How accountants charge and how to compare proposals

Accountants' fees can be hard to compare because firms package their services differently. One quotes a monthly fee that covers everything, another quotes per return, a third charges by the hour. The only way to compare fairly is to get each proposal in writing and check what it actually includes. This guide explains the common pricing models, what drives the price, and how to read proposals side by side. It is general information, not financial or tax advice.

The main pricing models

Fixed monthly fee

Many firms serving small businesses now offer packages paid monthly. A package might cover bookkeeping or a review of your bookkeeping, sales tax returns, payroll for a set number of employees, year-end accounts, the business tax return and the owners' personal returns, plus a certain amount of advice.

The advantages are predictable costs and an accountant who is more willing to take a quick question without starting the clock. The risk is paying for services you do not use, or finding that something you assumed was included is charged extra.

Per return or per job

Some accountants charge a set price for each piece of work: one fee for a personal tax return, another for year-end accounts, another for each sales tax return. This suits sole traders and people with simple affairs who need help once a year. Ask what the price assumes about your records and what happens if the job turns out to be bigger.

Hourly rates

Hourly billing is more common for one-off work such as tax investigations, catching up on years of missed filings, complex advice, or tidying badly kept records. It is fair when the scope is genuinely uncertain, but ask for an estimate and an agreement that they will tell you before they go over it. Ask who will do the work, because junior staff are usually billed at lower rates than partners.

Value or tiered pricing

Some firms offer tiers, such as a basic compliance package, a mid-level package with regular reports, and a premium package with meetings and planning. Others price based on the value of the advice, for example a project to restructure the business. Ask exactly what each tier includes and whether you can move between them.

Free consultations and one-off fees

Many accountants offer a free first meeting. Some also charge a one-off onboarding fee for setting up software, taking over from a previous accountant or catching up on records. Ask about this up front so it does not appear on the first invoice as a surprise.

What drives the price

Two businesses with similar turnover can get very different quotes. The usual factors are:

• Business structure. A company, corporation or multi-owner LLC generally has more filings than a sole trader.
• Number of transactions. More invoices, receipts and bank lines mean more bookkeeping and review.
• State of your records. Clean, reconciled books in good software cost less to work with than a box of receipts.
• Sales tax. Being registered for VAT, GST or HST, or collecting sales tax in several US states, adds regular returns.
• Payroll. The number of employees and how often they are paid.
• Complexity. Property, investments, foreign income, stock options, crypto assets, or several businesses.
• Locations. Operating in more than one state, province or country.
• Catch-up and rush work. Overdue returns, missed deadlines, and work brought in just before a filing date.
• Level of service. Regular meetings, management reports, forecasting and tax planning cost more than compliance only.
• The firm itself. Location, size and the seniority of the staff doing your work.

How to get proposals you can compare

Give every firm the same information. A short written brief works well:

Ask each firm to reply with a written proposal or draft engagement letter listing every service and its price.

Comparing proposals line by line

Put the proposals in a simple table. Down the side, list every service you need. Across the top, the firms. Then check each one:

• Is each service included, extra, or missing? A cheaper proposal that leaves out payroll or personal returns is not cheaper.
• What are the limits? Packages often cap transactions, employees, meetings or advice time. Find out what happens when you go over.
• Who does the bookkeeping? Some proposals assume you do it; others include it.
• Is software included? Some firms include the subscription, some pass it on, and some expect you to pay directly.
• How are questions handled? Unlimited email and phone support, or charged by time?
• Tax authority enquiries. Is help with an enquiry or audit included, or charged separately? Some firms offer fee protection insurance for this.
• Price changes. How and when can the fee rise, and how much notice will you get?
• Leaving. What notice is required, and will they hand over your records and cooperate with a new accountant?
• Qualifications. Check the credentials described in hiring a small business accountant.

The lowest price is not always the best value. Response times, clear explanations and an accountant who knows businesses like yours can matter more than a small difference in fee. The same side-by-side habit is useful for any service; our guide to getting quotes shows it applied to trades.

Keeping your bill down

• Keep your records current in decent software, with bank feeds connected.
• Send everything requested in one batch, well before deadlines.
• Consider a bookkeeper for routine work and keep the accountant for review and advice; see bookkeeper vs accountant.
• Group questions instead of sending them one at a time if you are billed by time.
• Review your package once a year and drop services you no longer need.