How much accounting should cost a small business depends on a number of factors. If you’re looking for the costs of accounting for your small business, you want to ensure that you’re considering all the items that influence the cost of accounting for a small business, as well as what kind of accounting services you’re looking for. Lower up-front costs is very rarely the best deal, as that typically means you’re not receiving the accounting services you need, or that you’ll end up having to hire a Chartered Professional Accountant after the fact to clean up the mess.
Accounting vs Bookkeeping
To understand how much your business’ accounting might cost, it is important to understand the difference between accounting and bookkeeping. These terms are often used interchangeably, but there is a significant difference between bookkeeping and accounting services.
Bookkeeping is most simply described as the basic function of recording transactions of a business in a consistent and periodic manner. Bookkeeping is the day-to-day itemization of the money that is going in and out of your business.
Accounting can be described as the process of using the business’ bookkeeping to produce more meaningful information. This includes compiling the bookkeeping information into financial statements, analyzing the information to help business owners make decisions, completing tax returns and tax planning, to name a few. Accounting services are far more in-depth and take your every day business statements and help you understand the full picture of your business’ financial standing.
How Much Does Bookkeeping Cost?
Bookkeepers charge between $55/hour and $85/hour if you are contracting out your bookkeeping services. Depending on the nature of your business, you may have a full time accounting team who handles the bookkeeping including items like paying invoices, employee payroll, and other important day-to-day financials. If your business maintains organized bookkeeping throughout the year, that can significantly lower the amount of time it takes to get accounting services done for your business’ year-end.
Are Accounting Services Worth the Cost?
The short answer to whether or not professional accounting services are worth the cost is, yes, there is significant value in professional accounting services for owner managed businesses. Accounting services are incredibly technical and there is a lot riding on them to ensure your taxes, financial statements, and financial planning is done correctly. The value of innovative accounting services is unparalleled, as a Chartered Professional Accountant has the abilities to look at your business’ bookkeeping and offer advice that can help you make even more money. A Chartered Professional Accountant who has your best interests in mind can help you make the right financial decisions and grow your business.
How Much Does Accounting Cost an Owner Managed Company?
Due to the importance and value of accounting, accounting work costs more than bookkeeping. Accounting work completed by a Chartered Professional Accountant will range from $150/hour to $450/hour.
The amount of time it takes to complete your accounting services depends on the breadth of your project. Audits and Financial Reviews will range higher than Notice to Readers (NTRs), for NTRs can be completed quickly often requiring fewer specialists, while Audits and Corporate Tax returns can require the expertise of multiple CPAs and many hours of work. For owner managed businesses, accounting services are not cheap, but the Return on Investment is definitely worth it!
Factors that Contribute to Your Accounting Costs
There are a number of factors that contribute to the cost of professional accounting services. Some factors are due to clerical work and the level of organization in a business’ bookkeeping, while other factors are simply about the difficulty and level of expertise required to complete the task.
Here are some of the most common factors that contribute to your accounting costs:
1. The state of your bookkeeping. Bookkeeping that is concise, neat and correct will result in lower accounting costs.
2. The scope of the accounting engagement. Financial statement preparation will vary depending on which engagement you require; Notice to Reader, Review Engagement, or Audit Engagement.
3. In conjunction with the scope of the accounting engagement, the complexity of the business also factors into the total accounting costs.
4. Qualifications of the firm preparing the work. Chartered Professional Accountants will generally charge more than non-designated accountants.
5. The level of involvement of your accounting firm in the operations of the business. Involving your accountant can help in making business and tax decisions
Gallo LLP Chartered Professional Accountants is equipped to handle all your business’ accounting services. Our team of experienced accountants will compile your financial statements, prepare you for tax season, and provide you with expert financial advice as you make your next moves. If you’re in need of a team of hardworking, innovative accountants to get you the best information regarding your business’ financials, contact Gallo LLP.