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How Much Should I Pay an Accountant for My Small Business? Thumbnail

How Much Should I Pay an Accountant for My Small Business?

CPA

Running a small business means making the most of your expertise and capability to earn yourself and your employees a living. But unless you are a small accounting and bookkeeping firm, chances are you will need to hire outside support to help track financials and prepare for taxes.

As you shop around for a small business accountant, it’s important to understand not only what services you need, but what services the vendor offers. This will help you know when you are paying the right amount.

What Accounting Service for Small Business Includes

It’s important to understand the difference between accounting services and bookkeeping services for small business.

  1. Bookkeeping involves the day-to-day tasks of recording income, receipts, sales, and payments. This helps you keep track of the necessary data that keeps the business running.   
  2. Accounting means helping a business owner understand the impact of their decisions and extract insights. They can also prepare audits and reports, along with annual taxes.

Even if you have a bookkeeping software, an accountant is still a beneficial resource for a business. But when your business engages in a lot of transactions, or complicated transactions, an accountant who also provides bookkeeping can be even more valuable. They will be able to alert you to any issues and think critically about recordkeeping far better than a software.

How Much Does a CPA Charge for Bookkeeping?

You can expect to pay an hourly rate for small business bookkeeping service. The more entries and transactions you have to record, the more you will pay.

Outsourcing your bookkeeping can cost anywhere from a couple hundred dollars a month to a few thousand, depending on how complex your books are. At most firms, bookkeeping is managed by a bookkeeper, not a CPA. This is a way to be mindful of expenses and allow the CPA’s to add value through client conversations.

It’s important to remember one benefit of a bookkeeper is the assurance that your records will be tax-ready. If you take a DIY approach to the bookkeeping, or use a software, you might end up paying more for taxes if the accountant needs to work back through the records to correct issues.

Another way a bookkeeper can save you money is by helping you maximize deductions throughout the year and keeping the necessary records to prove it come tax time. For example, in 2020 entertainment was not a deductible expense. A bookkeeper can be mindful to separate entertainment from food expenses to maximize deductibility of those expenses.

Average Cost of Tax Preparation for Small Businesses

The average cost of professional tax preparation for a small sole varies depending on the number of 1099’s and other complexities of your situation.

In 2015, The National Society of Accountants reported the average cost of hiring a tax professional to file the following IRS forms:

  • $174 for a Form 1040 Schedule C (business)
  • $634 for a Form 1065 (partnership)
  • $817 for a Form 1120 (corporation)
  • $778 for a Form 1120S (S corporation)
  • $457 for a Form 1041 (fiduciary)
  • $688 for a Form 990 (tax exempt)
  • $68 for a Form 940 (Federal unemployment)
  • $115 for Schedule D (gains and losses)

Costs have risen in the years since this survey, but you should still be able to gauge if a tax preparation rate is fair or too high based on these numbers. Ultimately, the best approach is to send a copy of your tax filing from the previous year and get a custom estimate based on that information.

Affordable High-Quality Small Business Accounting Services

Delta Wealth Advisors offers a full-suite of accounting, tax, and consulting services to meet your personal or business needs. Our primary services include accounting and bookkeeping, tax planning and consultation, and audits. We also offer specialty services to meet the unique needs of each individual client.  Whatever your daily bookkeeping needs or annual tax complexities, we are here to help. Contact us today to ask questions or get an estimate for services.