How much do accountants cost?
Most businesses require accounting services, but how much does an accountant cost? If you are outsourcing your accounting for end-of-month bookkeeping or tax purposes, expect to pay anywhere from $150 to $400 or more per hour for these services. Every accountant or firm will have a different price structure, largely dependent on:
- The type of work you require
- The size of the accounting firm
- Location
Where some accountants might charge you based on your business revenue, others may have a flat rate fee along with some variable costs.
Accounting costs for sole proprietors
If you’re a sole proprietor who needs assistance during tax season, you may find hiring an accountant is a wise decision. Hiring an accountant to prepare an itemized Form 1040, Schedule C and a state tax return costs $457, on average, according to the National Society of Accountants.
While this may seem expensive, tax returns are becoming increasingly complicated.Submitting an incorrect or incomplete form to the IRS could result in hefty penalties, so it’s best to invest in an accountant’s services to ensure your finances are in order and reduce the chances of mistakes.
It’s also important to note that this average fee is based on the assumption that you’ve collected and prepared your own documentation. You should be able to provide the accountant with all the necessary financial records and proof they require to file the tax return and forms. Accountants charge, on average, an additional $117 for incomplete or disorganized paperwork when filing returns.
How much is an accountant for your business?
If you are a small business owner, you should consider accounting fees as part of your overhead expenses when budgeting, which are costs that don’t directly generate a profit. Because these expenses don’t result in additional revenue for your business, you’ll want to keep them low, but it’s still essential to consider using the services of an accountant to reduce the likelihood of financial errors that could cost you in other ways.
According to data from SCORE, 23% of small business owners spend $1,000 or less annually on administrative costs like accounting or bookkeeping. Another 31% report spending between $1,000 to $5,000, while 18% say they spend anywhere from $5,000 to 10,000. Additionally, 12% of business owners spend $10,000 to $20,000 on these fees each year, while 16% spend $20,000 or more.
Is it worth hiring an accountant for your small business?
After asking yourself, how much is an accountant, you may be wondering if it’s worth hiring one to handle your business record keeping or annual tax paperwork. With 40% of small business owners reporting they spend 80+ hours per year on tax preparation alone, it’s easy to see how a hiring an accountant can help you save time and money.
Benefits of hiring an accountant
There are plenty of advantages to hiring an accountant for your business. For small businesses, the primary benefits include:
- Reduced likelihood of financial reporting errors
- Better adherence to your budget
- More time for you to focus on operations and your employees
- Up-to-date information about your finances and revenue
- Ability to make quick budgetary decisions based on hard data
If you operate a business as a sole proprietor, an accountant can help you:
- Claim deductions for business-related expenses
- Ensure you’re paying the correct amount of income tax
- Explain the necessary forms you must complete and file each year
Additionally, an accountant can help you maximize your tax deductions and reduce the chance of misinformation, giving you peace of mind that everything is filed correctly. They’ll also save you time and energy while improving your financial record keeping. When you operate a business, having accurate and detailed financial records is extremely valuable.
FAQs about how much accountants cost
What does an accountant do?
Accountants are responsible for managing and interpreting financial records for the individuals or businesses who employ them. Depending on your needs, an accountant can:
- Prepare accounts and tax returns
- Audit and analyze your finances
- Perform risk analysis and financial forecasting
- Monitor your budget
- Offer advice on where to cut costs to drive revenue
- Create financial reports based on available data
Who needs an accountant most?
While using an accountant’s services can benefit most people, hiring someone to help with financial record keeping is most beneficial to those who might be audited by the IRS. Statistically, people making more than $500,000 per year have a higher chance of being audited than those who don’t cross this threshold.
How do I find a reputable accountant?
To find a licensed, trustworthy accountant for your business, there are a few steps you can take. If you’re outsourcing accounting work, ensure the person or firm you hire has a legitimate online presence and positive reviews from past clients. Review their credentials as well, to ensure you’re entrusting your business and personal information to a properly certified professional. If you’re a business owner looking to hire a full-time accountant, check the applicant’s references and educational background before offering them the job.
