If you have a history of working with annual tax accountants, then you know that they usually bill by the hour for tax work (and bill by the minute for answering your questions).
So, why don’t monthly accountants do the same? After all, accounting is accounting, right? Not quite.
At CSI Accounting & Payroll, we’ve specialized in monthly accounting for over 50 years. That includes meeting with thousands of small business owners who often wonder why we bill differently than their annual tax accountants do. Here are the questions we receive the most about the topic:
- If annual tax accountants bill hourly, why don’t monthly accountants?
- How do monthly accountants charge for their services?
- Do monthly accountants charge the same for back taxes?
Why Only Annual Tax Accountants Bill Hourly
Annual tax accounting is a very short-term service each time you use it. Billing hourly is simpler when there aren’t a lot of hours to count.
Monthly accountants work with your books year-round, meaning there are a lot more hours to count.
Even if monthly accountants did bill by the hour, there can be so many fluctuations in work each month that you wouldn’t know what your accounting bill would look like. This can cause cash flow issues or an inability to efficiently budget.
Monthly accounting firms like CSI Accounting & Payroll determine your set monthly fee by considering factors that influence how much time we might spend on your books. In a sense, it’s like billing hourly - except it’s based on an estimate of how much work your business requires.
The following section goes over the details.
How Monthly Accounting is Billed
The factors that are used to price monthly accounting include your company’s accounting activity and the complexity of your financial statements.
Monthly accounting is a much more inclusive service than annual tax accounting - so just comparing price does not compare value. It’s like having a bookkeeper, an annual tax accountant, and a consultant all in one. Monthly accounting includes:
- Business tax work (including year-round strategy)
- Monthly profit and loss statements
- Monthly balance sheets
- Monthly bank reconciliation
- Sales tax filings
- Audit representation
- Unlimited one-off questions
How Back Taxes Are Billed
Back taxes are billed the same way that each month of monthly accounting is billed. That means that the basic formula to determine the price of your back work is:
Back Work Price = Number of Prior Months to Work On * Monthly Fee
Some people ask, “Why would my back work fee be the same as the monthly accounting service? If this portion is a short-term service, why can’t it be billed hourly?”
To put it simply, we don’t want time to be a factor in your fee here. One of the worst things we can do is rush this critical process in an attempt to minimize a fee that’s based on hours, so instead, we base the fee on what your typical month with CSI would look like.
This is a great deal, considering this portion of our service is extremely time-consuming for our onboarding team to get to know your business and ensure your records are correct. If we charged hourly, the price would be much higher in many instances.
With back work, we are doing what we can to guarantee audit-proof books moving forward, and we’re also in much more frequent outbound communication in this phase (although you can reach out to us as much as you like even after onboarding is done).
Know What Accounting Fee to Expect
Ultimately, why do monthly accountants not charge hourly when annual tax accountants do?
It all comes down to the length of service, the amount of work required, and how the amount of work can fluctuate each month and within the onboarding period. Plus, with a set monthly fee, you’re better able to monitor your cash flow and your budget.
If this sounds good to you, why not consider working with CSI Accounting & Payroll? We offer services and advice beyond what an annual tax accountant can, including better chances to minimize your taxes and make informed business decisions. Click the button below for a free consultation:
Not ready to talk? That’s okay! First, learn more about the advice monthly accountants can offer you:
