For those people who have a high net worth, an accountant is a vital part of handling your finances. If you work for a large company, it’s likely that you’re also using an accounting firm to handle the company’s taxes. This process takes the entire year because, at a certain point of wealth, tax season no longer exists and records could be asked for at any time. It’s important to have accountants handling the financial records who can keep track of all these deadlines and make sure the records are in proper order, along with all the correct paperwork filled out. Handling all of these responsibilities can take hundreds of hours throughout the year, so accountant costs add up quite quickly. The accounting firms often charge by the hour, starting around $150, but costs can go up to nearly $1,000 per hour, resulting in yearly costs of hundreds of thousands of dollars.
Number of Accounts
Unfortunately, a client’s income doesn’t often affect the amount of money charged; it depends more on how many accounts the money is spread amongst. Some clients have over $100 million, but it’ll be in a few accounts, while other clients only have several million dollars, but that money may be spread across up to 150 accounts. So, my first tip to reduce accountant charges is to consolidate your money into as few accounts as possible!
State Tax Returns
A common issue amongst people who travel a lot for work and earn large amounts of money is that you’re taxed on the income you make in each state; this is particularly problematic with professional athletes, who play games in different states all the time. Because of these various taxes, a tax return form must be filed in each separate state, which takes dozens of hours.
Hourly cost will also vary depending on who handles the client’s account. People working on the account may have various levels of experience, so your rates could be different from hour to hour. Interns may work on basic aspects of your account, but so might partners in the accounting firm. Be aware that your costs could change and talk to your firm about this issue; ask for a breakdown of who worked on the account and when. You might even want to ask for a flat rate instead of being charged hourly, which is a service many accounting firms offer.
A final tip is to remember that you can always shop around! Check out other accounting firms to see if they can give you a better price, but make sure you aren’t downgrading to a lower quality of accountant who won’t handle your finances as well!