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Cost of an Accountant for a Small Business

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Accounting is a necessary chore that comes with running a business—no matter how small. But with all the work needed to grow your venture, it can be hard to spend time balancing the books, analyzing financial statements, and dealing with taxes. So it makes sense to hire accountants to help lighten the load. Though it counts as an overhead expense, paying for the service is worth it to guarantee that your finances are in check and that you comply with the law. An accountant costs anywhere between $1,000 to $5,000 a year; though the final amount depends on various factors including the scope of work, the accountant’s experience and expertise, and the business location, among others. 

What Is the Difference Between a Bookkeeper and an Accountant?

A lot of people assume that hiring an accountant comes with bookkeeping. It is sometimes offered as an extra service (it’s good to add this to your list of questions to ask an accountant), since it isn’t typically part of an accountant’s scope of work. There is a difference between the two, although bookkeeping is a prerequisite for proper accounting.

A bookkeeper’s job generally involves data management. They record and process a business’ day-to-day transactions, making sure that its ledgers are balanced. They also typically handle whatever software is used to keep track of the company’s finances, and are responsible for training and guiding employees to properly input all transactions based on best practices. Bookkeepers typically don’t need formal training, and they can be hired as in-house staff. On an average, they’re paid $17 to $30 an hour. When a company has both a bookkeeper and an accountant, the former usually assists and reports to the latter.

An accountant, on the other hand, takes a more strategic role. They use the information from the bookkeeper to give financial advice and guidance to a business to better manage and maximize its finances. Additionally, an accountant is responsible for making sure that a business is legally compliant with government regulations of taxes and finance.

What Services Do Accountants Provide?

Accountants provide several different services, and how much you pay them depends on which of these you utilize for your business. Their responsibilities include:

  • Examining financial data
  • Generating and analyzing financial statements
  • Giving financial management advice
  • Forecasting cash flow
  • Briefing business owners about legal implications of their financial plans
  • Tax planning and compliance (i.e. filing taxes)
  • Minimizing tax owed through credits and deductions
  • Staying up to date with accounting best practices

How Much Are Accountant Fees for a Small Business?

A small business can expect to pay $1,000 to $5,000 a year for accountant fees. Accountants can charge at a fixed rate for their services, or per hour regardless of the task at hand. Before hiring, explore the different pricing structures that are available to see which one works best for you.

Factors That Affect Accounting Service Fees

Some accountants can charge even more (higher than $20,000 annually) or less (lower than $1000) depending on various factors, such as:

The Scope of Work

Small businesses usually don’t have as many transactions done as larger firms, so the scope of work is limited. However, if a business deals with a lot of numbers, e.g. an e-commerce shop handles thousands of orders a day, then that’s giving an accountant more work. In this case, they may charge more.

Experience Level

As with most jobs, experience plays a big part in how much a professional charges you. An accountant with more experience will be more expensive. You can save a few bucks hiring a less experienced one; just make sure you do your due diligence beforehand to see if they fit your requirements and expectations.

Expertise in the Industry

Some accountants are very experienced in specific industries. For example, some of them are experts in dealing with businesses that operate online and across different countries. If you hire one of these experts, expect to pay a higher amount.

Employment Status

Hiring an accountant as a full-time employee as opposed to a part-time employee can be expensive, given that you’ll be providing them with the typical benefits and inclusions of an employee package. Although, that might weigh down how much they ask for when it comes to their regular salary.

Outsourcing an accountant may be beneficial because you wouldn’t have to include them in your payroll. Some freelance accountants also usually charge less.

Additional Services

Tasks outside of an accountant’s usual work will naturally cost more. This generally refers to providing a bookkeeping service if you don’t have one, or organizing finances that haven’t been managed properly before their arrival.

Do I Need an Accountant for My Small Business?

Many business owners assume that as long as they have good financial software in place, they don’t need an accountant. While technology definitely helps, hiring an accountant is necessary to ensure that you are properly guided on money management and that you are compliant with relevant regulations. They are a valuable asset because they can help you improve your financial systems, plus they rid you of the headache that comes with the numbers, allowing you to focus on the bigger picture of scaling up your small business.

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