If you run a business, you’ve likely wondered–how much does it cost to hire a tax accountant? Do I need accounting services, and will they save me more money than they cost?
While doing accounting and business taxes, you may worry about making mistakes or missing opportunities that a pro would spot right away. Furthermore, taxes can feel like chores—no one enjoys doing them. The cost of hiring a tax accountant for your business may more than make up for the time and energy you’ll save doing them.
Small business accountant fees vary depending on a number of factors, including expertise levels, types of services offered, technology integration, and industries or niches served.
For example, a bookkeeper that does routine data entry charges less than a CPA (Certified Public Accountant). A CPA is an accounting expert that is highly qualified to advise you on business strategy or tax planning.
If you’re fed up with trying to do your own books, you’re not alone. For many small business owners, accounting is definitely not an area of expertise.
To help you decide, we’ve put together an accounting cost guide. It covers how much it costs to hire a tax accountant and other typical accounting costs.
Accountant Hourly Rate
How much does an accountant cost per hour? Traditionally, bookkeepers have charged an hourly rate. The more time they spend on your books, the more you have to pay.
Note, that bookkeepers tend to manage the day-to-day recording of financial data. Accountants or CPAs do that and many other functions. CPAs are able to manage your books, identify big-picture financial insights, conduct audits, prepare taxes, financial statements, and more. For this reason, you pay a little more for CPA and accounting services.
Typical hourly rates for bookkeepers and CPAs are:
- Bookkeeper hourly rate — $30 to $90 per hour
- CPA hourly rate — $150 to $450 per hour
Accounting Fees Per Engagement
Some accounting services don’t make sense to bill hourly. For instance, businesses must file taxes every year, but you don’t need an accountant every day of the year.
With that in mind, you may be asking—how much do accountants charge to do taxes?
If you only need an accountant for an occasional project such as tax preparation, the typical cost to hire a tax accountant is:
- Tax return (unincorporated) — $200 to $500
- Tax return (incorporated) — $800 to $1,800
The National Society of Accountants (NSA) reports that the average fee to file individual taxes with no itemized deductions is $176. The average cost for business tax preparation is much higher. Businesses have more tax requirements, complicated forms, and accounting needs. Cost varies based on the type of business and forms you are filing, but the tax return costs above are a good estimate.
Now, let’s say you need other accounting services besides tax preparation. Again, the cost depends on the complexity of your business and your specific need. In general terms, the cost of hiring an accountant for special business services like financial statements and audits is below.
- Financial statement — $1,000 to $2,500
- Audit — $2,000 to $5,000
Flat Monthly Accounting Fees
A common question that we hear is–what is an affordable accounting fee for small businesses? Small businesses often choose accounting services that charge a fixed amount every month.
Flat rate accounting services are easier to budget. Plus, it can cost half what you would pay an hourly accountant for the same amount of service.
That’s why Xendoo offers flat rate pricing plans to our clients.
It is also important to consider the area where you live and the cost of living. You may want a local accountant, but if you live in a high-cost area, expect to pay a higher than average rate.
Alternatively, you can hire a tax accountant online. It is common for CPAs, bookkeepers, and accountants to work remotely. As long as they are familiar with your state and local requirements, you can work with an online accounting service like Xendoo without issue.
Before You Hire an Online Accountant
Research the firms you’re considering to make sure they meet your needs and quality standards. Some things to consider:
- Credentials. Unlike professions such as law or medicine, anyone can call themselves an accountant. Don’t just trust in a CPA certificate. Check certifications, education, training, and years in practice.
- Service level. How often and how easy will it be to communicate with your accountant? Do you prefer to be contacted by telephone, email, an app, or all of the above? How fast do you want a response—within 24 hours or sometime next week?
- Processor vs. advisor. A processor type of accounting firm mainly provides data entry and reconciliation services. An advisor can help you analyze your financials to spot trends, challenges, and opportunities for improvement.
- Specialization. Ideally, the firm you choose will have experience in your industry and the size of your business. In-depth knowledge of the challenges you face adds value and insight to their services.
Are Accountants Worth the Money?
You know how much it costs to hire a tax accountant, but is it worth it?
With so many business accounting software choices now available, you may assume that letting your computer do everything will be cheaper than the cost of accounting services. And you may be right. However, there are some things that still need an expert accountant who can save you significant money, time, and hassle.
For example, an experienced accountant can help with:
- Tax savings advice, such as when to make capital purchases, what you can deduct, and how to reduce taxes on capital gains
- Answering your questions about financial reports, cash flow, depreciation, and other accounting processes
- Identifying opportunities to improve profit margin and business growth
- Setting up systems for business accounting and teach you best practices
- Preventing costly missed tax deadlines and noncompliance penalties
Xendoo specializes in providing expert accounting and bookkeeping services to small businesses. Because this is our niche, we can deliver tried-and-true expertise. Because we know small businesses need affordable accounting services, we leverage accounting technology to reduce costs while maintaining gold standard quality.
If you’d like to learn more about our pricing and what you get for your money, please contact us today.