The cost of an accountant can be inexpensive or expensive, but it doesn’t mean you’re getting the same quality.
Accountants’ prices range for all budgets but sometimes you get what you pay for we will look at how much accountants cost and why the price point differs between accountants. Let’s dive into it!
Is the Accountant Qualified or Not?
The first thing that can really drive the price of an accountant if you are paying for a qualified or unqualified accountant. This means someone with their CPA license or without it. So why would you want someone with a CPA license? More complex accounting calls for a CPA.
If you have a complex issue in inventory, you can’t just hire a standard accountant to fix the issue. You most likely will want a competent CPA or a firm. Unqualified accountants typically fall to the cheaper side but they clearly cannot tackle as complex accounting problems.
Solo or a Firm
The next factor that plays into the cost of hiring an accountant is if the accountant works for a firm or works for himself. It will generally be cheaper to get a solo accountant because they may have less overhead.
An accountant in a firm has to pay the overhead costs of a firm, including all the staff below them.
Sometimes with firms, you are also paying for the name. This is especially true of the big four if you are a large business.
While the big four has access to a ton of resources, not all the accountants are of the same quality, plus many of the big four work is outsourced to cheaper countries like India and the Philippines.
So do you need to engage an accounting firm or not? It depends. Think about how complex your business is, how big it is, and go from there.
Also, be sure to look at your budget, constraints, and if you are a start-up or a mature company, and this will help you determine if you need a solo accountant or a firm.
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So What is the Cost of an Accountant Versus a Firm?
An accountant starts at around $100 an hour. It can go all the way up to $500 an hour or more for a specialized accountant. Big four accountants are some of the most expensive accountants you can hire. The smaller, the firm, the cheaper, the price.
All accountants charge by the hour just like lawyers, another fee arrangement you can agree on is a fixed fee. The rate depends on the type of service that your small business or yourself requires.
For example, a personal tax return can be $400 while a corporate return can run into the thousands of dollars. Again it all depends on the size and complexity of the work required.
What are Some Types of Services Where You Need an Accountant?
As we mentioned, the cost of an accountant depends on the type of service you need, the size of the accountant, and the quality of the accountant. Audit services can run into the thousands of dollars. Tax services can be hundreds of dollars to thousands of dollars.
Compiling financial statements can be hundreds of dollars or into the thousands. Consulting services are usually billed at an hourly fee. There are too many services that an accountant can provide.
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So How do you Know you are Paying the Right Amount for an Accountant?
While you can take rates like $250 an hour for a CPA, it is best to shop around at a few accountants or firms. If you are shopping for midsize accounting firms, then don’t be afraid to get a quote from a few of them.
Ask for transparency, which includes asking for the makeup and mix of the team working on your engagement. This includes asking how many staff, seniors, managers, senior managers, and partners will be working on the engagement.
From there you can ask if the junior staff are CPAs or not. If the junior staff that works on your account are CPAs, then you can expect to pay more than if they are not.
Lastly, get a breakdown of the cost per hour of each of the levels of employees working on the engagement. This will help you compare across a couple of firms.
I’ve Decided on an Accounting Firm Now What?
Once you’ve decided on a firm, expect to be working with them for a few years. It’s not an easy task to change service providers once you are set up and it can be expensive, as well as time-consuming.
You can also expect that the CPA firm or accountant will raise their prices every couple of years. This is common in the accounting industry and is done to keep up with inflation, as well as to keep a sense of profit margins.
Keeping in mind that there will be price hikes to the accounting fees that you pay will help you budget for future years. It also always helps to ask the accountant or firm if they expect any price increases on the horizon.
How Much do Accountants Cost? Wrapping Up
Accountants price themselves differently for the type of services they offer. Firms can tend to be more expensive than a single accountant due to the resources they have behind them.
Keep in mind that there will be price hikes in the future and you should be able to manage the cost of the accounting services. Your business needs. Be sure to shop around, but it is not always the cheapest accountant who can deliver the best quality for your business.
