Ensuring sustainable business growth is highly time- and labour-intensive. You have to build your customer base and nurture your existing customers through communication and excellent customer service. Growing your business also requires creative problem solving, dealing with pressure, and improving your products or services.

As if that’s not enough, you also have to ensure government compliance. Your business needs an up-to-date financial reporting system, allowing you to monitor its performance and make informed decisions.

For most small business owners, outsourcing accounting is the natural solution to save time and eliminate the risks of non-compliance or inaccurate financial data recording.

But how much does an accountant cost? This question is critical to ensure that your decision to outsource makes financial sense. Let’s take an in-depth look at a few accounting solutions you may need and the costs of hiring an accountant.

Does Your Business Need Accounting Services?

Before discussing the costs of accounting services, it is necessary to look at accounting as a service. Many business owners use the terms “bookkeeping” and “accounting” interchangeably, even though there are notable differences between the two.

When considering the cost of recording and reporting financial data, you also have to consider your business’s needs. For example, if you have a straightforward service-based business, appointing an accountant to record your transactions using the single-entry system can be a waste of money.

However, you may need a tax consultant to file your returns and ensure that you don’t miss any tax-deductible expenses.

What Does an Accountant Do?

An accountant uses your financial data to compile reports that reflect your business’s performance. Accountants are qualified professionals who have extensive knowledge of finance-related matters. Their tasks frequently include:

• Analyzing and verifying financial data
• Generating financial statements, such as the balance sheet and income statement
• Performing audits
• Using data to gain insight into a business’s financial position
• Identifying financial inefficiencies or opportunities for growth
• Providing business owners with the financial information they need to make calculated decisions

An accountant mainly plays an advisory role and will consult with you to ensure accurate financial reporting. Among others, these solutions include determining the most optimal method for reporting inventory costs, calculating depreciation on your assets, or reporting your business’s intangible assets.

A qualified accountant should have a bachelor’s degree from an accredited university or college. In Canada, to qualify as a chartered professional accountant, they also need to complete the CPA Professional Education Program and pass the Uniform Evaluation exam.

Bookkeeping is just one component of accounting, though many accounting firms do provide their clients with bookkeeping solutions.

Tax Consulting

Tax consulting falls under the spectrum of accounting and consists of tax preparation and counselling in an expert capacity. Tax preparation involves the mechanical process of gathering your business’s financial information, transferring it to tax forms, and submitting the tax returns to the Canada Revenue Agency for processing.

Only a certified public accountant can provide tax counselling in an expert capacity, as it is a regulated service. If you have a complex tax situation, you may need tax counselling to prevent mistakes on your tax forms and CRA fines. Professional tax counselling will also ensure that you minimize your tax obligation.

How Much Does an Accountant Charge?

In Canada, accountants charge an hourly rate ranging from $30 to around $400 per hour for providing general accounting services. However, CPAs providing white-glove accounting solutions charge more. An accountant’s fee depends on various factors, including their qualifications, how many years of experience they have, and their location.

Partners in an accounting firm typically receive a fixed CPA salary along with their share of the firm’s profits. Larger firms also offer their accounting solutions as a package that can include bookkeeping and tax consulting services.

Individual Services and Factors Affecting Your Accounting Costs

How much you can expect to spend on accounting primarily depends on the services you need. If you don’t come from a background in finance, schedule a consultation with an accountant to find out which solutions are a good fit for your business.

If your company is still in its early stages, setting up an accounting system is the first step in allowing you to record and track your income and expenses. These initial stages include opening a business account and setting up a system to collect payments.

You also have to set up an accounting software account and create a chart of accounts. That’s where an accountant comes in. A chart of accounts is a customized accounting system that aligns with your business’s financial structure. Your accountant will advise you on the account types your business needs and add them to your accounting system.

Setting up your accounting system requires a one-time payment and isn’t an ongoing expense. Your accountant will factor the initial accounting system setup into their fee structure.

Payroll System Setup or Conversion and Support

Your accountant can also help you register payroll accounts with various governmental agencies. The process of setting up a payroll system involves:

• Getting a business number from the Canada Revenue Agency
• Setting up the Employer Health Tax remittance
• Advising you on the proper frequency of payroll for your business

Accountants often provide payroll solutions as a self, partial, or full accounting service. Generally speaking, these services are affordable, even if you have a relatively small operation. At the low end of the price spectrum, a CRA remittance fee is below $10 per business number.

Software Training

After setting up your new accounting system, your accountant will train your in-house staff to use the software. Depending on the product, accounting software training can cost up to $1,200 per employee.

That may sound expensive, but by training staff members to take over some of the business’s accounting tasks, you’ll save significantly over the long run. At tax time, you may even save more than you spend. Generally, most of these software includes bookkeeping tasks, such as:

• Managing accounts payable and account receivable
• Facilitating transactions with suppliers and customers
• Recording transactions in journals and posting them to the general ledger
• Reconciling accounts at the end of each accounting period

Sophisticated systems automate basic tasks, which saves valuable time.

Accounting Software Subscription Fees

Your accountant should only recommend accounting software after evaluating your business’s unique needs. Accounting software vendors can use a subscription hosting plan or perpetual licensing pricing model. If your accountant manages your software account, they will typically cover the subscription or license fee and include it as an item in their fee structure.

Software fees depend on the accounting features included. Accountants generally don’t recommend free accounting software, as these products don’t always offer the bank account integration or robust financial data reporting features the average small business needs.

The subscription fees of popular accounting software run anywhere from $10 to $20 per month for bottom-tier plans. Top-tier plans cost up to $200 per month. However, the more affordable plans are generally suitable for small businesses with fewer than ten employees and annual revenue of up to around $400,000.

Filing Tax Returns

How much do accountants charge for tax returns? Canadian accountants often charge between $50 to $300 per return, depending on the complexity of the tax situation. Most base the fee on the time it takes them to prepare and file the return.

Keep in mind that the earlier you get in touch with an accountant to file your returns, the lower the fee. Accountants typically start increasing their fees near the end of March.

Some accountants also offer a cash-back option and will give you cash after preparing and filing your return. After processing your return, the CRA will assign the refund to your accountant. If you expect a refund that meets your accountant’s threshold, this option is worth considering to save time and costs.

Drawing Up Year-end Financial Statements

Preparing financial statements and analyzing them to determine a business’s financial health is at the foundation of accounting as a discipline.

After preparing your statements, such as the income statement, balance sheet, and statement of change in equity, your accountant will use various ratios to determine your business’s ability to cover liabilities and your return on equity. Then, they’ll advise you on your business’s performance and make recommendations to ensure sustainable growth.

Accountants generally charge an hourly rate to draw up and analyze financial statements, which can be anything from $30 to $500, depending on your accountant’s profile and expertise.

Choosing a Suitable Accountant for Your Business

When choosing an accountant to maintain and interpret your financial records, you need to consider various factors to ensure that you onboard a professional who can meet your business’s unique requirements.

Qualifications

The professional you choose should have all the necessary qualifications to practice as an accountant. Ideally, they should also have a CPA designation with the license to provide attestation services.

Be aware of the differences between an accountant and a bookkeeper. The latter doesn’t require any certification or training by law. These professionals can only offer bookkeeping services such as journal entries and bank reconciliation.

Location

Thanks to cloud-based accounting solutions, you don’t have to reside in the exact location of your accounting firm, which means you have more options.

Technology such as screen share, cloud storing, file sharing, and meeting recording allows for effective one-on-one consulting solutions. However, working with an accountant within the same province ensures that your business complies with all relevant provincial regulations and laws.

Track Record

Before signing up for an accountant’s services, do some research to determine how other business owners experienced their services. Online reviews on forums and consumer sites will give you valuable insights into how communicative and responsive the accountant is when providing a service.

Relevant Experience

An accountant with experience in your industry will likely be familiar with relevant regulations affecting the reporting of financial data. Those who have industry-related experience will also be more likely to understand your business’s unique challenges and requirements.

Fee Structure

When selecting an accountant, one of your objectives should be cost savings. However, paying a premium for an experienced accountant’s services is worth considering, as they will be able to provide you with the most cost-effective accounting and tax solutions over the long run.

Find the Right Group Insurance Product for Your Business

Apart from cost-effective accounting solutions, your business also needs quality group benefits. At Group Enroll, we’ve helped countless business owners compare and pick group insurance products that meet their needs.

Whether you need extended health care, group dental insurance, group life insurance, or a group retirement savings plan, we can help you find the best possible coverage at the lowest possible rate.

Just fill out our quick quote form or email us at [email protected] to get started. You can also contact us by post at 10 Great Gulf Drive, Unit 5, Vaughan, ON, L4K 5W1.