When you’re starting with a new accounting firm, it’s easy enough to miss some of the fine print under the cost. However, a single price tag can be deceiving if you don’t know what it covers. It’s equally important to know how much you’re paying and to have a breakdown of everything you’re paying for.
While you may already know what the cost of monthly accounting will be, there still may be questions about exceptions and specific situations. One of the most common questions we get from small business owners, especially sole proprietors, is whether our monthly accounting fee includes the preparation and filing of personal taxes.
In this article, we’ll outline the types of tax returns we work with, what the cost for those can look like, and why sole proprietorships have a slightly different situation than other businesses.
Policy on Individual Tax Returns
For most businesses, the business’s taxes and the personal taxes of the owner are separate; this means separate tax returns as well. While we work with your business’s monthly accounting year-round, we’re not working with your personal accounting. We only prepare the personal taxes of our business clients.
As a general rule, we want to focus on the needs of small business owners. We want our accountants to be available to help our business client base and to not be too busy with preparing the taxes of any individual who contacts us.
If you’re a client and you decide you want to have CSI prepare and file your individual return, we can absolutely do that! However, it will be charged on an annual basis, separately from your monthly accounting fee.
Cost for Individual Tax Returns
Did you know that there are hundreds of tax forms that can potentially go into a tax return? That’s why we use “per-form pricing”: so you’re charged for the work that’s gone into your own return - no more, no less.
The personal tax returns of a business owner are going to be more complex than those of an individual who does not own a business. A package for individual tax return forms can range from about $400 to over $1000.
This is certainly not always the cheapest option, but it also includes:
Full audit representation
Support throughout the year
An avoided headache of working with an annual tax accountant outside of CSI Accounting & Payroll
Some of our small business owner clients choose to have us file their personal taxes, and some do not.
The Exception: Sole Proprietorships
Sole proprietorships are a little bit different than other entity types. They aren’t incorporated, tend to be smaller businesses, and don’t have a lot of risk. As these businesses grow, they may want to become a different entity type to remove their personal assets from the associated risks, as little as they are. We often advise businesses through entity selection and change processes.
The part that stands out with a sole proprietorship is that there’s no legal difference between the business owner and the business itself. That means the business taxes are included in the personal tax forms of the owner. Because of the combined tax forms, many of our new clients who are sole proprietors want to know if their personal tax return fee is included in the monthly accounting fee.
To answer this simply, sole proprietorships do essentially get a small discount on their personal returns. This is because we don’t charge the owner for the business-related forms come tax season, since that portion is included in the monthly accounting fee. When it comes time for a sole proprietorship business owner to file their personal taxes, we only charge them for the personal forms.
You may have arrived at this article without a confident knowledge of the correlation between personal taxes and business monthly accounting. If you did, we hope that you now know that the fees are separate for entities that separate the business and the owner.
As a business client of CSI, if you’d like to extend our work to cover the preparation and filing of your personal taxes, you can, on average, expect to pay between $400 and $1000 annually. This is a separate fee from your monthly service cost.
Sole proprietorships, on the other hand, are set up so that the business and personal taxes are combined. Therefore, for sole proprietorships, part of the personal taxes goes into the monthly accounting fee for the business.
Now that you know what to expect, you should feel more confident about scheduling a free consultation so we can review a full list of what we need in order to give you an accurate accounting quote.
This article was composed by a member of our staff who interviewed our experts to get the facts straight. Any uncited information found here came straight from a knowledgeable accountant or payroll specialist.