Small businesses have a lot of financial responsibilities, and many entrepreneurs handle their own accounting to save money. But is this the best decision for your business?
Hiring an accountant can save you money in the long run and free up your time to focus on other aspects of running your business. How much will you be paying for these small business accounting services? Read on to find out.
Should You Use Accounting Services for Your Small Business?
There are some things to consider before you decide to use accounting services. First, you need to make sure you find a reputable and qualified accountant. Second, you must decide whether you want to use an online or offline accounting service. Third, you need to consider the cost of accounting services.
The cost of accounting services can vary depending on the size and needs of your company. You might find an accountant who charges a flat fee, an hourly rate, or a monthly retainer. You’ll also need to factor in the cost of any software or other tools that the accountant will need to do their job.
Overall, using accounting services can be a great way to save time, money, and stress. It’s more cost-effective for a small business than hiring a full-time accountant on staff and creating an accounting department.
If you’re careful about choosing a reputable accountant and clear about your needs, you can find an accounting solution that works for your business.
How Much Should Accounting Services Cost for Small Businesses?
The size of the business, the number of transactions, the level of complexity, and the location of the business all play a role in determining the cost of accounting services. Fees charged by accounting firms can also vary widely. Therefore, it’s difficult to give a definitive answer to this question.
What we can do is look back at past statistics about small business accounting costs, such as these figures from SCORE, a small business nonprofit and partner of the US SBA. While much has changed in the tax landscape since 2015, the figures can serve as a benchmark for how much money business owners spend on accounting costs:
- $1,000 or less: 23%
- $1,000-1,500: 31%
- $5,000-10,000: 18%
- $10,000-20,000: 12%
- $20,000 or more: 16%
If you fall into the majority of business accounting needs, you may be able to spend $1,500 or less on your annual accounting services. However, if your company and financial needs are more complex, you should prepare to pay upwards of $5,000 annually for professional accounting services.
Other Costs You Should Consider
When considering the costs of accounting services for your small business, you should also weigh the costs of other services that can help you run your company. These services can include bookkeeping, taxes, payroll, and more.
While you may be able to do some of these things yourself, it’s often worth it to hire someone to do them for you so that you can focus on running your business.
Benefits of Using Accounting Services for Small Businesses
There are many benefits of using accounting services for small businesses, starting with the very inception of your company and leading into the later stages of growth and development.
Choose the Right Business Structure
An accountant does more than just reconcile the number of your business. They can also help you choose the proper business structure as you’re getting started and as your company grows so you can take advantage of certain benefits.
Typical business structures include sole proprietorships, limited liability companies (LLCs), partnerships, and corporations. Each company structure has different tax implications, so it’s essential to choose the right one for your business.
Choose the Right Funding Source
Small businesses have various financing options available, and choosing the right one can be critical to the business’s success. An accountant can help a small business owner understand the pros and cons of each funding source and make the best decision for the company.
An accountant can also help a small business owner navigate the paperwork and red tape associated with securing funding. Investors want to see hard figures, and accountants can provide that critical data.
Save Time and Money
When you’re first starting, there are a million things to do and not enough hours in the day to get them all done. Hiring an accountant can free up some of your time so you can focus on other aspects of running your business.
In addition, an accountant can help you save money by taking advantage of all the deductions and tax breaks you’re entitled to as a small business owner.
Reduce Tax RIsk
Taxes are one of the most complicated aspects of running a business. An accountant can help you ensure that you’re paying the right amount of taxes and help you reduce your risk of being audited by the IRS.
By managing your taxes and accounting throughout the year, you can avoid tax-related difficulties when it comes time to file.
Prevent Tax Penalties
There are many ways an accountant can help prevent tax penalties for small businesses. One way is by maintaining accurate records and filing accurate and timely tax returns. If the IRS has questions about the return, the accountant can help to resolve the issue.
Finally, if the business has to go through an audit, the accountant can help to represent the business and ensure minimal penalties, if any.
Help Your Small Business Grow
Accountants help manage finances and advise financial planning and investment. They also help small businesses keep track of expenses and prepare tax returns. Having an accountant can help small businesses save money and grow.
Make Informed Financial Decisions
As your business grows, you’ll face many financial decisions. An accountant can help you understand your financial situation and make informed decisions like expanding your business, taking out loans, or making major purchases. Having this knowledge can help you avoid financial difficulty down the road.
Provide Valuable Insights
Most small businesses don’t have in-house accountants, but that doesn’t mean they don’t need their insights. An accountant can help a small business owner in many ways, from deciphering financial statements to providing advice on tax and cash flow.
They can also offer unique insights into the business’s current and future performance, identify areas of unnecessary spending, and advise on ways to increase profits. Having an accountant on call can be a huge asset for any small business.
Provide Security
As the financial backbone of any business, accountants are responsible for safeguarding a small business’ assets and protecting its financial interests. They do this by maintaining accurate records of all transactions, monitoring spending and income, and preparing financial statements that clearly depict the company’s financial health.
By staying on top of the numbers, accountants can help small businesses avoid financial problems and make sound decisions to secure their success.
Need Accounting Help? Give Us a Call
There are many benefits to using accounting services, but ultimately the decision comes down to what’s best for your business. If you’re a small business owner needing accounting help, call MI Tax CPA. We’ll be happy to answer any of your questions and help you make the right decision for your small business.
