How Much Does an Accountant Cost for Small Businesses?

Cash flow is the lifeblood of any small business. The goal is to keep your income higher than your expenses so that you can reinvest profits into building your business. But in order to manage your cash flow, you need to first understand it. That’s where the right accountant can come in. As you’re preparing your budget, it’s only natural to wonder how much does an accountant cost. The answer depends on a variety of factors, including the nature of your business, the location of the accountant you choose, and the specific services you’ll need.

When Does Your Business Need an Accountant?

Before you research how much does an accountant cost for a small business, stop and ask yourself if you really need one. There are plenty of small business accounting tools available that can help you manage your own books.

But there are some instances where the cost of an accountant for small business is well worth it. They include:

• Kicking off your small business: You’ll need plenty of advice as you form your business, including helping you choose a structure for your organization (LLC vs. S-Corp for instance) and working with you to get the business licensing you’ll need.
• Writing your business plan: Whether it’s at the beginning or after you’re established, at some point, you may need a business plan. An accountant can help you gather all your financials and document everything. You’ll likely need a business plan if you’re courting investors, but some landlords and creditors will also want to see one.
• Tax filing: Business taxes can be brutal. In addition to your income and payroll taxes, you may have sales tax reconciliation. An accountant can keep you on track without having to be full-time.
• Intermittent consulting: From time to time, it can help to have an accountant take a look at your books and offer advice. Maybe there are areas you can tighten up to boost profits.
• Troubleshooting financial issues: If you’re struggling to pay the bills, an accountant can take a look and offer advice. You can also loop in your accountant after receiving a notice from the IRS.
• Closing your business: If the day comes when you decide to sell or close down your small business, an accountant can help you make all your final payments and shut down your financial accounts.

How Much Does an Accountant Cost?

Accountants are in demand, whether it’s for small businesses or large corporations. You’ll even find some asking how much does a personal accountant cost. A variety of factors determine what you’ll pay for a small business accountant.

Pay Structure

There are three ways an accountant can be paid:

• Salary: If you need a full-time accountant that serves as your everyday staff, you’ll need to commit to an annual salary, along with benefits. A small business typically won’t need full-time accounting help, although this could change as a business grows.
• Hourly: Often estimates of how much does it cost to hire an accountant will prioritize hourly rates. This is likely to be your course of action. An hourly accountant will simply bill you for each hour of work you request.
• By project: If you’re hiring a consultant for a one-time project, this is more likely to be the way you go. A project fee is a fixed rate, quoted up front, for a deliverable, such as creating financials for a business plan or filing your tax return.

So how much does an accountant cost on average? According 2021 figures from the Bureau of Labor Statistics (BLS), the average accountant cost breaks down like this:

• Salary: $77,250
• Hourly: $37.14

The BLS doesn’t track per-project rates, but if you’re hiring an accountant for a project, it can help to know the average hourly wage. This will allow you to ballpark how long it will take to make sure the accountant is in line with national averages.

Location

Geography plays a direct role in how much an accountant charges. Although, on average, accountants charge $37.14 an hour, this varies dramatically by area.

In New York, where the cost of living is higher, accountants make $53.04 on average. By contrast, the cost of an accountant in rural North Dakota is only $30.62.

Years of Experience

Not all accountants are equal. One major factor in how much an accountant cost is experience. An entry-level accountant could have a bachelor’s degree with no certification or experience. A certified public accountant will have a bachelor’s degree plus experience and 150 hours of additional coursework.

How to Find a Small Business Accountant?

Once you’ve determined how much does it cost to hire an accountant for a small business and worked it into your budget, it’s time to start looking. First, decide the status you want your accountant to have:

• Accounting firm: With an accounting firm, you’ll have the option of working with a newer professional who has the resources that come with being on salary alongside an established team.
• Independent contractor: This individual will work for you, along with a variety of other clients. You’ll always work with the same person, but you might find yourself competing for the person’s time, especially during tax season.
• Employee: Chances are, you won’t need to bring on a full-time accountant for your small business, but there are benefits to having an accountant on payroll, including working with someone who knows the ins and outs of your business.

One of the best ways to find an accountant is through a referral. Ask colleagues and fellow small business owners who they use. Someone who’s had experience with an accountant and can give an honest recommendation is likely to be more helpful than relying on strangers and searches.

That said, don’t discount the value of reviews. Thoroughly research any accountant you’re considering and look for negative reviews. Did the accountant do the work promised? Is the accountant reliable and trustworthy? Only proceed once you’re confident that the accountant is a legitimate professional.

If you’re interested in hiring a Certified Public Accountant, the American Institute of CPAs has a Find a CPA tool. It can help you track down professionals who work with small businesses. Keep in mind, though, that when estimating how much an accountant charges, CPAs have more education and experience. That is the reason why they’ll likely cost more than accountants without certification.

Things to Check Before Hiring an Accountant

Determining how much does an accountant for a small business cost is only the first step. You’ll need to match the accountant’s offerings to what you need. Here are a few things to check before hiring an accountant:

• Work guarantees: Does the accountant stand behind the work? If you’re audited, you’ll want to be sure the accountant will be by your side, backing up the facts and figures.
• Credentials: Does the accountant have a degree? Any certifications? Has the accountant worked with businesses similar to yours in the past?
• Office hours: Some accountants hold standard “banker’s hours”. It means if you need an accountant to be on call on weekends or on holidays, you’ll need to prioritize that in your search.
• Communication preferences: If you prefer to meet in person, an accountant who works by phone or email might not be the right fit.
• Accountant availability: Some accountants will defer you to an assistant or employee once you’ve signed on. If you go with a firm, you may find you’re working with someone new every few months. Check to determine exactly who will be your point of contact when something comes up.

How much does an accountant cost? That depends on your business needs. It’s important, first and foremost, to make sure you’re getting the right services for your small business. Once you’ve narrowed down the options, compare pricing and choose a professional that has the skills you need at the price that meets your budget.

Frequently Asked Questions