How Much is the Cost of an Accountant for a Small Business?

Every small business owner needs an accountant for business taxes, tax preparation, and day-to-day operations. However, many small business owners believe that accountants are too expensive. So, what exactly is the cost of an accountant for a small business?

The truth is that many variables go into assessing the cost. We’ll take a look at these different variables, explain how accounting costs are calculated, and what exactly should a small business owner expect from their accountant.

But first, let’s explore why you even need an accountant in the first place.

Can You Do Your Own Accounting and Bookkeeping?

Many small business owners do their own accounting and bookkeeping. Some owners enjoy bookkeeping, while others do it to gain a better understanding of their business.

So, while you can certainly do your own accounting and bookkeeping, the question to ask yourself is whether your time as an owner can be better spent running and growing the business rather than doing an activity like accounting that you can get expert help with doing.

Now, let’s look at the different accounting and bookkeeping procedures your business needs to get done.

Accounting Tasks for Small Businesses

Here are some of the typical accounting and bookkeeping tasks that a small business needs to have done.

Record transactions. Money coming into your business and money going out of your business must be recorded.

Reconcile accounts. Each of your bank accounts should be reconciled a minimum of once per month. Consider reconciling your accounts every week.

Generate financial reports. There are three types of financial reports. The balance sheet shows all the cash and other assets you own, along with any loans or other liabilities that you owe to someone else. The income statement shows your income and expenses for a certain period of time, such as for one month or one year. The statement of cash flows shows the cash coming into your business and the cash going out of your business.

Issue invoices. After providing a product or service to a customer, you need to issue an invoice as evidence of providing that product or service. You then need to keep track of all invoices that you have issued but have not yet received payment for.

Pay bills. Expenses must be paid to keep your lights on and your business’s doors open. It’s important to record bills as you receive them and then once again when you pay them.

Payroll reporting. If you have part-time or full-time employees, payroll transactions must be recorded so your workers can be accurately paid. There are also tax returns that must be filed to report wages paid and taxes collected on behalf of your employees.

Tax reporting. If your business turns a profit, you’ll need to pay federal taxes and, where applicable, state and local taxes. Your accounting and bookkeeping must be accurate to calculate the amount of business taxes your business needs to pay. The goal is never to underpay or overpay your taxes!

Other reporting. Other financial and operational reports can be created depending on your industry that can help you as an owner make more informed decisions about the day-to-day operations of your business.

Experts Who Can Help

Bookkeepers and accountants are the professionals who can help you with your business’s accounting.

Bookkeeper. A bookkeeper helps with properly recording your business’s transactions and handling the paperwork or documents that are associated with the transactions. Example: When a customer is provided a product or a service, the bookkeeper will create an invoice to give to the customer that indicates how much the product or service costs. The bookkeeper will then record in your accounting system when this customer makes a payment.

Accountant. An accountant takes the transactions recorded by the bookkeeper and creates financial statements. The accountant also creates other useful reports from these transactions that you can use to make important business decisions.

Many times, the same person provides both bookkeeping services and accounting services.

Professional Certifications

Several certifications are given to accounting professionals who meet certain education and experience requirements and pass an exam. Keep in mind, though, that there are many highly qualified and competent accountants and bookkeepers who don’t have a certification.

Professional certifications are just one piece of the puzzle you should consider when evaluating whether an accountant or bookkeeper would be a good fit to work with your business.

Here are the most common certifications:

Certified Public Accountant (CPA). The CPA license is considered the gold standard certification for accountants. To obtain a CPA license, an accountant must pass the CPA exam and then acquire a certain number of hours of professional work experience while supervised by another CPA.

After obtaining a CPA license, the accountant must complete 40 hours of continuing education annually.

CPAs can sign audit reports and represent taxpayers in front of the Internal Revenue Service (IRS).

Each state has its own board of accountancy that regulates and oversees the CPAs practicing in that state.

Chartered Accountant (CA). The CA license is equivalent to the CPA license in the United States. The CA license is recognized in the following countries:

Canada

Australia

India

United Kingdom

Ireland

New Zealand

South Africa

Middle East (Bahrain, Oman, Kuwait, Qatar, Dubai)

Kenya

Singapore

Enrolled Agent (EA). An EA is the gold standard for an accountant who specializes in taxation. Like a CPA license, an EA has unlimited rights to represent taxpayers before the IRS after passing an exam.

Certified Public Bookkeeper (CPB). There are several bookkeeping certifications available in the United States that the National Association of Certified Public Bookkeepers governs. In addition to the CPB license, a bookkeeper can obtain certification as a Certified Payroll Specialist, a Certified QuickBooks Advisor, a Certified Accounting Paraprofessional, or a Certified Accounting Analyst.

What Kind of Accounting and Bookkeeping Help Does My Small Business Need?

It can be confusing to decide what kind of accounting and bookkeeping help you need for your business. Here are some tips to help you decide who you should hire:

A part-time employee or contractor. It’s a good idea to hire a part-time bookkeeper or accountant as soon as you start your business, even if you only need 1 to 2 hours of help each week, so you can focus on growing your business instead of crunching numbers.

A full-time employee. You probably don’t need a full-time bookkeeper or accountant until you reach $1 million in annual revenue or around 30 employees. Until this point, you most likely won’t have enough work to keep a full-time bookkeeper busy (although there are exceptions).

So, How Much Does an Accountant or Bookkeeper Cost?

When you hire an accountant or bookkeeper, either full-time or on a contract basis, you’re paying for two things: That person’s certification and credentials and the number of hours required to complete the agreed-upon work.

For a bookkeeper, hourly rates can average between $30 and $80. And for a CPA, hourly rates can fluctuate between $125 and $300.

To help keep the overall cost of an accountant or bookkeeper to a minimum, consider the following tips:

Stay organized. Documents and paperwork should be filed away logically so information is easy to find. Don’t make your accountant spend valuable time hunting for documents or data.

Keep great books. If your record keeping is messy, your accountant will have to spend time to clean up the information so it’s accurate. So whether you do the bookkeeping yourself or outsource this task, having accurate books can help you save on accounting expenses over the long run.

Ask for help. If you have a question about anything accounting or tax-related, ask for help immediately. If you wait to find an answer, the initial question or problem could grow into an even more expensive issue. Don’t be afraid to pick up the phone or schedule an appointment with your trusted accounting advisor.

Find Your Small Business Accountant Today

Remember that all your accounting and bookkeeping work needs to be done by someone and that your time as the owner is better spent growing your business, not entering transactions into your accounting system’s software.

Remove the guesswork from all your accounting and tax work by scheduling a free call to learn how 1-800Accountant can make small business accounting easy and affordable.