Every business owner knows that accounting services are an essential part of their business, however, oftentimes these services don’t get the attention that they deserve.
Why? Because accounting tasks aren’t the sexiest part of a business, and they typically aren’t any fun for a business owner to pay for each month, but they are extremely important for your business to succeed, financially.
Did you know that the 2nd highest paid person at most companies is usually the CFO (Chief Financial Officer)? Many times, this person is also a CPA. There is good reason for that!
The CFO position in the company is very important, so it’s difficult as a business owner to know what you should pay for your CPA Firm/Accountant, if it is simply based on the size of your business.
Accounting firms typically charge fees in two ways:
- Flat Fees
- Hourly Rates
Flat fees can work well for the following examples:
- Family tax returns (i.e. Our CPA firm, Simpson & Simpson Accounting, starts at $400 for straight-forward tax returns)
- Monthly accounting/bookkeeping for small companies under $500k of revenue (We start at $300 per month for this service.)
- Small company tax returns for a business that is under $500k in annual revenue, we start around $750 for S Corp tax returns.
Hourly fees can work well for the following examples:
- Monthly accounting/bookkeeping services for businesses that have at least $1M in revenue. The reason that a flat fee doesn’t work for businesses with $1M -$5M in annual revenue, etc. is because the hours to complete each month cannot be estimated. New financial situations can pop up each month. (If you are business owner in this category, you know this is true.)
This is when we have seen other accounting firms charge a flat fee. Here’s the issue with that method: A business of $1M – $5M in revenue won’t get the work they need completed, because they are working on too small of a budget, or too few hours to manage it effectively. If your business needs better financial management, and you take the lowest bidder, you are just getting what you paid for. If you are this type of business, you will need on-going tax help.
If a business owner wants great tax services to save money, or to solve IRS issues, then the business will need an experienced, high quality CPA. All of these types of CPA’s charge by the hour. These type of CPA’s are the best in their field; they are not scared of tax complications.
An on-going problem that we see is that business owners will pay $250 for a somewhat complicated tax return, but the low-cost accountant has no experience talking with the IRS. A low quality tax preparer will not have the experience or knowledge to take care of any IRS notices. This can cost the business owner thousands of dollars when the inexperienced tax preparer handles his tax return.
Our Goal: To help business owners pick the right size accountant for their company. We want to offer complete financial transparency and help the business grow!