What Is A Small Business Accounting Company?

Small business accounting firms help their client organizations maintain organized records of financial transactions such as sales, assets, expenses and liabilities.

Small business accounting companies can also provide additional layers of accounting functions to accommodate a growing business’s expanding needs.

Besides general journal and ledger bookkeeping, the best small business accountants also perform account reconciliation, payroll processing, monthly statement preparation and tax services.

When it comes to bookkeeping, best small business accountants, typically work with three types of accounting reports:

  • Balance sheets: Assets, liabilities and shareholders’ equity that the company owes.
  • Income statements: Profit and loss statements that summarize revenues and expenses over a specific period. They focus on revenue and gains, expenses and losses and net income.
  • Cash flow statements: They refer to the amount of money entering and leaving your business and focus primarily on liquid assets (cash and equivalents). The main components of a cash flow statement include operating, investing and financial activities

Each of these records different values and provides unique insight into one’s business financial health. For this reason, working with a small business accounting company can help you make better business decisions and/or improve any aspect that impacts your company’s budget.

Different aspects of small business accounting​
Small business accounting firms provide various layers of accounting functions​

What Do Small Business Accounting Firms Do?

For business owners that lack accounting skills or simply dislike crunching numbers, outsourcing small business accounting firms is the preferable option.

While some companies may prefer hiring a sole accountant, most small businesses opt for outsourcing accounting services firms, usually around the times they do their taxes. But business owners can benefit in a lot of ways from expert accountants trained to analyze the financial data, report and make recommendations that can result in the business becoming more profitable.

Besides extensive financial expertise and tax knowledge, the best small business accountants can also assist with:

  • Advising on how best to structure a company before launching
  • Consulting on the financial details of your business plan
  • Identifying potential cost savings in operations
  • Managing payroll
  • Developing a financial safety net in case of catastrophic events or struggling growth
  • Liaising with the IRS in the event of an audit

The duties of small business accounting firms can vary from company to company, but they are generally responsible for:

1. Data Management

Small business accounting firms ensure your financial data is properly stored, updated and managed for accurate reporting to owners, investors and the government. Best small business accountants also ensure that proper procedures are in place for data entry.

2. Financial Consulting

Besides providing financial data, small business accountants can be your best resource for determining the future of your business. Whether they offer tips on how to proceed with spending in the next quarter, evaluate overall expenditure, or discuss options for credit or tax deduction.

3. Regulatory Compliance

Small business accounting firms can handle all of the usual headaches that affect your business, including rules and regulations, going through an audit or tax period and ensuring that your income and expense reporting follow applicable state and federal laws.

Looking for the best market research agencies?

What Are Different Types Of Small Business Accounting Companies?

Depending on their accounting and business needs, small to midsize companies can opt for different types of accounting firms:

1. Public Accounting Firms

These firms typically employ Certified Public Accountants (CPAs) that work in the aforementioned areas of audit, tax and management consulting. Although they don’t exclusively offer local CPA for small business ventures, their areas of expertise, according to the US Bureau of Labor Statistics, include:

  • Examining financial statements in compliance with laws and regulations
  • Preparing tax returns
  • Reviewing accounting procedures
  • Analyzing financial operations
  • Cutting costs recommendations, enhancing revenue and increasing profits
  • And more

2. Tax Accounting Firms

As the name suggests, tax accountants focus on tax preparation and planning for companies of all sizes. They must keep up with current tax laws that may differ from Generally Accepted Accounting Principles (GAAP).

3. Bookkeeping Service Firms

Small business accounting firms that specialize in bookkeeping services complete fundamental accounting tasks for small to midsize companies. These services may include accounts receivable, accounts payable, bank reconciliation, financial statement preparation and more. Additional services offered are typically payroll, tax preparation and more.

How Much Do Best Small Business Accountants Charge For Their Services?

Since the emergence of various business accounting software on the market, many small business owners are looking to cut costs by omitting the need for a dedicated accountant.

Even though said software is fairly helpful it can’t provide invaluable financial insights businesses might miss out on – which is exactly what small business accounting firms offer.

That being said, how do you know whether you should actually hire one or not, or how much does local CPA for small business cost?

Before we delve deeper into business needs for them, it’s time to evaluate the budgetary needs for outsourced accounting services.

Knowing the exact type of small business accounting you need will help you determine the price you should pay. The rates for each may differ wildly and the total charge reflects the chosen specialties as well as the amount of work needed.

The cost also depends on the providers. While most charge by the hour, or offer a flat rate, some charge based on the factors like business revenue.

Most small business accounting firms charge anywhere between $50 and $300+ per hour. The rates may be lower or higher, depending on the type of service. Flat fees start at around $1,000+ upwards.

Why Should You Hire A Small Business Accounting Company?

If a business is in a position to grow or aims to cut costs, partnering with a small business accounting firm is an excellent choice. The main advantages of this partnership are that:

1. It Frees Up Your Time

If you don’t want to spend your time handling bookkeeping, payroll processing and tax strategy, opting for small business accounting services is the best course of action. Delegating these tasks to experts leaves you with more time and energy to focus on core operations and business growth.

2. It Saves You Money

The sheer cost of hiring a small business accounting company is the main reason why a lot of business owners are tending to accounting in-house, especially if the profit margins are already thin.

However, outside help can ultimately cut your costs. How? Best small business accountants can help you identify wasteful expenditures, as well as opportunities for saving. They can evaluate every element of your business to make sure it’s cost-effective, not to mention that professionals mitigate the risks of making expensive mistakes.

3. It Improves Your Reputation

For small businesses that are still finding their place in the (oversaturated) market, accounting firms can add to you’re their professional image as they bring a healthy dose of order and organization to your business. Invoicing on time and timely follow-ups about financial matters can go a long way when it comes to business reputation.

4. It Streamlines Your Tax Time

Having in mind how often tax codes and regulations change and how confusing they can be, it’s easy to make mistakes. Employing small business accounting services mitigates the risk of tax issues that can hinder your growth, or worst-case scenario, bankrupt your business.

5. It Provides More Than Accounting Advice

There are numerous accounting firms, but the best small business accountants represent wells of knowledge that you can safely drink from. As we’ve seen, they can do far more than balance your books and file your taxes.

Knowing your business, your preferred accountants can help you anticipate challenges and prepare for them accordingly and make recommendations custom-tailored to your business and goals.

How To Choose The Best Small Business Accounting Firm?

Finding the right small business accounting company for your business needs can be challenging. Whether you own a business requiring full-service accounting or one-time tax advice, choosing the right firm is essential.

When reviewing the prospective partners be sure to:

1. Know Your Business Needs

What kind of accounting service do you need? If you seek monthly financial statements and handle bookkeeping tasks you can hire a non-certified accountant. But to get the proper tax planning advice, be sure to hire a local CPA for small business.

2. Look For Relevant Experience/Expertise

Hiring a company that works with small to midsize businesses is a given, but it can be a huge bonus if the selected partner works (or has worked) with businesses in your industry as they have the related challenges experience to draw from.

When considering small business accounting firms, it is crucial to find one with experience preparing tax returns and financial documents for companies of a similar size and revenue to yours.

3. Evaluate Their Reputation

No business can afford to compromise on quality. This, however, extends to more than their services and/or products. Reputation is the third core pillar every company should strive to strengthen.

In today's inter-connected world, it isn’t exactly hard to review the history of your prospective accounting partner. So, when selecting one, be sure to read through all the reviews, testimonials, or even connect with some of their past clients and note their experience.

4. Ask About Accounting Software

If the prospective partner ticks all of the above-mentioned points, the only thing you’re left with is to check the quality of their resources, e.g., what accounting software they’re using. You’ll also want to partner with the accounting firm that can train you how to use said software and set up your initial chart of accounts,

Additionally, more and more small business accounting firms are switching to cloud computing for its many benefits, including data security, remote data accessibility and flexibility. This can streamline the process of financial reporting, data entry and more, not to mention that you would want your accountants to be available to discuss urgent matters at any time, which cloud services also enable.

We've ranked the top staffing agencies.

10 Questions To Ask Small Business Accounting Firms Before You Hire One

Before selecting a small business accounting company, make sure to gather additional information about your prospective partner approach, quality of work, etc.

Ask them these questions:

  1. What Services Do You Provide?
  2. How long have you been in business?
  3. How do you typically communicate with your clients?
  4. Will my account be handled by a single person or a dedicated team?
  5. Is everyone who will work on my account a certified CPA?
  6. Can you provide feedback on my current accounting system?
  7. What steps will you take to prepare me for tax season?
  8. What challenges particular to my industry concern you most?
  9. Which, if any, accounting programs or systems do you recommend?
  10. What technology do you use to share documents and updates with clients?

Takeaways On Best Small Business Accountants

Small business accounting firms help small to midsize ventures maintain organized records of a business’s financial transactions such as sales, assets, expenses and liabilities, as well as services like:

  • Financial consulting
  • Regulatory compliance
  • Managing payroll
  • Tax planning and preparation
  • And more

There are many reasons why you should hire a small business accounting company for your company, chief of which are:

  • They save you time and money
  • They improve your reputation
  • They have tax expertise
  • They offer business/financial invaluable advice

When selecting your next accounting partner be sure to:

  • Know your business needs
  • Check their experience/expertise
  • Read through their reviews
  • Check their software

Best of luck!

Scroll Up To Find The Best Small Business Accounting Firms And Pick A Partner Today!