How Much Does a CPA Cost

A CPA typically charges from $150 to more than $400 per hour. But you could save money with these other payment types.

Accountant fees can be hefty, so don't blindly accept the first quote.

Use this guide to understand how CPAs charge, what influences their rates, and alternative services that might fit your needs.

Payment Types and Average Cost

Some CPAs charge hourly or by form, while others ask for a fixed fee. The average cost for each payment type varies widely, but you can estimate it through the following details.

Hourly Rate

Range: $50 to $743.13+^[1]

Hourly billing is the most common payment type for CPAs. It accommodates a wide range of services and client needs, from simple tax returns to complex financial planning. It also allows CPAs to charge more for time-consuming tasks.

According to the 2020-2021 survey by the National Society of Accountants, the hourly rate can be as low as $50 for elderly care services.^[1] This involves financial management for elderly clients or advising on estate planning.

It goes as high as $743.13 per hour for federal or state tax returns and other tax services. However, that's rare. The typical hourly rate for tax returns and payroll services is around $103 to $250.^[1]

Fixed Monthly Fee

Range: $100 to $2,500+^[1]

A CPA may charge a fixed monthly fee regardless of how many hours were worked for the client. Also called a flat or retainer fee, this option could be more beneficial to clients because it provides more predictability.

You can get tax services for as low as $100 per month. However, accountants may charge $2,500 or more to audit financial statements.^[1] The higher your gross income is, the higher the CPA fixed fee will be.

Keep in mind that you might still pay the monthly fee even if the accountant didn't accomplish any task. So, this payment type may not be the best option if you only need seasonal services.

Per Form Fee

Range: $50 to $1,000+^[1]

Some accountants charge per tax form, like Form 709 for gift tax or Form 1120-S for S-corporations.

A simple Form 940 for Federal unemployment tax could cost as low as $50. However, more complex forms, like Form 706 for estates, could cost at least $1,000.^[1]

Consider choosing a per-form payment type over an hourly rate if you only have simple tax returns done annually. This prevents disputes over the number of hours worked.

Factors That Affect CPA Fees

Some accountants charge higher rates than others. But based on the following factors affecting CPA fees, that isn't necessarily bad.

• CPA experience and expertise
  CPAs with more experience are more likely to charge higher fees. Specialization also matters.

  For example, forensic accountants may charge double the usual rate ($300 to $500 per hour) to assist with litigation-related finances.

• Geographic location
  Differences in the cost of living, market dynamics, and local demand also affect CPA fees.

  Cities like New York, Los Angeles, San Francisco, and Boston are most likely to have the highest CPA fees because they are major business and financial hubs.

• Complexity of tasks
  Tasks like auditing financial statements require meticulous attention to detail due to strict standards. Additionally, complex tasks may need advanced software for data analysis.

• Business structure
  CPA firms often charge higher fees than individual freelancers. This is due to the higher overhead costs of running a firm, such as office space, staff salaries, and technology systems.

  In a partnership, fees can vary significantly depending on the partnership's size, prestige, and specific expertise.

• Frequency of engagement
  An initial engagement might be more expensive since the CPA is still learning about your financial situation. With consistent work, the CPA becomes familiar with your records, reducing time spent on basic tasks.

  CPAs might offer discounted hourly rates or value-based packages for regular clients.

Benefits of Working with a CPA

Hiring an accountant is not cheap, nor should it be. Here's what a CPA brings to the table:

• Years of education and training
  CPAs undergo rigorous education and exams. Many hold specialized certifications too. You're paying for the expertise they gained through years of extensive training.

• Peace of mind
  Tax season and complex financial tasks can cause anxiety. Knowing your finances are handled correctly offers a sense of security that's hard to put a price on.

• Cost-saving strategies
  Time is money. An accountant frees you to focus on growing your business. Plus, they can help save money by applying tax reduction strategies.

• Professional liability insurance
  Also called Errors & Omissions insurance, it typically covers financial damages to clients like missed deductions, penalties caused by an error, and having to redo filings.

CPAs can also help with financial planning, like helping you see potential financial gains and losses.

Alternatives to CPA Services

The following alternatives don't compare to the high-quality services that a CPA can bring. However, they might just do if your primary goal is to find cheaper services:

• Accounting Software
  You can subscribe to accounting software like QuickBooks, FreshBooks, and Xero. It helps you handle bookkeeping, invoicing, and some basic tax preparation.

• DIY Tax Filing
  Ideal for freelancers and small business owners, online tax software helps complete and file tax returns. Many use TurboTax, TaxSlayer, and TaxAct as they provide easy-to-follow instructions.

• Tax Preparer
  A tax preparer is not a certified public accountant, but their services will do if you only need basic tax preparation. They may also offer cheaper services than a CPA.

• Bookkeeper
  A bookkeeper helps with financial recordkeeping. They make sure that the nuts and bolts of your finance records are accurate, categorizing transactions into accounts. They typically charge much less per hour than CPAs.

Bottom Line

CPAs offer valuable expertise and experience, but you shouldn't pay more than you have to.

Before you commit to a CPA, consider how different fee structures might suit your needs better. Always weigh their rates against the potential costs and benefits they bring to your business.

References