How much should a small business pay for accounting services?

As a small business owner, it’s important to carefully consider your expenses and allocate your budget wisely. One key area that often requires a significant investment is accounting services.

But how much should a small business pay for accounting services? That, my friend, is a great question. Let’s discuss below!

How much does an accountant cost for a small business?

When trying to calculate the price of a qualified accountant, you need to consider the services they offer. In general, small businesses can expect to pay anywhere from $500 to $1,500 per month for basic accounting services.

Some accountants charge higher rates for complex tasks due to the additional time and financial expertise required to complete them. Small business owners can expect to pay anywhere from $100 to $300 per hour for complex accounting services.

This can equate to roughly $1,500 – $5,000 a month and can easily go on an upward tick to $15,000 for CFO services.

However, it is important to note that this is just a general estimate, and the actual cost will depend on the individual circumstances of each business.

It is always a good idea for small businesses to compare the scope of work being offered before making a decision.

How are small business accountant fees structured?

Well, it all depends on several factors. Let’s look at a few below.

Company Size

One key factor to consider is the size of your business. Generally, small businesses with fewer employees and lower revenue will pay less for accounting services than larger enterprises.

This is because smaller businesses typically have simpler financial needs, requiring fewer hours of work from an accountant or bookkeeper.

Complexity

Another important factor to consider is, again, the complexity of your finances.

If your business has multiple sources of income, a large number of expenses, or other complicating factors, you may need to pay more for accounting services.

This is because more complex finances require more time and expertise to manage, which can increase the cost of accounting services significantly.

Services Provided

In addition to the size and complexity of your business, the level of service you require can also affect the cost of accounting services.

For example, if you need frequent support and guidance from your accountant, you may pay more for these services. This can include simply monitoring a large number of customer invoices.

On the other hand, if you only need occasional assistance, such as light bookkeeping services and quarterly financial reports, you can negotiate a lower rate.

So, how much should a small business bookkeeper charge?

It’s difficult to provide a specific number, as the cost of accounting tasks can vary significantly depending on the factors discussed above.

However, there are a few general guidelines that can help you get a sense of what you can expect to pay.

Number of Transactions

One way to estimate the cost of accounting services for your small business is to consider the number of transactions you have each month.

Small businesses with fewer than 100 transactions per month can expect to pay an average of $500 to $650 per month for accounting and bookkeeping services.

For businesses with 100-200 transactions per month, the average accounting cost increases to around $750 – $1,000 per month.

Anything above 300 transactions can quickly generate accounting costs of $1,500 – $2,500+ per month.

Business Revenue

The higher a company’s revenue, the more money it’ll cost to hire an accountant. Here’s why!

Tracking and managing transactions

First, as a business’s revenue increases, it may require additional accounting tasks to properly track and manage its business finances.

For example, a business with higher revenue may need frequent financial statements or more complex tax planning and preparation services. These additional services can increase the cost of accounting fees.

Require’s Expertise

Second, some accountants charge higher rates for businesses with higher revenues, as these businesses may have more comprehensive financial affairs and require specialized expertise.

Preparation and Planning

Finally, as a business’s revenue increases, it may also be subject to higher tax rates, which can increase the need for professional tax preparation and planning services.

Accounting Fee Structure

Some bookkeeping and accounting firms may charge a flat fee for a set number of hours of work per month, while others may charge by the hour for additional services.

Depending on your needs, it’s a good idea to ask about additional fees that may be charged that can be grouped at a discounted rate.

For example, if you need tax preparation, frequent financial statements, or tax planning, you can easily get a bundle discount deal to reduce costs and get more for your buck.

Outsource an accountant and use accounting software

Another option to consider is outsourcing your accounting services to a virtual accountant in conjunction with using accounting software.

Most small business owners spend less outsourcing bookkeeping and accounting tasks as it’s cost-effective. Doing so can provide services at a lower cost than hiring a full-time in house accountant.

Flat monthly accounting fees

Also, many accounting firms charge a flat fee. Paying a flat rate for accounting services can be budgeted easily. The costs can be half the price you’d get with an hourly accountant for similar services.

Accountant Hourly Rates

The hourly fee for accounting services can vary widely depending on several factors, such as the experience level of the accountant and the business location.

It is also common for accountants to charge different rates for different types of services, with higher rates for more complex or time-consuming tasks and lower rates for more routine tasks.

Levels of services

Let’s outline a few basic bookkeeping tasks compared to complex accounting tasks.

Simple small business Accounting

Here are a few basic accounting tasks below:

1. Recording transactions.
2. Reconciling accounts.
3. Categorizing monthly transactions.
4. Setting up sales tax in accounting software.
5. Preparing financial statements.

Complex Accounting Examples

Below are a few complex tasks that require expertise:

1. Analyzing financial data on the financial statements.
2. Provide business owners insight into company’s cash flow.
3. Provides advisory services to reduce or monitor internal expenses.
4. Advise on business structure to benefit the small business owner.
5. Process payroll.
6. Give tax advice on handling financial transactions.
7. File taxes.

Conclusion

In conclusion, the cost of accounting and bookkeeping services for small business owners can vary significantly depending on a number of factors.

These factors include the size and complexity of your small business, the level of service you require, and the specific services you need.

To get a better idea of how much you can expect to pay for accounting services, look at the number of transactions, business revenue, and how often you need financial reporting to estimate the accounting costs.

By carefully considering these factors and understanding your business related tasks, you can make an informed decision about hiring an accountant.