You’ve probably heard businesses hiring a CPA, especially at a tax time.
However, most organizations are unaware of all the other ways a Certified Public Accountant can benefit them.
Whether it’s a professional accountant or CPA, they can help proactively plan for your business goals.
Plus, they have hands-on experience working with financial challenges, offering the ideal solutions that best suit business needs.
Simply put, for anything that affects your finances, these experts can help.
But how much does a CPA cost?
Several factors determine their service fees and that’s exactly what we’ll covertoday.
Let’s get started.
Key Takeaways
- CPAs are essential for navigating complex tax regulations and ensuring financial compliance for businesses.
- Having a professional prepare your taxes has many benefits
- The demand for CPAs is projected to grow by 22% by 2027
- CPA costs vary based on location, complexity of services, and frequency of required assistance
- Understanding the differences between CPAs, accountants, and bookkeepers can help businesses choose the right professional
- Accounting software and accounting firms are some alternatives to hiring a CPA
Is A CPA Required for Your Company?
CPAs are highly respected credential holders, which indicates they’ve met rigorous expertise standards established by AICPA.
This designation requires them to pass 4 challenging exams organized by AICPA.
The requirement for CPA is soaring high in the US financial market.
In fact, the Bureau of Labor Statistics projects a 22% surge in demand for Certified Public Accountants (CPAs) by 2027.
This surge highlights the growing need for professional accountants in today’s changing business landscape.
Some key factors influencing the growing demand for CPA in the US financial market include:
- Increasing Complexity of Financial Regulations: New laws and reporting standards are becoming difficult to navigate for new businesses.
- Growing Requirement for Business Advisory Services: CPAs now play a larger role beyond just preparing financial statements or conducting audits. They are now helping organizations develop strategies to 10X their performance.
- Adjusting to New Technologies: With constant advancements in technology, CPAs are required for businesses to stay agile. They can help them explore new accounting software and keep up with the latest technology.
- Globalization of Business: Understanding international accounting standards can become a challenge as a business expands into international markets. Certified accountants have the expertise to align financial practices to global standards.
As companies adapt to the ever-shifting financial dynamics, the need for a CPA has become more essential. Thus, their assistance is indispensable in these competitive times.
Benefits of Hiring A Certified Public Accountant (CPA) for A Company
“Are our financial goals on track?”
“What if my organization is missing any tax opportunities?”
These are just a few of the many questions businesses face when it comes to finances.
A CPA can provide relevant answers and strategies. Not only can they help you stay compliant, but they also uncover growth opportunities that you might be lacking.
They bring the following expertise to the table:
- In-depth Financial Knowledge: CPAs can analyze data effectively, all thanks to their extensive understanding of accounting practices and principles.
- Compliance with Tax Regulations: Certified accountants help businesses navigate the ever-changing tax landscape. They can help your company adhere to the regulations while minimizing the risks of penalties.
- Strategic Tax Planning: Beyond mere compliance, CPAs develop smart tax preparation strategies that can help you retain more of your hard-earned money.
- Audit Preparation: With a CPA by your side, you’ll be ready in advance for audits.
- Support for Growth: One of the key aspects of business a CPA can help with is expansion. They can chart a course for growth so you can seize opportunities without fear.
- Cost-effective Accounting Solutions: Save money in the long run under the guidance of a certified accountant. This allows businesses to allocate resources to aspects that contribute to their success.
- Proactive at Problem-solving: Their support can help companies remain resilient during financial uncertainties.
- Access to Network of Professionals: Hiring a certified public accountant can open doors to invaluable connections and countless opportunities.
- Time-saving: Though choosing to work with a pro might not save you enough money, it can save you time doing taxes that may take days.
Types of Accounting Services Offered by CPAs
From preparing a company’s tax returns to helping it save money, a CPA can do a lot more.
Whether you own a small business or a large enterprise, there are a number of services that CPAs can offer. Here is a breakdown of some essential ones:
- Bookkeeping: CPAs keep transactional records organized so that businesses can maintain financial accuracy and have extra time to focus on growth.
- Financial Planning: Strategic financial planning by CPAs sets a clear path toward achieving your business goal.
- Handling Tax Obligations: Let certified accountants navigate your tax obligations. Doing so will minimize liabilities while maximizing your financial benefits.
- Tax Filling Solutions: Preparing and submitting tax returns punctually is a core responsibility of CPAs. The best part is they maintain accuracy in these returns to the T.
- Generating Financial Paperwork: You can trust CPAs to create essential financial documents supporting you in decision-making.
- Financial Audits: CPAs are qualified to assist with timely financial audits.
- Fraud Prevention: By keeping track of all the records, these professionals can help detect fraud.
- Audit Fee Reduction: They can negotiate with the IRS on your behalf regarding financial compliance to help you save audit fees.
- Payroll Services: If your company is not using any payroll software, CPAs can assist you in setting up one.
The cost of hiring a CPA can vary depending on the type of service you need.
More specialized services like tax planning or financial audits typically require more time so they might charge higher fees.
Factors Influencing the Cost of Hiring A CPA
The cost of a CPA depends on several factors..
It includes what tax forms are required to file, your situation, or even where you live.
If your tax situation is quite simple – let’s say, a sole proprietorship with minimal expenses – it might not be expensive to hire a professional.
According to the National Society of Accountants 2020 – 2021 study, the average CPA’s fee for submitting a Form 1040 was $220. It increased to $323 for an itemized Form 1040.
Apart from the complexity of the accounting solution required, several other elements play a major role in determining the cost.
Let’s discuss these factors in detail:
1. Qualification and Expertise
While the cost of enlisting a professional to handle taxes can put some financial strain, taking the advice of an untrained person can backfire.
Instead, hiring an experienced CPA can help get the most out of your investment as they rarely overlook important details.
Like any other professional, certified accountants leverage their skills and experience to charge fees.
So, expect the fees to be higher if you’re consulting an expert in this field.
Average Fees for Various Services
There are specific average rates fixed for some tax filling situations, including:
| Form/Schedules | Average Fees |
|---|---|
| Form 1040 (not itemized) | $220 |
| Form 1040 (itemized) | $323 |
| Form 706 (Estates) | $1,289 |
| Form 1120 (Corporation) | $913 |
| Form 1065 (Partnership) | $733 |
| Schedule C (Business) | $192 |
| Schedule B (Interest and Ordinary Dividends) | $42 |
| Schedule SE (Self Employment Tax) | $41 |
Geographic Location
Depending on the location of the business, the cost of hiring a CPA may vary.
As per the US Bureau of Labor Statistics, organizations established in New England states may pay significantly more fees than those in other states.
This is often due to higher living costs and overheads in this area.
Complexity of Services
The cost of hiring a certified public accountant also rises with how complex your accounting needs are.
If it takes more time for the person to complete the tax filing, the rate will increase considerably.
For instance, a growing e-commerce business with multiple revenue streams, inventory management, and international sales requires more intricate tax filing.
On the contrary, a small, local retail store with straightforward accounting may not have such complex needs.
Frequency of Services Required
In a survey conducted by Intuit, it was recorded that:
- About 57% of accounting professionals charge by the hour
- 43% of them charge a flat fee for tax preparation services
When a business needs a CPA for a specific task, like preparing annual tax returns or conducting a single audit, the cost is typically a flat fee based on the job’s complexity.
Though this service is affordable, it may not provide ongoing support.
In contrast, businesses that require regular CPA services, such as monthly bookkeeping or continuous tax planning, often pay a retainer or hourly rate.
Cost Comparison: CPA vs. Accountant vs. Bookkeeper
Bookkeepers, accountants, and CPAs are all experts in finance management.
However, the scope of their services differs significantly. And in the world of finances, understanding their roles and associated costs is important.
All of them offer unique solutions that cater to distinct financial needs, for instance:
- Bookkeepers: They provide affordable bookkeeping solutions for managing daily financial transactions, maintaining accurate records, and reconciling accounts.
- Accountants: These professionals handle broader financial tasks, including managing payroll, budgeting, and providing insights to support strategic decision-making.
- CPAs: Certified public accountants are trained in more advanced financial services, from tax planning and compliance to in-depth audits and business consulting.
Knowing what services you need will help you choose the right professional.
Plus, this consideration can save you a lot of dollars in the long run.
How to Reduce the Cost of Hiring CPA Services?
Working with a certified public accountant is no different than working with an accountant. In both cases, you’ll face some challenges in managing costs.
Here are some tips that can help you reduce the fees of taking CPA services:
- Determine Your Needs: Finalize all the specialized CPA solutions you require from the professional. This way, you can avoid paying for unnecessary services and focus on services that directly benefit your business.
- Research: Get quotes from multiple professionals to get a sense of pricing in your area. You can also check the virtual services offered as they tend to be cheaper.
- Stay Organized: It’s not shocking that organizing financial documents and receipts takes several hours. So, instead of bringing a heap of receipts for your CPA to arrange, why not get your ducks in a row first? This could save additional expenses.
- Establish A Long-term Relationship: Choose a CPA you trust and believe that you can partner with for years to come. This familiarity allows you to get personalized counseling on fast-growing costs, dropping revenues, and more. Maintaining a relationship with the same accounting firm saves time for their auditor, helping you keep costs low.
Alternatives to Hiring A CPA
If you’re seeking an alternative solution instead of hiring a CPA, you can find several other options that may fit your bill.
Out of all, we’ve highlighted two effective financial management services:
- Accounting and Tax Software: Popular software like NetSuite, QuickBooks, Xero, etc. have various features to handle finances. They’re ideal for small to medium-sized businesses but might not be entirely suitable for large enterprises.
- Accounting Firms: Some organizations offer a comprehensive range of solutions, including bookkeeping, auditing, tax compliance, and financial consulting for private and government companies. Not only are they capable of handling complex financial tasks but they also offer tailored services to meet your business goals.
Is Hiring A CPA Worth It? Final Thought
Yes, hiring a CPA is worth it if your situation is complex and you don’t have the time and patience to handle taxes on your own.
Moreover, a good CPA offers more than just basic number-crunching. They have the skills to analyze your financial condition and look for solutions to help you save money.
From intricate tax planning to guiding companies through the maze of tax regulations, their importance is unparalleled.
Furthermore, their experience becomes a high priority during any critical events such as an IRS audit, mergers, or business acquisition.
Depending on the complexity and volume of transactions, the cost of hiring a CPA can range from a few hundred dollars to thousands.
Ledger Labs has a team of qualified accountants who help businesses with effective financial management. With 12+ years of experience, we’ve gained a huge reputation for providing the right accounting expertise for businesses of all sizes.
To learn about our services, don’t hesitate to book an appointment with our team.
