Small Business Accounting | How much does it cost?

Jan 3, 2024Accounting

If you’re a small business owner, navigating the financial landscape of accounting and bookkeeping is crucial to long-term success. One key component of this journey is understanding the costs associated with small business accounting services. Let’s break down the factors that influence the cost of small business accounting and help you make informed decisions to manage your finances effectively.

Kimberly Ferguson, MSA, EA, founded Emerald Expectations as an accounting firm with this vision – “to treat clients like family with unquestionable integrity, incomparable professionalism, and the most exceptional customer care anyone could find in the market.” As a small business owner herself, she deeply understands how it is to run your own business and empathizes with other owners.

So, what exactly is a small business? According to census.gov, there are several ways to define a small business. Various groups define what a small business is based on different features. For example, a small business can be based on the amount of revenue and/or the number of employees it has. A small business can also be defined by how many employees each branch or location has, not the total number of employees.

In any case, a small business is generally a small start-up. In fact, according to a recent survey by the Census Bureau, half of all businesses with employees have fewer than five. If these definitions sound familiar, you are a small business owner.

How much does accounting cost for a small business?

There is no one answer to this question. Accounting costs vary from business to business depending on the size of the company and the scope of accounting services required. However, in this article, we will give you ballpark figures of how much these types of services cost so you can make informed decisions when it comes to your accounting needs.

Most small businesses need straightforward accounting services. After all, many businesses this size are not investing millions of dollars in several ventures or buying land across the country. Small businesses typically focus on offering one type of service or maybe selling several products under a few categories.

Accounting services that most small businesses need are usually the following:

  • Monthly bookkeeping
  • Preparation of financial statements
  • Payroll processing
  • Tax statement preparation

Other small business accounting services can include advanced tax planning and strategies, business and personal tax filing, retirement planning, and outsourced CFO services. These features are not commonly offered in a small business basic monthly accounting package, but some services offer these as add-on features.

If we talk about average monthly and yearly costs for accounting services, again, it varies depending on the services required and the size of the small business.

On the other hand, you can also compare how much it would cost to hire an accountant or a bookkeeper. The rate of a part-time accountant from a firm varies from $25 to $52 an hour, while a part-time bookkeeper’s average rate in the United States is $24 to $35 per hour. With freelancers, the rate for accountants ranges from $75-$300 per hour, while a bookkeeper’s ranges from $50-$100 per hour.

The range in hourly rate depends on the experience and expertise of the accountant or accountant, as well as if they work for a firm with overhead expenses or are a freelancer running their own small business. Rates also vary because of location (some cities are more expensive than others) and the complexity of the services they offer. The hours required depend on the scope of services you need the accountant or bookkeeper to do.

Understandably, a solo accountant has fewer overhead expenses than a small accounting firm and a big accounting company. This means lower costs for clients of a solo accountant than for a small or big accounting company. However, a solo accountant may not have the same resources and range of services as a bigger accounting firm.

If you’re looking for a balance between a solo accountant and a bigger accounting company, Emerald Expectations meets your needs. It offers expert financial guidance, including bookkeeping, accounting, and tax planning, through affordable monthly packages. Find the service package that fits your needs best through this short quiz.

Tips for saving money with small business accounting

You might be looking at the figures above and be hesitant about adding another business expense to your already growing list of expenses. However, outsourcing accounting services to an expert can actually improve your bottom line! Your accountant can offer valuable advice that can help you find deductible expenses that you never knew about or another tax bracket you can use that you didn’t know about, which enables you to save more money in the long run.

If you are still unsure, other ways exist to save money on your accounting expenses. For example, hire someone to do only your most challenging or time-consuming tasks, such as payroll or tax filing. If preparing your financial statements on your own is still manageable, go ahead and continue doing it yourself.

You can also choose to hire a bookkeeper instead of an accountant to help you with your financial needs. A bookkeeper typically has a lower hourly rate. When tax season comes, or when you have more complex tasks to complete, you can hire an accounting firm just for a few weeks or a couple of months to complete those tasks. You don’t need to have one on a monthly retainer or package.

Another way is to train or re-skill someone already in your organization to handle your financial tasks using accounting software such as Xero or QuickBooks. There are various online courses available that can turn a newbie into an expert in this field.

Whatever your budget is and what your needs are, Emerald Expectations can help. Here’s a testimonial from client Glenn Foltz that shows you exactly how:

“As a busy entrepreneur, I specialize in several things…Accounting is NOT one of them, lucky for me, Kimberly is fantastic at it! She’s helped me save $$ in many areas and saved me from hours and hours of bookkeeping tasks that I would frankly would normally put off until the tax man comes knockin(sic)!”

When should you hire an accountant?

Hiring an accountant is inevitable unless you have an accountant as a permanent part of your full-time staff, which is not usually the case for small businesses. You don’t need to hire an accountant immediately after opening your business. At this point, you can still DIY most of your financial requirements. Of course, if you want to, you can! This depends on how much time and money you want to spend on your accounting needs.

Some professionals recommend hiring an accountant before December 31 to prepare for tax season in April. Others say two months before the end of their fiscal year, while others say there is no wrong time to hire an accountant! The bottom line is you should hire an accountant well before tax season begins. If you only hire one when it’s time to file your taxes, you may not even find an accountant to work with.

Hiring a bookkeeper is slightly different. If you plan on filing your taxes yourself, you can hire one even after tax season has started. However, hiring a bookkeeper well before this time is best so you are well-prepared and do not scramble with your finances when tax season starts. Working with a bookkeeper year-round is a good idea, so your finances are in great shape when an accountant comes in. Bookkeeping and accounting are different, but most small businesses need people working on both.

Learn to DIY Your Accounting

If you’re still not convinced you need to hire Emerald Expectations, don’t worry! We can still help. Our DIY Bookkeeping Den Course plus Coaching Membership is a program for small business owners designed to help them understand the fundamental basics of accounting so they can manage their own finances.

The program consists of several modules that teach basic accounting terms, how to create invoices, enter and track invoices, create financial statements, and more. This course will fully prepare you to become your business’ in-house accountant. You can find more details about our DIY program here.

Understanding the cost of small business accounting services is crucial for budgeting and financial planning. Whether you choose one of our packages or DIY your accounting a little longer, Emerald Expectations can help you with expert financial advice. We love helping small businesses and business owners focus on the core of their businesses and reach their goals rather than spending too much of their time on accounting and bookkeeping needs.

Emerald Expectations also offers CFO services and retirement planning for small business owners who want to take charge of their financial future beyond bookkeeping and accountancy. These services give small business owners even more control over managing their finances.

Book a Right Fit Call today and learn more about how we can help you.

Hi, I’m Kimberly.

Thanks for stopping by. At Emerald Expectations, we love making a big impact on small businesses like yours by educating, growing profits, increasing cash flow, and reducing your tax liability.

If you’re always worrying that something important is falling through the cracks or you feel like your current tax or financial strategy is lacking, we can help you offload that stress so you can feel at peace knowing everything is being taken care of.

Click the link below to take our Fit Quiz and find out which of our packages is right for you.

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