bookkeepers are often responsible for training other employees on the best ways to enter expenses so that the company’s overall cash flow can be monitored smoothly. 

A bookkeeper is also responsible for sorting out errors in a company’s books and ensuring that financial records are accurate and up-to-date. When they are working for a company, a bookkeeper may also be responsible for smaller tasks, like making bank deposits or assisting financial personnel with special projects. 

Unlike a CPA, a bookkeeper does not need to have an advanced degree or specialized skill set, which means that the position is considerably easier to fill. 

Keep in mind that the ongoing needs of this position will almost always require a full-time employee, which means paying an annual salary in addition to employment benefits.

Why You Need an Accountant and Bookkeeper

Does your small business need both an accountant and a bookkeeper? By now, you’ve probably realized that these two positions both play a valuable role in the financial health of your company. A bookkeeper can handle your day-to-day operations, but a CPA is necessary when you need to handle specialized tasks, most notably tax preparation.

This can pose a challenge for many small businesses and start-ups. If you’re a business owner, you may be looking for ways to cut costs and reduce overhead, and the prospect of needing two separate financial employees may seem daunting. 

While you could cut costs by handling your own books and preparing your own taxes, these time-consuming tasks might pull you away from what you’re most passionate about:  Managing and growing your business. When you handle your own taxes or specialized financial tasks, you run the risk of making a mistake, which could result in an audit, penalties, and other fees that you just can’t afford.

Thankfully, there’s a solution. By outsourcing your company’s financial tasks to an accounting firm, you get all the benefits of an accountant and a bookkeeper without the overhead of hiring more personnel. Online bookkeeping and other financial services can ensure that your needs are met without excessive expenses.

Xendoo Pricing:  Cut Costs, Not Quality

At Xendoo, we provide expert-level financial services so that your small business can thrive. Why pay salaries for full-time employees when you can rely on the affordable services that Xendoo has to offer?

Xendoo pricing is made with your small business in mind. We can offer regular bookkeeping services for your business and deliver specialized services such as tax preparation and more, thanks to our team of knowledgeable financial professionals. Reach out today to learn more about the ways that we can help your business to thrive! 

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