How much money do you spend on accountants (for a small startup)?


10

For small startups of 3 or less owners:

  • How much money do you spend on accountants per year? What is a reasonable amount?
  • do you recommend "doing it yourself"?
  • does it matter the quality of the accountant? Do you think a "great" accountant will pay off much more than an "average" accountant?

Accounting Accountants Fees

asked Sep 29 '10 at 06:14
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Gush
53 points
  • I spent $2000 a year on an accountant that specialised in startups and they were terrible, so I taught myself how to do it and have never looked back. Several businesses and personal tax returns all done on simple spreadsheets and never had any issues with filing. When using accountant, always had issues, fines, etc, now no problem. My experience is certainly not typical (not all accountants are incompetent/crooked), but it is trivial to do yourself, if you are sensible. Saved me over $20,000 and lots of headache. – Steve Jones 5 years ago

4 Answers


15

We do all bookkeeping and payroll ourselves but spend between $1,500-$2,000/year on an accountant to do end-of-year filing. I strongly feel that a good accountant is a must for anyone doing business even if you are just starting out. There are several reasons:

  • Tax laws are complicated and a good accountant will stay on top of changes, requirements and deductions. They would have dealt with the IRS on many occasions and have a good knowledge of what works and what doesn't. Penalties for non-compliance can be steep (and sometimes criminal) and deduction rules are subtle and gray.
  • Because they deal with many different businesses they can often offer money-saving insights (e.g. your business spends a lot more on X than other clients).
  • When you get audited it's good to have someone to lean on that you trust and is already familiar with your business. Furthermore, using a professional provides "plausible deniability" which makes it harder to prove tax fraud.
  • Your time is better spent focusing on the business than figuring out the correct depreciation schedules for the company car.

In my experience a great accountant will pay off much more than an average accountant. I look for the following things:

  • Has experience dealing with small businesses (specifically in my case - S-Corps)
  • Is part of an established firm, at least 10 years in the community.
  • Returns my phone calls promptly (surprising how many do not). Even during tax season.
  • All filing on my behalf must be done promptly and ahead of deadlines.
  • Available for face-to-face meetings at least once a year.
  • Constantly strives to stay current with the tax law and able to put forth creative solutions to reducing my business' tax obligations.
  • A greater attention to detail than myself -- spot accounting mistakes on my end and not make any of their own.
  • Good command of the English language.
  • Must be honest and discreet.
  • Knows their own limitations and can admit when they do not know something rather than give incorrect advice. Bonus points if they subsequently research the topic and get back to me.
answered Sep 29 '10 at 07:22
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Oleg Barshay
2,091 points
  • I really like your list on the quality attributes. – John Bogrand 8 years ago
  • Agreed on all of the above, and similar to my experience. The one time I was audited it was really nice to have an accountant that handled it all. You need to double check and make sure that you and your accountant are in the same place as far as risk taking. Some accountants take more chances than others, all legally. I tend to be on the conservative side, and that's what I'd like my accountant to do. – Dror 8 years ago
  • Very good point about risk, Dror. – Oleg Barshay 8 years ago
  • thanks for the great info. – Gush 8 years ago

3

  1. Never do it yourself unless you are a trained accountant. See #2 as to why.
  2. A good accountant should pay for himself. I don't think you would need the top of the line, but I wouldn't go just average.
answered Sep 29 '10 at 06:45
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Martin
1,340 points

2

My current budget for accounting

  • $0
  • I do it myself but have a degree in finance. (not an accounting degree but very related)
Doing it yourself?

  • So consider expected revenue prior to deciding to bring in an accountant. The higher your expected revenue the more improtant it is that all of the accounting is correct. The less the money that is at risk the less important it is.
  • If the company is fully owned by you then the accounting can be primarily around taxes and not for splitting up equity.
  • If you don't know the legal rules for the jurisdictions that are relevent to where you are conducting business in then get an accountant.
Does quality matter for an accountant

  • If the business is large, complicated or very profitable then it matters a great deal.
  • The most significant measure of need for a quality accountat is business complexity.
    • International.
    • Physical and virtual presense.
    • Regulated industry
answered Sep 29 '10 at 07:11
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John Bogrand
2,210 points

1

We track expenses and income ourselves (just a couple transactions per month right now) and pay an accountant something on the order of $800 to preparer the tax paperwork.

When the tracking becomes a real diversion we will hire someone else to do it, but of course we want/need to know big picture stuff.

The tax prep and all the compliance, etc stuff is not useful for us to do and is a risk not worth taking in doing it yourself.

answered Sep 29 '10 at 07:33
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Tim J
8,346 points

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