How much do accountants charge for a small business (typical hourly fees)

Hiring an accountant can be one of the most important decisions a small business owner makes. A knowledgeable accountant can help you keep accurate financial records, prepare taxes, provide advice, and keep your business running smoothly. However, accounting services can also represent a significant expense, especially for small businesses with tight budgets. So how much should you expect to pay an accountant? Here are some guidelines on typical accountant fees for small businesses.

Factors That Influence Accountant Fees #

The fees an accountant charges depend on several factors, including:

• Accountant’s location - Rates are typically higher in major metro areas than rural locations.
• Accountant’s qualifications - CPAs tend to charge more than bookkeepers or accountants without credentials. Experience level also affects rates.
• Complexity of your business - Industries like manufacturing or retail that deal with inventory and equipment usually incur higher fees than service businesses. The more complicated your tax situation, the more you’ll pay.
• Services provided - Basic bookkeeping and tax prep is cheaper than services like payroll, auditing, or financial planning. Ongoing services cost more than one-time needs.
• Company size - In general, the bigger your business, the more you’ll pay. But some accountants offer discounted rates for very small businesses.
• Billing method - Hourly rates, monthly retainers, project fees, and value pricing options exist. The billing method impacts overall costs.

Basic Bookkeeping Fees #

Most small businesses need help with basic bookkeeping tasks like recording income and expenses, reconciling bank statements, tracking invoices, and producing monthly financial statements. Here are typical hourly rates charged by accountants for bookkeeping based on credentials:

• Bookkeeper without certification: $30-$50 per hour
• Associate or bachelor’s degree in accounting: $50-$70 per hour
• CPA: $70-$120+ per hour

Many accountants can provide outsourced bookkeeping services remotely for an hourly fee. This allows small business owners to access experienced bookkeepers at an affordable rate. It may make sense for business owners who want to manage their own books but lack the expertise or time. Expect to pay for a few hours of bookkeeping per month, though monthly costs vary widely based on business size and complexity.

Tax Preparation Fees #

Virtually every small business needs to file taxes on an annual basis. Accountants usually charge a flat fee for tax prep based on the forms and schedules required. Here are typical rates:

• Simple Schedule C tax return for a sole proprietorship: $250-$800
• S-Corp or partnership tax return: $600-$1,500
• Nonprofit tax return (Form 990): $850-$2,000
• State or local tax returns: $150-$500 each
• Other common small business returns like payroll taxes or sales taxes: $150-$300

Keep in mind that tax prep fees apply each year. You may be able to reduce your tax prep costs by supplying your accountant with organized books and high-quality recordkeeping. Complex taxes with deductions, business assets, inventory tracking, and other factors can increase fees.

Ongoing Accounting Services #

Many small businesses utilize an accountant regularly throughout the year instead of only at tax time. Accountants may charge monthly retainers that provide ongoing services like:

• Managing payroll
• Providing financial statements
• Filing sales tax returns
• Managing accounts receivable/payable
• Performing bank reconciliations
• Preparing budgets

Typical monthly retainer fees range from $200 for basic services up to $2,000 or more for comprehensive outsourced accounting. Packages and rates are customized for each business based on their needs.

Value Pricing #

In addition to hourly and retainer fees, some accountants offer value pricing for small business clients. Under this model, fees are based on the value the accountant provides to the client rather than hourly rates. For example, an accountant may charge a fixed annual fee to handle all bookkeeping, tax prep, and consultation services. Value pricing arrangements range from around $1,000 for basic services to $10,000+ for specialized expertise.

Getting the Right Accountant for Your Budget #

Accounting fees definitely add up, but view quality accounting services as an investment in your business success. Here are some tips for getting the accountant you need within your budget:

• Shop around and get quotes from several accountants. Fees can vary widely.
• Understand exactly what’s included to compare “apples to apples” quotes.
• Consider a newer accountant building their client base if you want lower fees.
• Ask about discounts for very small or simple businesses.
• Inquire about fixed price packages to cap costs.
• See if your state CPA society provides resources to find affordable accountants for small businesses.

With a little research, you can find quality accounting help at a reasonable price. Having the right accountant in your corner providing strategic advice and ensuring compliance can give small business owners valuable peace of mind.