CPAs are experts in their fields who can help you with tax and accounting responsibilities. They can be an invaluable asset for small businesses, but how much do they cost? The answer depends on various factors that contribute to CPA fees. In this article, we’ll take a look at what those factors are so you can get a better idea of what your business would pay when hiring one or more CPAs.
What factors contribute to CPA fees?
You should think about the following factors when you’re deciding how much to charge:
- Time spent on the project. This is a crucial element of your fee, but it can be difficult to estimate. We will discuss this more in detail below.
- The complexity of the project and your level of expertise with it. A complex audit can require significantly more time than an accounting review or tax filing for a small business, so your hourly rate will differ depending on what you are doing for your client.
- Your experience with similar projects and clients in the past (both yours and theirs). If someone contacts you because they need help with their books after reading about how great CPAs are, you may want to charge them less than if they were referred by another CPA who has worked with them before and knows that they’re going through an audit phase right now—and would thus benefit from having someone familiar with audits work through their books!
Some CPA fees are fixed
Some CPA fees are fixed. This means that a CPA charges a flat fee for certain projects, and the rate doesn’t change based on the time spent on the project or its complexity. Fixed fees are generally reserved for routine work like tax returns, payroll processing and financial statements. The advantage of using a fixed-fee service is that you know exactly what your budget will be before any work begins.
The disadvantage is that if you run into issues during the project, it can get expensive quickly; after all, there’s no incentive for your CPA to keep costs down when they’re already charging you an agreed-upon number per hour (or day). When using this type of pricing structure, it’s best if your project requires little specialized knowledge or extra effort on behalf of your CPA—which makes sense given their expertise!
Some CPA fees are based on an hourly rate
Hourly rates are determined by factors such as your experience and location. The average hourly rate for a CPA in the U.S. is $150, according to the Bureau of Labor Statistics (BLS). If you live in a larger city like New York City or Los Angeles, your hourly rate is likely to be higher than that—the average rates for CPAs in those cities are $155 and $170 per hour respectively.
In smaller cities and towns where there aren’t as many options for employers who need accountants, CPAs may charge less than their counterparts in larger metropolitan areas do. Also, different specialties carry different hourly rates: tax work tends to bring in more cash than other types of accounting work because it’s more complicated and requires additional training from tax professionals like CPAs
Other factors that determine CPA fees
Other factors that determine CPA fees include:
- The complexity of your business. CPAs typically charge more for businesses with complex operations, such as manufacturers and service providers who rely on multiple divisions to run their operations.
- The size of your business. Smaller businesses often see lower overhead costs, which means less work for the CPA and thus a lower hourly rate and fee structure. However, larger companies often have complex tax reporting requirements that require more time and effort than smaller firms’ filings do; this can lead to higher billing rates even with fewer employees working on the project at any given time because they’re spread out over multiple departments instead of being clustered together in one area like most small businesses are likely to be (i.e., accounting department).
- The industry you operate in: If you have an unusual business model or operate within an industry where there aren’t many similar competitors nearby (such as agriculture), then you may need specialized expertise that only comes from someone who understands all aspects of what makes up “your” sector—including how much those particular types of businesses typically spend on certain kinds.
Your business can benefit from having a CPA on your team, even if you don’t need one full-time.
As your business grows, you’ll likely need more assistance from a CPA. If you don’t have the resources to hire a full-time CPA, however, there are other ways that CPAs can help your business.
- CPAs are business advisors and experts. A great accountant will be able to provide feedback on everything from your company’s core operations to its strategic direction in order to ensure that it is heading in the right direction. They can also help with financial statements, taxes or any other area where they see room for improvement or opportunities for growth.
- Your business plan should include a cash flow projection that shows how much money will come into your company each month as well as any expenses associated with running it (such as payroll). A CPA who understands this kind of budgeting could be able to assist with forecasting future revenue streams based on historical data so you’ll have accurate projections when pursuing financing options down the road.
CPA fees are an important part of your business’s financial health. You can’t afford to make mistakes when it comes to calculating your CPA costs, so it pays off to understand how they’re calculated. The good news is that the CPA hourly rate has been falling over the past few years (as have other professional services). So while hiring a professional may seem expensive at first, they can actually save you money in the long-run by helping you avoid costly mistakes or poor decisions made without their expert advice.
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