How much do accountants cost -- a quick guide

Hiring an accountant can be a major investment for a business, especially a small business or startup. Accountants provide valuable services like bookkeeping, payroll, tax preparation and planning, audits, and financial advisory. However, their services come at a cost. When budgeting for an accountant, it’s important to understand the different factors that influence accountant fees so you can find the right accountant at the right price for your needs.

In this article, we’ll break down the typical ranges of accountant fees, the different billing methods they use, and the key factors that impact how much an accountant will charge. We’ll also provide tips on how to get the most value from your accounting services while keeping costs reasonable. Whether you’re a new business hiring your first accountant or a growing company exploring switching firms, read on to learn what goes into accountant costs and how to budget wisely.

Average Cost Ranges for Accountants #

Accountant fees can vary widely based on factors like location, qualifications, firm size, and types of services offered. However, most individual accountants charge within these general ranges:

• Bookkeeping: $25-$100 per hour
• Tax preparation: $150-$500 per return
• Financial statements: $300-$1,000 per statement
• Payroll services: $250-$1,500 per month
• Advisory services: $125-$500 per hour

Accountants working at larger firms tend to bill at higher hourly rates of $150-$500 per hour. Audit services from a big firm can cost tens of thousands of dollars.

It’s important to note that these rates are just general guidelines. You’ll need to consider the accountant’s specialized skills and credentials, your particular accounting needs, and local rates when budgeting costs.

Accountant Billing Methods #

Beyond hourly rates, the billing method an accountant uses can impact your total costs. Common accountant billing methods include:

• Hourly billing: You are billed for the exact hours worked. This allows you to closely track time spent but can lead to unpredictable costs.
• Fixed fees: A flat rate is charged for a defined project or service, like an annual tax return. This makes costs consistent but can incentivize the accountant to work quickly.
• Value pricing: Fees are based on the value the accountant provides, not hours logged. This aligns incentives but can be vague.
• Retainers: An upfront payment is made to secure services for a timeframe. This helps with cash flow but requires budgeting lump sums.
• Contingency pricing: Accountants receive a cut of the tax savings or funds recovered from audits. This rewards results but fees are uncertain.

When choosing a billing method, assess your budget, risk tolerance, need for predictability, and aligning accountant incentives. Be sure the billing details are specified clearly in an engagement letter.

Key Factors That Influence Cost #

Many variables impact what an accountant will charge for their services. Key factors include:

• Accountant credentials: CPAs and accountants with advanced certifications or specializations can charge higher rates. Their expertise commands a premium.
• Firm size: On average, small firms/solo accountants charge less than larger firms with more overhead costs to support.
• Geographic location: Accountants in major metro areas tend to have higher rates than rural accountants. Consider local averages.
• Complexity of work: More complex books with numerous expenses, inventory, assets, or revenue streams take more time and drive up fees.
• One-time vs. ongoing services: One-off needs like tax prep cost less than ongoing advisory and bookkeeping. Established relationships increase fees.
• Expedited services: Rush jobs often carry an extra surcharge. Allowing ample timelines can reduce billing.
• Experience level: Senior accountants charge more than junior staff. Ensure you’re paying for the appropriate experience level for your needs.

While you likely can’t control or change these factors, being aware of them helps set realistic cost expectations.

Tips for Budgeting Wisely for Accounting Needs #

Don’t let accounting costs take you by surprise. Use these tips to keep accountant bills reasonable for your business:

• Shop around: Get bids from a few accountants to compare rates. Be clear on your needs and ask what is included.
• Review qualifications: Hire at the skill level truly needed so you don’t overpay. An expensive CPA may be overkill for basic books.
• Look for fixed/value pricing: Capping costs helps control surprise bills down the line. Build trust with value pricing.
• Discuss timeline needs: Ask if rush fees can be avoided by adjusting project timelines. Build in cushion time.
• Leverage junior staff: Allocate the simpler tasks to junior versus senior level accountants at lower rates.
• Consider virtual firms: Online accounting services can offer pricing discounts, especially for basic books.
• Inquire about overhead costs: Ask what is included in fees so you aren’t paying for unused services.
• Automate where possible: Invest in accounting software to reduce hours spent on data entry.

Hiring an accountant provides valuable expertise. But accounting help still represents a major business investment. Taking the time to understand accountant rates and optimizing costs without sacrificing quality enables you to maximize value. With realistic budgets and clear communication, accountants can provide incredibly helpful services while keeping your bottom line in check.