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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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When You Need to Hire a CPA

Bookkeeper? Accountant? CPA? Which one does your business need, or does it need all three of them? Actually, it depends. Staying on top of your business’s finances is key for a small business owner, but you may need more than day-to-day bookkeeping. When you have more questions than a bookkeeper can answer, you’ll probably need to look into CPA services. Fortunately, Xendoo has you covered. Read on to see if online CPA services are best for you and your business.

What is a CPA?

It’s important to understand the differences between a Certified Public Accountant, CPA, and a regular accountant. A CPA is an accountant who has met specific state and education licensing requirements and passed the CPA exam. So, accountants with the title of CPA offer a higher level of financial analysis for you and your business and can act as a fiduciary on your behalf.

At that same time, an accountant can give you tax savings advice, such as when to make capital purchases, what you can deduct, and how to reduce taxes on capital gains. They can answer your questions about financial reports, cash flow, depreciation, and other accounting processes and identify opportunities to improve profit margin and business growth. Additionally, they can help set up business accounting systems, teach you best practices, keep you legal, and prevent missed deadlines and noncompliance penalties.

What does a CPA do?

Certified Public Accounts can be the financial strategist for Fortune 500 companies or advisors to neighborhood businesses.  CPA act as consultants on many issues, including taxes and accounting. Generally, online CPAs services include:

  • Prepare financial statements
  • Identify red flags and growth opportunities
  • Prepare and file taxes
  • Plan capital purchases and other investments
  • Strategize for scaling the business

When should I hire a CPA?

Whether you’re starting or growing your business, an accountant can help set up financial systems and analyze data so that you can make smarter business decisions. They have the power to forecast business success, diagnose financial health issues, and increase revenue—saving you significant money, time, and hassle. 

So while a bookkeeper focuses on the everyday tasks that maintain your business’s finances, accountants consider the big picture strategy to keep your business strong and growing, and a CPA has an even higher level of financial analysis to assure you’re making the right moves at the right time.

How much does a CPA cost?

Budgeting for bookkeeping and accounting services is tough for a small business. Traditionally, bookkeepers have charged an hourly rate; the more time they spend on your books, the more you have to pay. Typical rates are:

  • Bookkeeper — $30 to $90 per hour
  • CPA — $150 to $450 per hour

Or you may only need an accountant for an occasional project such as tax preparation.

  • Tax return (unincorporated) — $200 to $500
  • Tax return (incorporated) — $800 to $1,800
  • Financial statement — $1,000 to $2,500
  • Audit — $2,000 to $5,000

This is why accounting for a small business can become expensive. Plus, you may decide you only need an accountant for an occasional project such as tax preparation, financial statement, or audit, which costs a fixed amount that can add up, or you may not have allotted this in your end-of-the-year budget. A popular option with small businesses is an accounting service that charges a fixed amount every month. It’s easy to budget for, and it can cost less than half what you would pay an hourly accountant for the same amount of service. That’s why Xendoo offers a monthly pricing structure to our clients, charging a fixed amount every month. It’s easier to budget for bookkeeping and inline CPA services monthly and cost less than half of what you would pay an hourly accountant for the same service amount.

The right account professionals for your business

A small business accounting service will file your taxes, but you’ll need to have your bookkeeping in order so you can provide them with the data and reports they need. Xendoo’s online team of bookkeepers and CPAs will handle everything for you – they will manage all of your bookkeeping and accounting and will file the right return for you, right on time. Plus, Xendoo also takes care of all the filing that goes along with your tax return to itemize your business deductions.

Ultimately, it’s best for you and your business to have both a bookkeeper and an accountant. Making Xendoo your financial partner means joining a community of small business owners who love working with Xendoo’s bookkeepers and CPAs. Xendoo’s online CPA accounting services are ideal for small businesses because the more eyes looking out for your business, the better. Your dedicated financial team provides the perspective on your finances that can help ensure you’re able to anticipate problems and have the appropriate solutions ready to go. In gaining a complete picture of your company’s financial health, you can confidently grow your business.

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When You Need to Hire a Pro: Online Accounting Service for Small Business

Your business is growing (congrats!), but entering invoices, expenses, and paying bills take up far too much valuable headspace—it’s headspace that you need to focus on your offerings and your clients. It’s time to go beyond merely tracking the ins and outs of your books and to start focusing on accounting and the financial health of your growing business. Choosing an online accounting service for your small business is the best way to keep your books updated, in compliance, and thriving. An online accounting services team can quickly become an integral resource for your small business — providing so much more than just your monthly reports — you’ll receive a trusted partner that helps you focus on your goals.

You need a solid business plan

Every small business needs a solid business plan — something to help you navigate the short term and work towards success in the long run. An accountant can help you devise a solid business plan as you get started writing one or updating your existing plan. An online accounting services team can determine areas for growth within your small business by providing insight on cash flow patterns, inventory management, pricing, and business financing, as well as providing advice on property and equipment leasing and purchasing. They can help you prevent getting audited by the IRS by setting up your bookkeeping system right the first time and preparing and guiding you through an audit, if necessary. 

Online accounting services ultimately create financial forecasts to make better decisions in your business while working alongside you to create a business budget that will support your business goals. Xendoo’s online accounting service provides you with Quickbooks and Xero, plus end-to-end service with a U.S.-based financial team—bookkeeping, tax consulting, and tax filing all under one roof, available 24/7. Xendoo also helps small business owners with their personal filings, so you don’t have to worry about a thing.

You need to figure out the best legal structure for your SMB

One of the first steps when starting a small business is determining the best legal structure for the business. But it is no small task! There are a handful of options to choose from, and they can be incredibly confusing to sort through. An accountant can help you analyze each option and look into the things you must investigate before deciding. 

Together you can determine the impact it will have on your taxes, your personal liability, the cost, and problems that could arise if you need to dissolve the registered entity, among many other things. There are benefits and disadvantages to registering your business that you have to consider. Whether you register as an LLC, Corporation, Partnership, or as a Sole Proprietorship, an accountant can help you determine what’s best based on your current status, your financials, and your goals.

You’re spending too much time on your finances and not enough time on your business

Small business owners are notoriously time-starved—struggling with marketing and sales with employee management, bookkeeping, and so much more. Not to mention providing the goods and services they set out to deliver in the first place. Choosing to work with an online accountant like the team at Xendoo will instantly take some of the heaviest, most important work off your plate. Online accounting software keeps your books up to date and tax-ready, giving you the ability to forecast and make strategic decisions as needed.

Need to finalize your marketing budget? Need to quickly determine whether or not you can hire a new employee? In the past, you likely had to sit down with your books for hours to attempt to find an answer. With an online accounting team on your side, you can quickly access your up-to-date financials and have a sounding board to help you make big decisions.

When you need to deal with government red tape

This year has been so hard on small businesses. As the government continues to implement and propose new measures to help companies manage the economic consequences of the COVID-19 pandemic, you need to know how to account for the assistance. The accounting and financial reporting implications can vary depending on whether the assistance is considered a loan, a grant, or an income tax benefit, among others. 

With approvals and funding of Payroll Protection Program (PPP) loans ongoing, there will be key accounting considerations that a CPA or accountant can make sure you’re aware of, so you can continue to navigate the changes and make smart decisions for your business.

When you have been audited

Many businesses are required to have a financial statement audit or a review with the IRS at some point. An audit sounds daunting because it truly is! Managing an audit can unexpectedly pull you from your regularly scheduled business – sucking up time, energy, and money. When you’re audited, you need a CPA to perform the audit services and issue the IRS’s required reports. Your CPA will help you ensure everything is in order and save you time and expenses.

CPAs are considered fiduciaries with a legal duty and power to act on behalf of and in their clients’ best interest. It’s important to note that non-CPA accountants are not considered fiduciaries to their clients, meaning they cannot represent their clients before the IRS during an audit.

Buying, selling or growing your business

If you’re considering selling your business, an accountant acts as a financial advisor – helping to ascertain your material assets and liabilities: what you own, what you owe, and what will be included in the sale. Thanks to Xendoos online accounting support, you’ll have all your up-to-date records ready when you are.

More importantly, an accountant can generate a picture of your income over time and assign concrete value to the more fluid and variable aspects of your business: past earnings, cash flow, balance sheets, equity statements, and the company’s performance related to economic and market conditions at large, as well as any liabilities that may be lurking under the surface. That CPA tax expertise is also important. An accountant will utilize your online accounting software to organize, document, and verify your small business’s tax filings, as well as give you a sense of the other party’s tax status.

Xendoo can help you with online accounting services, taxation solutions, and so much more – and will become a trusted resource for your small business. With accurate, up-to-date records at your fingertips, Xendoo’s online accounting software for small businesses plus their dedicated team of financial advisors will allow you to grow your business, meet your goals, and spend more time focused on the reasons you started your small business in the first place.