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How Much Should a Small Business Pay For Accounting?

The cost of accounting is determined by the size of your business, its sector, and the bookkeeping method used. While every firm is unique, there are typically small business accounting charges and expenditures. Do you think you’re paying too much for accounting?

In 2015, the nonprofit organization SCORE compiled information on small business accounting expenses. The majority of small company owners spend at least $1,000 each year on accounting administrative charges, internal costs, and legal fees, according to SCORE.

This is how it’s done: according to SCORE, the most common charges are as follows:

  • 23% spend $1,000 or less
  • 31% spend $1,000 to $5,000
  • 18% spend $5,000 to $10,000
  • 12% spend $10,000 to $20,000
  • 16% spend $20,000 or more

According to the poll, the average accounting costs for small businesses range from $1,000 to $5,000. Don’t forget to include accounting fees into your budget if you’re a new business owner. It may be time for a veteran owner to reassess accounting expenses if she’s new to the game.

Other Costs to Consider

Not just administrative costs and accountant fees are included in accounting expenditures. You should also think about how accounting will affect you and your time.

The SCORE study found that 40% of small company owners believe bookkeeping and taxes are the most difficult aspect of running a firm. That is not an unfounded feeling.

The following are some of the reasons why entrepreneurs dislike bookkeeping and taxes:

  • Financial cost (47%)
  • Administrative headaches and time (13%)
  • The complexity of compliance (13%)
  • Changing regulations and confusion (10%)
  • Paperwork (8%)
  • The inequity of the tax code (8%)

While you may believe your attitude toward bookkeeping is unimportant in comparison to cold, hard cash, it has an impact on your company. If accounting makes you miserable, it might spread throughout the rest of your business. Your capacity to command staff, serve clients, and make judgments may be affected.

It’s also worth considering your time when evaluating accounting costs. Accounting work does not create profit. The less time you put into bookkeeping and taxes, the more time you have for the development of your company.

According to SCORE, most small business owners spend at least 41 hours each year on tax preparation.

The study breaks down the time spent on tax preparation as follows:

  • 40% spend over 80 hours
  • 18% spend 41 to 80 hours
  • 15% spend 21 to 40 hours
  • 28% spend less than 21 hours

You don’t want to spend the bulk of your day dealing with accounting necessities. However, you should make the time you devote to accounting worthwhile. To record transactions quickly, use a simple program solution. Hire an accountant for difficult jobs if necessary. Establishing a balance between time and money spent on your books will aid in keeping accounting expenditures in check.