Owning a small business brings unique challenges, and navigating the complex world of bookkeeping and accounting often stands out as a particularly daunting task. Understanding the specific forms to fill out, the types of spreadsheets to maintain, and how to manage those ever-piling credit card receipts can be overwhelming when your primary focus is running your business and serving your customers. While some entrepreneurs may opt for online accounting software like QuickBooks to manage these tasks, others turn to professional bookkeepers or accountants, in-house or outsourced, for a more streamlined and expert approach to keeping their financials in order.

If the thought of doing it yourself seems too taxing, but concerns about the cost of professional accounting services are holding you back, there’s reassuring news. The cost of outsourced accounting services for small businesses can be both manageable and proportionate to the value they bring, offering superior service often at a lower cost than other alternatives. Understanding how these costs fit into your business model is crucial in making informed decisions that support your enterprise’s financial health and growth.

This article delves into the critical question many small business owners face: How much does it cost to have an accountant for a small business? We’ll explore the various factors that influence these costs, from the nature of the services provided to the specific needs of your business, giving you a comprehensive view to help you make the best decision for your financial success.

How much does it cost to have an accountant for a small business?

The first thing to understand when trying to determine how much an accountant will cost for your small business is what services an accountant will provide. Accountants can cover a wide spectrum of services from basic bookkeeping (vendor invoices, credit card transactions, bank reconciliations, customer invoices, collections etc), to more complex things like cash flow forecasting, financial statement preparation, and financial projections. 

The cost of bookkeeping services for a small business can vary depending on your location, but often ranges between $40 to $100 per hour. While many bookkeepers charge by the hour, it is becoming increasingly common for outsourced accounting firms to quote a fixed fee based on the volume of transactions and complexity of the work involved. Basic bookkeeping services can start as low as a few hundred dollars a month, but can increase to as much as several thousand dollars a month as the workload increases. Be careful not to jump at the lowest cost provider.  Often you get what you pay for and will end up disappointed because your books are a mess.  

Higher level accounting services are performed by a Controller or CFO who will typically charge between $100 and $400 per hour depending on the market and experience level of the person doing the work.

How much should I pay an accountant for my small business?

There is no standard for how much you should pay for outsourcing accounting services for a small business. This varies depending on the industry you’re in and the services you need. SCORE, a nonprofit dedicated to helping businesses, shows the annual costs of accounting for businesses in 2015 ranged from under $1000 to over $20,000, with the majority of businesses spending up to $5,000 per year on these services.

• $1,000 or less: 23% of small business owners
• $1,000 – $5,000: 31% 
• $5,000 – $10,000: 18%
• $10,000 – $20,000: 12%
• $20,000 or more: 16%

They also found that 40% of business owners say that bookkeeping and accounting are the worst part of running a small business. 

How much does a CPA cost for a small business?

This is a common question that many small business owners ask.  The answer, however, depends on what you are looking for. More often than not, people who ask this question are really asking, how much does an accountant charge for small business taxes? According to the National Society of Accountants, the average cost of tax preparation for small business in 2017 was $457 (an itemized Form 1040 with a Schedule C and a state tax return).

Average fees also included: 

• $273 for a Form 1040 with a Schedule A and state return
• $184 for a Form 1040 Schedule C (business)
• $124 for Schedule D (gains and losses)
• $656 for a Form 1065 (partnership)
• $826 for a Form 1120 (corporation)
• $809 for a Form 1120S (s corporation)
• $482 for a Form 1041 (fiduciary)
• $282 for a Form 3115 (application for change in accounting method)

It’s also important to note that not all accountants or accounting services prepare or submit taxes. 

Should I use my CPA to do my bookkeeping?

A common mistake that many small business owners make is that they turn to their local CPA to do their bookkeeping.  While accounting and taxes go hand in hand, they are distinctly different services. Tax is a highly specialized area that requires a unique skill set. Firms that provide tax services utilize a team of highly trained experts that stay up to date on the latest tax code in order to prepare business and personal tax returns and provide tax advice. While a good tax accountant is invaluable, you should be careful not to assume they are experts in all areas of accounting. 

For years, small business owners would go to their tax accountant for all accounting related services. Too often they would end up frustrated with the results.  Tax accountants are great at what they do, but they are often not experts on operational accounting and not up to speed on the latest technology applications that drive efficiencies. If you are looking for someone to help you with your day-to-day accounting needs, you should find an outsourced accounting firm that specializes in this type of service.

Is it worth it to hire an accountant?

With so many financial programs available, it can be tempting to try to do it alone and rely on technology to do your accounting. The truth is that some small business owners are perfectly capable of doing this! However, even if you are capable of doing this, you also have to factor in the time, effort, and resources it takes to find a solution, learn how to use it, and make sure you are utilizing it correctly—and keep up with it! Accounting can be complicated (and take a massive chunk of your time), and it’s difficult to learn all the ins and outs without a professional guiding you. 

Accountants are also trained to catch mistakes, and can easily find errors and correct them before they turn into massive problems. Remember how many business owners hate doing this administrative work? Score also found that 40% of small business owners spend 80+ hours a year dealing with bookkeeping tasks. Outsourcing this headache comes with a lot of benefits and more and more businesses turn to accountant professionals to take care of these tasks. 

What’s the first step in hiring an accountant?

Explore for yourself! At Milestone, we do everything we can to make your life easier, starting with simple, flexible, no long term contract solutions for your accounting needs. Whether you are looking for customized bookkeeping services (starting at just $250 a month) or a trusted financial advisor to help your business navigate these tough and unpredictable economic times, Milestone has an answer for you. 

We love working with small businesses and partnering to make them successful. We truly believe that every business deserves access to strategy and expertise, no matter how big or small they are, and Milestone puts that within your reach. Click here to learn more about the Milestone difference.