How much does a CPA cost? Understanding the fees and services

Hiring a certified public accountant (CPA) is a smart move for small business owners. Along with tax preparation services, they provide expertise in tax and finance regulations and compliance, business growth, and financial planning, and make sure businesses meet the reporting requirements of lenders and government agencies. A CPA will make tax season easier while helping business owners avoid IRS audits. 

If you’re growing your business, wondering how you’re going to handle your company’s taxes this year, or need assistance with legal or financial issues, a CPA will help. 

Key takeaways

• Certified public accountants are experienced, educated accountants who have passed the Uniform CPA Exam, meet specific continuing education and ethics requirements, and have an active state license.
• Factors that may affect CPA costs include location, experience, services provided, tax return complexity, and whether specialized expertise is required
• On average, the cost for professional tax preparation ranges from $200 to $1,000 or more, and hourly fees can range from $100 to $500 or more
• Along with tax preparation, businesses can also hire CPAs for tax planning, financial consulting, and business management assistance
• Staying organized, researching your options, and understanding accountant fee structures will help you save when hiring an accountant
• Tax preparation software that organizes financial data, receipts, and reports in one place makes life easier for small business owners and their accountants.

Table of contents

• Introduction to CPA costs
• 7 Factors that affect CPA costs
• Average fees for certified public accountant services
• 3 Ways to get the most out of your money when hiring a CPA
• Tips for saving money when hiring a certified public accountant
• FreshBooks can help make small business tax filing easier

Introduction to CPA costs

A certified public accountant (CPA) is a highly educated and experienced accountant who has passed the Uniform CPA Exam, met specific continuing education and ethics requirements, and obtained an active license from the state in which they work. CPAs are held to high professional standards, and may occupy specialized roles like business tax, auditing, or forensic accounting. 

The cost to hire a CPA varies widely, ranging from a few hundred to several thousand dollars. By understanding their average fees and the services they provide, small business owners and individuals can make informed decisions about their tax services and financial planning needs. 

Hiring a CPA can provide peace of mind to business owners and sole proprietors, helping ensure compliance with tax laws and regulations. Still, it’s important to weigh the benefits of paying a higher hourly rate for expertise vs. saving money by hiring a less experienced tax professional.

7 Factors that affect CPA costs

The cost to hire a CPA is influenced by several factors, including:

1. Location

If an accountant is based in a rural community or small town with lower costs of living, they’ll likely charge lower rates than somebody working in a large metropolitan area. This is because the costs of running their business are passed on to the customer. 

In some states, the tax structures and tax regulations also affect CPA business practices, and they may charge more as a result.

2. Experience

As a CPA gains expertise and specialized knowledge, their services become more sought after, giving them a competitive advantage that allows them to charge more for their services. 

Accounting experience provides financial insights and extensive knowledge of tax laws, giving them the ability to handle complex cases, lower business tax bills, and provide other benefits that mitigate their higher hourly rates.

3. Services provided

A CPA will charge more for more complex work. If the job requires specialized knowledge, complex financial statement reviews, or ongoing services, it’ll cost more than simple tax returns. Larger businesses will pay more in CPA fees than small businesses due to the scope of work involved.

4. Type of services needed

Different types of services, like professional tax preparation, tax planning, auditing, or financial statement preparation, can also impact CPA costs. Some may be able to charge a flat fee, while others will charge an hourly rate for CPA services. 

5. Tax return complexity

The level of service required by the accountant will determine what they charge. This might include charging more if they spend extra time looking for receipts, verifying earnings, or providing corporate tax returns or detailed financial reports. 

6. Business vs. individual taxes

Individual taxes are usually simpler than business taxes, and the bigger the company is, the more complex the tax structure tends to become. Therefore, a CPA will charge different fees based on whether it’s for individuals, small businesses, or a big company. 

7. Specialized expertise

The CPA’s specialized expertise in areas like tax law, accounting, or finance planning can influence their fees as well. In most cases, specialized services involve in-depth, complex work that takes additional time and effort, and CPAs trained to deal with these cases have undergone years of education and certification, bringing high value to the job. 

Knowing a specialized accountant is working on complex business tax returns or legal issues brings better peace of mind to business owners, knowing the job will be done right. All of this value puts specialized CPAs in high demand, so they may charge more to reflect the current market value of their work. 

Average fees for certified public accountant services

On average, the cost of tax preparation by a CPA ranges from $200 to $1,000 or more, and hourly fees can range from $100 to $500 or more per hour. They may provide a range of professional services, like: 

• Auditing
• Financial statement preparation
• Consulting services
• Federal and state tax preparation
• Representation in the case of an IRS audit

Common CPA fee structures are:

1. Per-service fixed fees

Per-service fees are fixed, set prices based on the complexity and scope of each type of service the CPA provides. They may have minimum charges, with add-on services available for an additional fee.

2. Hourly fees

Some CPAs charge by the hour, offering different hourly fees for different services, based on the client they’re working for, their expertise level, and the complexity of the job.  

3. Retainer fees 

If a company requires ongoing CPA services, some accounting professionals will charge a monthly, quarterly, or annual retainer fee, providing service to clients whenever they’re needed. 

3 Ways to get the most out of your money when hiring a CPA

To maximize the value of hiring a CPA, it’s essential to understand the services provided and the upfront costs associated with those services. By knowing what CPAs offer, their fee structure, and what the business needs, it’s easier to make a better-informed decision when choosing an accountant.

Hiring a CPA gives you access to in-depth knowledge of tax structures, business accounting processes, and more. They can also help you with:

1. Tax planning strategies

CPAs can offer guidance on tax planning strategies to minimize tax liabilities and maximize deductions. Tax planning with a CPA provides an opportunity to see what your tax position will be using their extensive knowledge of legal ways to benefit at tax time, like:

• Optimizing tax preparation timing
• Strategically grouping deductible expenses together
• Knowing about the most recent legislative changes 
• Helping businesses select the most advantageous business structure
• Identifying tax-efficient investment opportunities
• Applying an in-depth understanding of tax code allowances
• Proactively applying strategies to minimize the tax burden
• Integrating technological advancements like financial software for more efficient data collection and reporting. 
• Navigating international tax considerations and foreign tax credits

CPAs also work to stay up to date on legislative changes, so they’re informed on any legal changes to state and federal taxes. Tax laws are always changing, making it challenging for the average business owner to remain knowledgeable about the most current advancements.

2. Financial planning consulting

While accountants can’t take the place of a good financial planner, they can help by producing specialized accounting reports and financial statements like cash flow statements, income statements, and balance sheets. They can provide helpful analysis to identify trends and areas of weakness and offer expertise that’s crucial for creating a comprehensive financial plan, helping with business valuations, and building financial projections. 

3. Business management 

CPAs help with business management by:

• Creating detailed business plans 
• Generating current financial projections
• Helping to secure funding and attract investors
• Forecasting future revenue, profits, and expenses
• Helping with cash flow issues
• Managing debt
• Restructuring the business

By taking advantage of these services, individuals and businesses can ensure they are getting the most value from their accountant. 

Tips for saving money when hiring a certified public accountant

Budgeting for tax preparation costs can be difficult for individuals, self-employed folks, and small business owners. There are some ways to save money while still receiving professional help finding the best tax deductions when filing a tax return. To reduce the cost of hiring a CPA, individuals and businesses can take several steps, such as:

1. Organize records ahead of time

The more receipts, detailed records, and paperwork provided up front, the less time the CPA has to spend looking for important information. Using accounting software that automatically compiles and categorizes this data for you year-round will make this type of tax prep easier for business owners. 

2. Research your options

Remember, just because a tax accountant is the most expensive in town doesn’t always mean they’re the best for your unique needs. Conversely, it’s also not wise to go with the cheapest option without doing your research.

Don’t just choose the first accountant that shows up on your internet feed. Dig deeper, and make sure they have the education, licensing, experience, and training required to do the job you need them to do. Due diligence now will save you a headache later. 

3. Understand the accountant’s fee structure

The average CPA costs vary wildly depending on where you live and what you’re hiring them for. You may be able to hire an accountant for a specific service at a flat rate, or they may offer package deals or discounts for bundled services.

Learning the payment structure and billing methods of a CPA can help business owners make informed decisions when choosing their accountant.

FreshBooks can help make small business tax filing easier

Hiring a certified public accountant for small business tax preparation is smart, and so is using bookkeeping and accounting software to keep financial records and data organized. FreshBooks is a cloud-based accounting software designed to automatically generate professional financial reports, including profit and loss reports, balance sheets, and more, saving you (and your accountant) valuable time.

Stay organized with FreshBooks, using helpful features like automatically categorized expenses and easy-to-use receipt capture and storage. Your CPA will appreciate the streamlined access to your company’s financial reports, up-to-date business health insights, and access to real-time data that makes it easier for them to provide timely financial advice. Try FreshBooks free today, and make your small business tax preparation easier than ever.

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