Cost of an Accountant for a Small Business: A Complete Guide

Running a small business means managing many things at once, and keeping your finances in order is one of the most important parts. That’s where hiring an accountant comes in. But before you bring someone on board, it’s important to ask: what services do you really need, and how much will they cost?

The cost of an accountant for a small business can vary a lot. It depends on what tasks you expect them to handle. Some common services include bank and credit card reconciliations, customer and vendor invoices, collections, preparing financial statements, and even cash flow forecasting. On average, small businesses might spend anywhere from $1,000 to $5,000 per year, or $500 to $2,000 per month, depending on the work involved.

Many businesses today are also turning to outsourcing accounting tasks to save money. This means hiring experts outside your company who offer bookkeeping services at fixed monthly rates. These essential bookkeeping services can start at just a few hundred dollars a month. As your business grows, the cost may rise depending on the workload. Still, it’s a great way to focus on your core work while professionals manage your books.

Another smart option is hiring virtual employees who can handle your finances remotely. This not only helps cut costs but also plays a big role in improving your business ROI. Remember, the cheapest option isn’t always the best. Investing in skilled professionals means better financial health and fewer headaches down the road.

What Are Accounting Overhead Costs

Accounting overhead costs are more than just tracking income and expenses. These are the extra services that help keep your business financially safe and organized. Some common accounting overhead costs include payroll services, tax filing, audits, financial reports, and making sure your business follows all the rules and laws.

These services may not seem urgent every day, but they’re very important. For example, if you want to get a business loan, banks will look at your financial reports. If your taxes aren’t done right, you might face IRS penalties. If you don’t follow rules, you could even get into legal trouble.

Having expert help to handle these things may seem like an extra cost; but it’s really an investment. Proper accounting support helps your business grow, avoid mistakes, and stay on track.

In short, accounting overhead costs help protect your business and give you peace of mind. They keep everything running smoothly behind the scenes so you can focus on doing what you do best, serving your customers and building your business.

Key Factors Affecting the Cost of Hiring an Accountant

The cost of hiring an accountant can change based on a few important things. Here’s what usually affects how much you’ll pay:

1. Size and Type of Business:

If you run a small business with simple income and expenses, accounting fees will be lower. But if you have many employees, different services, or several locations, the accountant will need to do more work, and that means higher costs.

2. Industry Needs:

Some industries, such as healthcare or construction, have special rules and taxes. Accountants may charge more if your business needs that kind of expert help.

3. Record Condition:

If your books are messy or need fixing, the accountant will need extra time to sort things out, which may increase the cost.

4. Location:

Where you live is crucial. Accountants in large cities often charge more than those in smaller towns or rural areas.

According to the National Society of Accountants, the average cost of accounting services for small businesses is about $3,000 per year. Keep this in mind when setting your budget. Understanding these factors can help you plan better and choose the right accountant for your needs.

What is the Cost of an Accountant for a Small Business

The cost of an accountant can vary significantly depending on their level of expertise and the services provided.

Standard Costs by Service Type

• Hourly Rates: Accountants typically charge between $30 and $300 per hour, based on experience. A junior bookkeeper may charge on the lower end, while a seasoned Certified Public Accountant (CPA) will be on the higher end.
• Tax Filing: Flat fees for filing business tax returns range from $200 to $1,500 or more, depending on the complexity of your taxes.
• Audits and Financial Reviews: Auditing services start at $1,000+ but go up for larger or more complex businesses.

Geographic Variations and Cost-Saving Tips

Where your business is located can change how much you pay for accounting services. In big cities like New York or San Francisco, costs are usually 15–20% higher than in smaller towns. This is because living and business costs are higher in those areas, so accountants charge more.

Want to Save Money?

You don’t always have to hire a local accountant. Many businesses now choose to outsource accounting work. This means hiring someone from another place, sometimes even another country, who can do the same job at a lower price.

You can also try using virtual accounting services. These online platforms offer expert help with bookkeeping, taxes, and payroll at a much lower cost than hiring someone full-time. So, if you’re looking to cut expenses, outsourcing or going virtual can be a smart way to save while still getting professional help.

How Much Should You Pay Your Accountant

The amount you should pay depends on how big and complex your business is. A small business with simple finances will pay much less than a large company with many employees and transactions.

Here’s a simple guide:

• Bookkeeping: For basic tasks like tracking expenses and income, you may pay around $200 to $500 per month.
• Tax Help (CPAs): If you need help with taxes or filing, costs can range from $1,000 to $5,000 per month for larger businesses.
• Financial Advisors: For expert advice and planning, expect to pay around $500 per month or more.

Before hiring anyone, make sure you know exactly what services they offer and if those match your business needs. Paying the right amount for the right help can save you money and avoid problems later.

Essential Bookkeeping Services Small Businesses Should Consider

If you run a small business, keeping your finances organized is super important. Here are the main bookkeeping services you should think about:

• Cash Flow Tracking: This helps you see how much money is coming in and going out, so you always have enough to pay bills.

• Payroll Management: Make sure your employees get paid on time and that you’re following the law when it comes to taxes and deductions.

• Tax Compliance: Good bookkeeping helps you file taxes correctly and on time; so you don’t get fined.

• Financial Reporting: Monthly or quarterly reports show how your business is doing and help you make smart decisions.

These services are the foundation of healthy business finances. You don’t need to do it all yourself; outsourcing these tasks can save you time and money while keeping your business on track.

What Are Other Accounting Costs to Consider

Beyond hiring an accountant, you should also account for the following costs:

• Accounting Software: Platforms like QuickBooks and Xero may cost $30 to $100 monthly.
• Auditing Services: Paid annually or semi-annually as needed.
• Compliance Costs: Industry-specific licensing and compliance may incur additional fees.

Keep in mind, the hidden costs of poor financial management, such as penalties or missed opportunities, often outweigh the expense of proactive bookkeeping.

Outsourcing vs. In-House Accounting for Small Businesses

Should you manage accounting in-house or outsource it? Here’s a side-by-side comparison to consider.

Outsourcing Advantages

• Cost Efficiency: Ideal for startups or businesses with limited budgets.
• Expert Access: Gain access to professional-grade accountants without paying a full salary.
• Scalability: Easily adjust services as your business grows.

When to Outsource

Outsourcing is highly recommended for small businesses undergoing rapid growth or facing complex tax scenarios.

When to Keep It In-House

If your business reaches a revenue threshold where you need daily financial oversight, hiring a full-time accountant may be more efficient.

When Does Your Small Business Require an Accountant

How do you know when your business actually needs an accountant? Use this checklist to decide:

• You need help preparing tax returns.
• Keeping up with payroll or bookkeeping is overwhelming.
• You are scaling your business and dealing with investors.
• You need audited financial statements to obtain funding.

Even if you aren’t at this stage, starting with basic bookkeeping services is a smart move.

In Closing

Hiring an accountant might feel like an extra cost, but it’s actually a smart move for your business. A good accountant helps keep your money organized, your taxes on track, and your business running smoothly. Start by figuring out what your business really needs. Focus on the most important services like bookkeeping, payroll, and tax filing.

You don’t always need someone full-time in your office. Outsourcing or hiring virtual accounting help can save you both time and money (cost of an accountant won’t be much). Offshore services often cost less and still provide great quality work.

If you’re looking for a simple, cost-effective way to handle your accounting, we’re here to help. Let our experts guide you in choosing the best solution for your business. Contact MyVirtualTalent for consultation and see how the right support can make managing your business finances easy and stress-free.