As a small business owner, you know that you need an accountant to help with various aspects of your business. But you’re also concerned about the cost. In fact, that’s why you’re in the position you’re in now – you don’t spend money without first doing research to make sure you’re getting great value in return for what you’re purchasing.
But how exactly do you go about researching how much an accountant is going to cost for your business?
This article takes a look at the factors that come into play when looking for a trusted accountant to help with your business.
The cost of a small business accountant
The first question most business owners ask when starting a search for an accountant is, “How much will it cost?”
To answer this question, think of your search for an accountant like you would think about a search for a doctor:
Generalist or specialist - Do you need an accountant who is a jack-of-all-trades, or do you need an accountant who specializes in a specific area? A generalist typically costs less than a specialist.
Certifications and licenses - Do you need an accountant who is licensed or certified? These credentials cost a lot of time and money for that person to obtain. These costs need to be recouped, not to mention the value of the knowledge this person acquires while working towards these credentials. There’s also the annual cost of continuing education that the accountant uses to maintain their credentials.
How much work needs to be done - Accountants charge hourly and flat-rate fees for their services. If you need an accountant infrequently, perhaps a few hours a month, one who charges hourly rates might be appropriate. If you need an accountant often, flat-rate services provide tremendous value to hourly fees that can pile up fast.
Hourly fees at the low end can range from $40 to $80 per hour and up to several hundred dollars per hour for highly credentialed specialists.
Flat fees can range from several hundred dollars to several thousand per month.
The difference between an accountant and a bookkeeper
You may hear bookkeeper and accountant used interchangeably. There is a difference, though, between the services provided by a bookkeeper and an accountant:
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
There are several certifications earned by 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.
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.
What a small business accountant can do for your business
It’s perfectly fine to consider the cost when deciding if or when to hire an accountant. But another question you may want to ask yourself is, “What’s the cost to your small business of NOT hiring an accountant?”
You may initially be apprehensive when you see the price tag to hire an accountant. But have you ever thought about the alternative? Here are some of the important ways that an accountant can help your business.
Pay your bills on time. Your bookkeeping needs to be organized and up-to-date so you can pay your vendors on time. Accountants can help with entering transactions into your accounting software, reconciling accounts, and making payments. (Make sure, though, that there is proper segregation of duties.)
Pay your employees on time. Maybe even more important than paying vendors and suppliers on time is paying your employees. There are many federal and state rules and regulations that must be followed when paying both part-time and full-time employees. These rules can be very detailed and complicated, which is why some accountants specialize in nothing but payroll accounting and taxes for employees.
Stay on the good side of the IRS. Next to not having enough paying customers, getting behind on your taxes is the quickest way to go out of business. An accountant who specializes in taxes can help with figuring out how much you owe in taxes, provide tax planning to legally minimize the amount of taxes you owe, and help you make payments on time and accurately file tax returns.
Help secure financing. Securing a line of credit (LOC) or a loan can be a time-consuming process that requires pulling together a lot of financial information. Certain accountants specialize in helping businesses apply for different types of financing and can help create the financial statements, reports, and documents that banks are looking for when completing a loan or LOC application.
Measure what’s working and not working. Renowned management philosopher Peter Drucker is credited with saying, “You can’t manage what you can’t measure.” As a business owner, you won’t know what areas of your business are doing great - and which are NOT doing so well - unless you consistently measure several key performance indicators (KPIs). Accountants can help identify which KPIs would be beneficial to track in your company and assist with gathering the data necessary to calculate the selected KPIs.
Where to find a small business accountant
Now that you have a good idea of the cost of hiring an accountant and the value they bring to the table, the next question you may ask is, “How do I find the right accountant for my business?” Here are several suggestions.
Industry connections. The best place to start is talking with people in your own industry. If your industry has a certain level of technical knowledge, then chances are good that there are accountants who have worked with other companies in your industry and have developed the same technical knowledge.
Local and state accounting associations. Every state has an association of accountants. Many metro areas also have their own association chapters. Reach out to your local association and ask how to get a list of accountants available in your area.
Local job boards. Accountants who have a long history in a community often advertise locally.
Find your small business accountant today!
From bookkeeping and taxes to preparing financial statements, 1-800Accountant's suite of professional accounting services is purpose-built for small businesses. Our CPAs have over 17 years of experience, on average, and cater to established and emerging industries in all 50 states.
Schedule a free call to learn how 1-800Accountant can make small business accounting easy and affordable.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.
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