How much does it cost to hire an accountant for a small business?
What are the accountant fees for a small business in Australia? What type of services do they provide within that price range?
Accountant costs vary depending on factors including:
1. Your small business structure
If you’re a sole trader with a relatively simple business and accounts, it will be way cheaper than a company or trust.
2. The type of service you’re looking for
Is it a one-off tax return? Just the monthly BAS and end of financial year tasks? Or do you need budgeting, cash flow review and projections, advisory tasks such as funding, restructuring, debt management? The more complex the service required, the more expensive it will cost your small business.
The accountant’s skills and qualification, whether CPA, CA or none, and experience, whether senior or junior accountant.
4. The type of accounting firm
Is it a big firm where you have 2-3 people handling your case or a smaller firm with just 1 junior person doing it? Of course, one-man shows will cost cheaper.
To a certain extent, your location. Capital cities like Sydney and Melbourne will be more expensive than regional locations. You can also use online or virtual ones, and they may be cheaper without any face-to-face meeting.
When it comes down to actual pricing, different accountants have different fee structures. Some may charge by the hour, some per project or task, and some will charge a monthly retainer fee.
The average hourly rate for a small business accountant starts from $100+ per hour for a junior accountant, and upwards of $300+ for a senior in an accounting firm. Of course, there are freelance accountants who charge lower than that.
For a simple sole trader business, tax return costs can start from between $300 and $500. Company tax returns will start from $1000 and get more expensive the more complicated the tax return is. BAS and IAS can start from $200 per quarter for a sole trader business and more for a company or trust.
With all monthly costs considered, the average accountant costs for small businesses ranges between $1,000 and $5,000 per year.
Bear in mind that an accountant can do a lot more for your business including budgeting, raising funds, debt reconsolidation, tax strategies, buying and selling businesses. These can be project based, part of a pricing package or paid based on a monthly retainer.
The most important thing is to hire accountants or firms who will be upfront and transparent with their cost and pricing. Make sure you understand the total cost including the fine print and any changes in the work needed, and always maintain an open line of communication.
Aishah's answer is very detailed and provides a great overview of the variables that go into accountant's pricing for their business clients. I think this is little to add to this other than to discuss some issues re costs I have in relation to my clients. I have some clients that want to do their own quarterly BAS to save on some costs which in some cases can turn out to be false savings. When you hand your work over to the accountant to prepare the annual accounts and tax returns, your accountant will need to do an annual BAS reconciliation of BAS lodged against the final accounts and there may be some adjustments via a BAS amendment. Usually this process goes smoother when your accountant has been doing the BAS each quarter rather than trying to unravel what has been done and rectify. Also, clients that only want thier annual financials and tax returns done will miss out on pre end of financial year planning opportunities which is a lot of cases can well exceed any additional costs incurred in engaging your accountant more proactively throughout the year. Aishah alluded to this above as well.
One thing that can make a big difference is the use of cloud based accounting software such as Xero (most have not heard of Xero) though Xero is not the only option. This will make the time to prepare BAS quicker as well as things like payroll reporting, super etc. You should really get a professional to set this up properly like your accountant. The other things that will increase the cost of engaging an accoutant will be the number of transactions your business turnsover during a quarter, higher turnover higher costs as more time needed for coding etc. The other item now more so than in previous years is the number of employees and the time to do payroll and STP reporting increases with increased employees.
Costs are only one side of the equation. What do you want for your business and from your business and how can trusted advisors such as accountants assist with these goals.
Ideally, your accountant should have a good ballpark for pricing on their website. If your business is doing around 50 transactions per month, the average costs for an accountant for small businesses as per 2020 pricing are as follows:
- Tax Compliance - Tax Return / BAS / Annual ASIC return / tax planning - $200+GST/month
- Bookkeeping on a monthly basis - $200+GST/month
- Payroll - 2 employees - $50+GST/month
We would make software suggestions for free but allow $250+GST for a basic setup of Xero (for a new business).
& $1,000+GST for the company setup (inc registrations, documentation & associated advice).
For more details on pricing just check out:
Thank you @Jane Jones
When asked this question, I usually reverse the question. What do you want from your accountant?
By asking how much it costs you are assuming the accountant knows what you want. And most accountants are too focused about compliance activities - making sure you lodge your BAS and tax returns. How your bookkeeping is done etc.
Don't get me wrong, these are very important aspects but they do not add value or help you grow your business or make you more money.
Generally, compliance does not solve probelems except keep the taxman happy.
Some accountants can be number crunchers. The numbers have been crunched and it spits out amounts. They may tell you that you business made a pofit of $50,000 and the tax due is $20,000.
Other accountants crunch numbers but add value. So they will tell you that your business made $50,000 and then show you how to increase it to $100,000 but at the same time keep your taxes as low as possible - maybe $30,000. They are more likely to ensure you are set up properly, help you to ensure you try to get the maximum profit from your business and assist in investing for your financial future/ retirement.
So I go back and ask yourself what is it you want from your accountant? - a number cruncher or someone who can add value.
Becasue based on what you want will determine what you pay. Number cruchers tend to be services that are more competitive so cheaper. A simple business might cost a few thousand dollars for example
The accountant that adds value is going to be more expensive but you make and keep more money. They may still charge a few thousand dollars for number crunching but then charge maybe $5,000 if they give you advice that makes your $25,000. They are more expensive but you have made more money.
If cheap and cheerful is what you want find a number cruncher - prices that have been quoted in answers to this question are about right.
But if you want to make more moeny or are serious about growing your business, you want one who will add value. The costs of that will depend on how much value they create for you.