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How much does an accountant cost for a small business?

Posted by Alden Hui on November 15, 2019
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The cost of an accountant depends on the provider. Some providers charge by the hour, others at a flat rate, and some charge on factors like business revenue. The cost structure can become more complex the larger the business gets. What's most important is that the accountant understands your business, its goals, and how they can help achieve them. The cost of an accountant also relies on the organization of your bookkeeping. In order to get good outputs, there first must be reliable inputs. 


What does an accountant charge for a small business?

The typical hourly charge of an accountant is between $150 and $400+ per hour. This varies on the type of work, size of firm, experience of the accountant, and location. As stated above, each provider may also have different cost structures, with some based on business revenue or a flat rate followed by variable costs. One distinguishable difference in pricing occurs if the accountant must also provide bookkeeping services.  

What's the difference between accounting and bookkeeping?

These two roles work in conjunction, think of them as your inputs (bookkeeping) and outputs (accounting). In some situations, the accountant may provide services for both. 

Bookkeeper

The primary role of a bookkeeper is to accurately and consistently record business transactions. They deal with the operational day to day of your business financials. To fulfill the role of a bookkeeper, responsibilities may include:

  • Reconciling accounts at the end of each month or week
  • Managing and tracking bills, payroll, and invoices
  • Tracking sales taxes and filing returns 
  • Handling transactions between suppliers and customers
  • Establishing a financial system
  • Budgeting and cash flow monitoring 
  • Managing accounts payables and receivables 
  • Determining asset depreciation

The complexity of these responsibilities depends on the business size, industry, and the quantity and complexity of the transactions.

Accounting

The accountant utilizes the information provided by the bookkeeper to give financial business insights (reports, business financial planning, etc). In most cases, accountants take a strategic role in maximizing your company's financial efficiency. In order to successfully execute their job, a financial system will be put in place to ensure everything is running smoothly. 

The responsibilities include:

  • Analyze all the inputs of the book keeper (analyze financial data)
  • Preparing and analyzing financial statements
  • Preparing income tax returns
  • Tax planning
  • Preparing adjusting entries for future expenses
  • Forecasting business cash flow
  • Finding ways to minimize your tax owed through credits and deductions
  • Staying up to date with best practices and regulations

Most importantly, the accountant will provide insight and advise the business owner on where to go forward for their business finances (in order to reduce taxes and align with the business goals). 

When should a small business seek financial help?

Not every small business needs financial help. If you are in a position to grow or cut costs, then an accountant's expertise may be right for you. It comes down to seeing if the bookkeeper or accountant is a worthwhile investment - whether you are in a position to gain from it. Do you find that you are spending too much time on tracking expenses instead of growth for the business? Are you having trouble making financial decisions? These are legitimate reasons to hire an accountant! 


How do I know if my accountant is doing their job correctly?

Some "obvious" warning signs are actually quite hard to spot, especially to someone who is not new to the world of accounting. Here's a checklist of signs (both good and bad) to look out for: 

Positive Signs

1. They have the right qualifications / come highly referred

2. They are honest about their experiences / have experience with your industry or business type

3. They are confident but welcome discussion 

4. They don't make decisions until they have all the necessary information

5. They are organized and trustworthy

6. They understand and recognize the client's goals

7. They keep up to date

8. They are accountable for deadlines

9. They are able to balance their own business needs (prospective vs. existing clients)

10. They successfully on board their clients and maintain communication throughout year

11. They have strong attention to detail

12. They keep their promises 

13. They have back up processes in place

14. They have an accurate breakdown of services and their charges / transparency 

15. They are able to set expectations

Warning Signs

1. A willingness to change minor details or numbers for financial gain

2. They get too into detail about other clients

3. They are unable or won't answer your questions in a satisfactory way

4. They pressure you into certain things you are unsure of

5. They start doing things (signing documents on your behalf) without your knowledge of it

What does an accountant provide in their services?

Besides the financial reports, a good accountant provides important business insight for the owner by interpreting the businesses financial information. This includes things like finding your appropriate business structure (partnership, corporation, sole proprietorship), explaining your working capital needs, creating an overall structure and organization to your financials, tax returns, budgeting, and reaching maximum tax efficiency.  

Does a small business require an accountant?

No, a small business does not require an accountant, but there comes a time when every business owner must evaluate the opportunity cost of doing the accounting by themselves. 

Health and Dental Benefits for a Small Business?

Health and dental coverage is an area where lots of small business owners fall short. However, that doesn't have to be the case. Health Spending Accounts are a tax tool which turns after tax personal medical expenses (for the owner and employees) into before-tax business expenses. This health and dental plan offers 100% coverage and is a cost-effective solution in Canada. The claims process funnels your money so that the end result is a business expense. Approved by CRA, Health Spending Accounts are a modern day solution for health and dental benefits.  

To learn more about Health Spending Accounts, download our FREE Guide:

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Talk to your accountant about an HSA - send them this guide:

accountant health spending accounts

 

Related reading:

Common misconceptions about Health Spending Account costs in Canada

An Explanation of Health Spending Account Taxes by Province

8 Questions to Ask Your Accountant for Taxes in Canada

 

Sources:

https://smallbusiness.costhelper.com/accountants.html 

https://www.accountingweb.co.uk/practice/general-practice/twenty-signs-youre-a-bad-accountant

https://www.fundera.com/blog/trust-your-accountant

 

Topics: accounting, accounting in Canada