How to Find the Right Accounting Service for a Small Business

As a small business owner, you know how managing your finances while ensuring accuracy can be a daunting task. Embracing the correct accounting practices is vital to your business's long-term success, as it is the best source for accurate financial records and advice to help you:

• Make informed decisions

• Remain tax compliant

• Avoid costly mistakes

Many entrepreneurs will handle accounting and bookkeeping tasks themselves to save money, but the complexity can become overwhelming as the business grows, and inconvenient penalties can virtually erase money savings. Nearly half of small businesses have neither an accountant nor a bookkeeper on staff, which underscores the importance of identifying the right accounting service to save time, eliminate errors, and gain insights that drive the business growth you need to reach your next milestone.

Keep reading to learn:

• The fundamentals of small business accounting

• What an accountant can do for you

• Options for getting accounting assistance, from in-house hires to outsourcing or software

This article also addresses key questions you should ask when evaluating accountants, warning signs to watch out for and avoid, and how 1-800Accountant can meet your business needs and scale with you as your operations grow. 

Small Business Accounting 101

Accounting is the process of tracking, organizing, and interpreting your business's financial information. This includes recording all transactions, summarizing them in financial statements, and filing taxes accurately by each deadline. Small business entrepreneurs use accounting to show where their money is coming from and going to and whether they’re making a profit. 

Small business accounting vs. bookkeeping

• Bookkeeping is the process of recording daily transaction records (sales, expenses, invoices, etc.) and maintaining the general ledger. It is a time-consuming administrative role focused on accurate and timely data.

• Accounting: Analyzing and interpreting financial data from bookkeepers. Accountants use the records to prepare reports, file taxes, and advise ownership on high-level business decisions.

Bookkeepers manage the data, while accountants analyze it and provide insight. Read more about these essential roles in our blog, What’s the Difference Between Bookkeeping and Accounting?

Small Business Accounting Tasks

When evaluating financial professionals for your small business, ensure they can handle a broad range of responsibilities, including:

• Bookkeeping & records – maintaining the general ledger (day-to-day transaction records, cash flow, etc.).

• Financial reporting – preparing financial statements to monitor your business’s financial health (income statements, balance sheets, etc.).

• Tax preparation & compliance – handling business tax returns and ensuring taxes are paid on time.

• Payroll – managing payroll processing and tax filings (if you have employees).

• Audits & risk management – guiding you through audits and setting up controls to prevent errors or fraud.

• Financial advice – providing budgeting, forecasting, and strategic guidance as your business grows. Financial advisors support critical decision-making during tax season and year-round.

Small Business Accounting Options

When you’re ready for accounting support, you have several options. Here are the most common routes for small businesses, with pros and cons for each option.

Hire an in-house accountant or CPA

• Pros: You have a dedicated certified public accountant (CPA) in your company who knows your business intimately and is readily available. 

• Cons: It’s the most expensive option (salary and benefits) and is usually only necessary for larger or very complex businesses.

Hire an in-house bookkeeper

• Pros: A bookkeeper on staff can handle daily financial tasks, which is cheaper than hiring a CPA. 

• Cons: They typically cannot provide high-level financial advice or tax planning – you might still need an accountant to address those tasks.

Hire a fractional accountant

• Pros: A part-time or contract accountant (or CFO) gives you expert help on demand at a lower price than a full-time hire. 

• Cons: They aren’t always available and may juggle other clients, so you might not get immediate attention to time-sensitive needs.

Buy or subscribe to accounting software

• Pros: Software (like QuickBooks, Xero, etc.) is affordable and automates many bookkeeping tasks—over half of small businesses use software to address their basic accounting needs.

• Cons: You must do the work yourself and invest time learning it. The software can track data but can’t give personalized advice or ensure you’re fully compliant.

Outsource to an accounting firm

• Pros: An external accounting or CPA firm can handle your bookkeeping, taxes, and financial statements without hiring internally. 

• Cons: This option can be costly, and you might not get the same personal, immediate face-to-face touch as having someone in-house.

Outsource to an online accounting service

• Pros: Online accounting services (like 1-800Accountant) offer virtual bookkeeping and accounting packages that are often cost-effective, tax-deductible, comprehensive, and designed to address the distinct needs of small businesses. They handle everything on your behalf, with end-to-end financial services, including bookkeeping and tax filing. 

• Cons: Your accounting team won't be on-site, and communication is conducted primarily via phone, video, and messaging. Virtual video and voice communication has become standard post-pandemic. 

Questions to Ask When Hiring an Accountant

When evaluating an accounting professional or service, ask questions to help you understand their capabilities and general working style. The top questions you should consider include the following: 

• What experience do you have with small businesses like mine?

• What services are included in your fee, and are there any extra charges?

• How do you bill for your services (hourly, monthly, project-based)?

• How will we communicate, and how often?

• Can you handle all my compliance needs (tax filings, payroll services, etc.)?

Red Flags: What You Don’t Want in Your Accountant

Online reviews, client testimonials, and LinkedIn referrals can help evaluate prospective accountants and their certifications. When choosing a good accountant or firm for your business, look for warning signs to avoid, which include: 

• Poor communication, such as a history of slow responses or missed deadlines.

• Unclear terms or fees, such as a lack of specificity when scoping work and detailing startup costs upfront. 

• Questionable credentials or ethics, including a lack of references while pushing overly aggressive tax strategies.

• Promises that sound too good to be true.

Find the Right Fit for Your Small Business: All Accounting Needs Covered by 1-800Accountant

If you've been searching for the right accountant and bookkeeper for your small business for an affordable, tax-deductible fee, look no further than 1-800Accountant, America's leading virtual accounting firm. 

Save time and achieve your financial goals with our suite of affordable, tax-deductible financial services, including Bookkeeping, Small Business Tax Preparation & Filing, Tax Advisory, and Audit Defense. Schedule a free consultation–usually 30 minutes or less—to learn how our financial solutions will help your business maintain IRS compliance with maximum tax savings.

Hiring an Accountant FAQ

How much will an accounting service cost?

Costs vary widely. For example, a freelance bookkeeper might charge $20–$40 per hour, while an experienced CPA might charge $100 or more per hour. Some accounting firms or online services offer monthly packages ranging from a few hundred dollars and up, depending on what’s included.

Would accounting software be a better option?

Software is a great tool but is not a replacement for an accounting expert. Accounting software can handle basic bookkeeping, and many small businesses start with it.

However, software can’t provide tailored advice or catch every nuance of tax law when you have a question about financial documents, financial planning or can't seem to overcome an accounting issue. It works best when you have a simple operation or are willing to manage business finances – and you can always use the software with periodic support from an accountant.

How much would a bookkeeping service cost?

Many online bookkeeping services charge a flat monthly fee. For instance, for a typical small business, QuickBooks Live (a virtual bookkeeping service) costs about $200–$400 per month. However, actual costs will depend on your business’s complexity and needs. For a comparison of options, see our rundown of the best online bookkeeping services.

What services are essential if I hire an accounting service or use accounting software?

Make sure your solution covers the basics: bookkeeping (tracking all income and expenses), financial reporting (so you can see profit/loss), and tax preparation (filing required tax returns). If you have employees, you'll also need payroll processing. In short, you want all your compliance needs covered by the service or integrations. Our small business accounting basics guide covers the key tasks you shouldn’t overlook.

When is it necessary to hire an accountant?

You should consider hiring an accountant when managing the financial side of the business becomes too time-consuming or complex to handle alone. Typical triggers include starting your business (to set up things correctly), expanding (more revenue, staff, or compliance obligations), or simply feeling out of your depth with taxes or recordkeeping. An accountant's guidance is crucial if you ever receive an IRS audit notice. For a straightforward one-person business, you might get by with just a tax preparer at tax time (see our guide on choosing a tax preparer). However, for most businesses, having an accountant is highly beneficial.

Do I need an accountant or a bookkeeper (or both)?