Can My Business Afford an Accounting Service?

Have you ever asked yourself the question, can my business afford an accounting service?

My guess is yes. Generally, the small business owners we encounter want to outsource the bookkeeping, accounting, payroll, and tax preparation for their business.

In fact, we can’t think of a single business owner who loves doing these tasks or feels it is a good use of their time. But does it make financial sense to work with a firm like TMA Accounting?

After this article, you should easily be able to answer this question for yourself.

Hiring an accounting service partner

The answer to that question is “It depends”.  It might not make sense to hire an accounting firm if your business is very small and/or has few prospects for real growth.  For example, it doesn’t make sense for a teenager who mows lawns for $100 per week during the summer.  Our fees start at around that amount.

To determine if it makes financial sense for your business, start by answering the following questions

• Does your business have significant revenue and profits?
• Do you and others depend on your business for their livelihoods?
• Do you want to grow your business?
• How important is it to safely minimize taxes?
• How important is it that your business is compliant with tax and payroll laws?
• How important is it to minimize the stress around filing returns and paying taxes?
• Are you comfortable with doing these tasks yourself or hiring and supervising an employee to do them?

Depending on your answers to these questions, it may not make sense to do these tasks yourself or to hire an employee to do them.

In fact, many of our clients are so happy with their decision they tell us they wish they had hired us sooner.  More than 95% of our clients continue with our services until they sell or close their business.

In general, we find that most small businesses can afford to outsource much of their bookkeeping, payroll, and taxes for between one- and two percent of total revenue.

Traditional accounting firms and hourly billing rates

Most accounting firms charge by the hour and each of the firm’s employees may have a different billing rate depending on their abilities - qualifications, experience, etc. Billing based on hourly rates works well for accounting firms because there’s no requirement for them to assess the amount of time a task will require before starting it.

Rarely will a traditional accounting firm provide a quote that is fixed fee or based on the actual value of the services they plan to deliver.  Instead, they give an “estimate” of the time and fees.

We’ve found that this approach does not work very well for small businesses because:

• It doesn’t allow the business owner to adequately budget for the cost of services.
• It doesn’t require the accounting firm to be particularly efficient.  The more time the service requires, the more they like it.

Accounting services and fixed fees

Over the years, we have developed a method of providing small businesses with services based on fixed-fee pricing.  Yes, you read it right.  We don’t charge based on hourly billing rates. If you want to learn more about how we determine prices for our services, you can read more here.

We determine our pricing based on the following factors:

• The unique service needs of each business client.
• The volume of bookkeeping and payroll activity.
• The complexity of bookkeeping and payroll activity.

The client’s willingness and ability to participate in our process and to streamline their processes.

Most of our small business clients view our services as an investment, not a cost, because it pays dividends:

• It allows them to focus on higher-value tasks, such as growing the business or time with family.
• Helps ensure that bookkeeping, payroll, and taxes are done correctly and kept current.
• Minimizes stress around the question, “How much tax will I owe, and when?”
• They see value in our fixed-fee billing arrangements.

Whether any business can afford to invest in these results depends on profitability and cash flow.  We’re always happy to meet with business owners to help them decide what services they need and how to fit within their budget.

So, what’s next? Check out our services and who we’re a great fit for. Then, you can start a conversation and rest easy knowing you have an accounting service partner.