How much does an accountant cost?

As your business grows, you have to deal with more complex situations—tracking expenses from multiple channels, handling payroll for dozens of employees, and figuring out how to fill out your tax return are only some of the things on your plate. 

When you get to this stage, you might wonder how to outsource these tasks to someone with more expertise—like an accountant. Accountants can help you save time and can assist with financial planning, tax preparation, and error prevention. 

But, how much does an accountant cost? In this article, we’ll explain how accountants calculate their costs and the average cost of an accountant to help you decide if hiring an accountant is the right decision for your business. 

How are accountant costs calculated? 

The costs of hiring an accountant are not as straightforward as you may think. There’s no set average rate accountants charge for their services since several factors affect their costs.

Accountants' costs change based on several factors:

• Location: Rates change depending on the city or state the accountant works in.
• Experience: Costs might be higher if they’ve been working for a couple of years, and if they have experience in your business field, usually the more experience the higher the costs. 
• Credentials: If they have a master’s degree or more credentials, like a CPA or CMA, you might pay higher for their services. 
• Services: Costs also change depending on the services needed, as you might need them for bookkeeping, tax preparation, and auditing. 
• Business size: Costs might also vary depending on business size, as larger businesses may require the accountant to do more work or have certain expertise. 

As a general rule, accounting costs can vary greatly and depend on the services you’ll need and how much time you have available to contribute to your business’s accounting. For example, suppose you’re already tracking transactions with accounting software and need help with tax preparation. 

In that case, you might only need to hire an accountant during tax season or for a limited time monthly, which will decrease the costs. 

How do accountants charge their time

Another thing that affects the cost of an accountant is how they set their rates. Depending on the services they provide your business or the type of accounting, they will have different rates.

Here’s how an accountant can charge their time: 

• Hourly: Charged based on how many hours it takes them to provide you with the service. The hourly rates can vary depending on experience, but the median hourly rate is $37 per hour. 
• Monthly: It’s salary based and paid every month, which is common when you hire an accountant full-time to take care of accounting yearlong. The average monthly cost depends on their experience and location.
• By project: Charged depending on the projects you hire an accountant for, like auditing and tax preparation. Usually, accountants will have a set rate for each type of project which may vary by company size.

How accountants charge you depends on how much assistance you need , and you might have to calculate if it’s more beneficial to hire an accountant hourly, by project, or monthly.

For example, you might hire an accountant to audit your business and pay them per project or per hour if you need assistance in different areas.

What are the average accountant costs?

As we mentioned, accountant fees vary depending on many factors, but the median accountant's hourly cost, according to the Bureau of Labor Statistics, is $37 per hour. This number can help you estimate how much you will spend on accounting services depending on the services you need.

If you’re looking to hire an accountant for tax services, here are the average federal tax return costs you can expect, according to the National Society of Accountants (NSA):

Aside from tax preparation, you might need different accounting services. Here are the average hourly rates for different types of services:

Keep in mind, these rates are national averages, and accountant costs may vary. Consider getting accountant quotes around your area to come up with a more accurate estimate of how much you should expect to pay for filing small business taxes and other services.

How to analyze the cost-benefit of hiring an accountant

Deciding when to hire an accountant and what’s a reasonable price to spend on accounting services can be difficult. But one way to paint a better picture of how much you’ll spend on accounting services is through a cost-benefit analysis.

A cost-benefit analysis weighs the benefits and the costs of hiring an accountant by putting a price tag on the pros and cons. This analysis is only an estimate but helps determine if an investment makes sense for your business. 

To analyze the cost-benefit of hiring an accountant, you can:

1. Determine how much it will cost to keep doing what you’re doing: Consider what accounting efforts you already have in place and how much time and money you’re spending. 
2. Identify the costs of hiring an accountant: Get quotes from accountants in your area and determine costs, including upfront costs, monthly costs, accounting software costs, and any unexpected expenses. 
3. Identify the benefits of hiring an accountant: Determine what you will gain from hiring an accountant, including potential revenue, reduced costs, efficiency, time saved, and long-term benefits. 
4. Assign a monetary value to the benefits and the costs: Estimate how much you will have to spend and how much you will gain, even if they don’t have a monetary value, such as saving time on accounting and staying compliant.
5. Compare your costs and benefits: Determine whether the benefits outweigh the costs and how long it will take you to break even after the initial investment. 

Comparing costs and benefits may not be as straightforward as you think. After all, some factors can be difficult to put a price on. You can create different scenarios, such as hiring someone to manage accounting software or hiring an accountant for special projects. 

How to find an accountant

If you decide that hiring an accountant will be most beneficial for your business, you might wonder how to find one. Finding an accountant that fits your business’s needs requires some research. 

Here are some steps to finding an accountant: 

1. Determine what services you need: Decide if you’ll need accounting services year-long or only for special projects, like bookkeeping, auditing, or tax preparation. 
2. Identify what accounting firms can offer: Compare what services they can provide you and if they have all the services you need.
3. Search for accountants around your area: Look at online resources such as the American Institute of Certified Public Accountants (AICPA) or ask for recommendations from other small business owners. 
4. Evaluate their typical accounting fees: Compare accountant fees and evaluate which one fits your budget. 

Once you find potential accountants or firms you can hire, you can meet with them to talk about their services and what they can offer you. Then consider running another cost-benefit analysis to ensure the benefits outweigh the costs. 

Hiring an accountant vs. using accounting software

But what happens when the accountant's costs don’t fit your budget? Sometimes, hiring an accountant might not be the best decision for your business yet, but you still have to take care of accounting. 

Calculate how much an accountant will cost your business compared to using accounting software. Accounting software can help you automate your accounting services, track transactions as they happen, and even prepare tax documents and reports. 

Consider looking for accounting software with advanced features such as mileage tracking, invoicing, and time tracking. Accounting software could be a more budget-friendly option, even if you have to hire someone to manage the platform. 

Streamline your accounting and save time

Now that we’ve got the “how much does an accountant cost” question out of the way, you can have a better understanding of how much you may have to pay for accounting services. 

If you still find that hiring an accountant is not the best decision yet, using accounting software can help you take care of your accounting needs so you can focus on your work.