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Updated March 26, 2024

Tax Preparation Pricing Guide 2024

Tax Preparation Pricing Guide May 2024

Hiring a tax preparation team can give you invaluable peace of mind, especially during the strenuous tax season. Keep reading this piece to know more about how much professional tax preparation services cost and what variables impact it. 

If there’s one thing in life and business that’s certain, that’s tax. Running a business is already a handful; business owners shouldn’t be stressing about the meticulous tax preparation process. 

Effective tax preparation is essential to running a business and fulfilling legal obligations. Whether intended or unintended, neglecting business taxes can lead to serious consequences — from financial penalties to legal troubles.

It doesn’t matter what industry or size of business; hiring a professional tax prep firm can bring significant benefits as they bring a wealth of knowledge and skills. 

In this detailed pricing guide, we’ll dive deeper into how much businesses should expect to pay and what factors directly affect the costs of outsourcing tax preparation services. Keep reading to see more crucial data like the average fees and pricing range by location.

Tax Preparation projects reviewed on Clutch typically cost

$10,000 - $49,999
< $10,000 $10,000 - $49,999 $50,000 - $199,999 $200,000 >

As seen in the table above, tax preparation services on Clutch usually costs a thousand dollars to several tens of thousands. 

The figures vary depending on factors such as the project's scope, the type of business tax involved, and the complexity of the business structure. Aside from those, expect additional fees if you require other types of accounting services like bookkeeping and payroll.

Safe to say that taxes are inevitable, and every business must comply if they don’t want big-time headaches to come. Effective tax preparation services can be game changers for growing companies that don’t have the internal infrastructure or capabilities to handle the tedious task.

Tax preparation is a focus area under accounting. Learn these crucial terms to best prepare before you get in touch and consult with service providers: “74 Accounting Terms

How Much Do Tax Preparation Services Cost?

The average cost of hiring a professional tax preparation service provider on Clutch is anywhere between $25-$49 an hour.

Before enlisting the services of a tax preparation firm, make sure you and your team do your due diligence. Assess your business and understand the different types of tax prep services so you can have a better estimate of costs. 

It’s also crucial to identify if your business needs additional support or assistance, which could increase prices and spare you from hiring a different service provider to handle those tasks.

Types of Business Taxes

The type of business taxes influences the costs, and knowing those types can make it easier to estimate the costs. 

Here are the common types of business taxes:

  • Income taxes: This is the type of taxes the government imposes on all companies and individuals within their jurisdiction. All businesses must file their income tax returns annually per the Internal Revenue Service or IRS.
  • Employment taxes: Being an employer involves tax responsibilities that should be filed and paid regularly. The typical employment taxes include social security, federal income tax withholding, and federal unemployment (FUTA) tax.
  • Sales taxes: Companies are required by the state and some other states they operate in to pay sales taxes. Some states or countries have higher sales tax rates which can affect the prices of their products or services. Businesses operating in two or more locations must pay sales taxes on those locations.
  • Excise taxes: These are Federal government levies applied to certain business types, industries, or what they produce. It usually includes environmental taxes, communication taxes, and manufacturer taxes.

Types of Tax Preparers

In addition to different types of tax, there are also 4 main types of tax preparers. These individuals have a different level of understanding and expertise. 

  • Certified Public Accountant: When hiring a professional tax prep firm, you’ll most likely work with a CPA. These licensed professionals studied the different accounting disciplines, took up state board certification examinations, and have undergone various tests held by institutions like the American Institute of Certified Public Accountants.
  • Enrolled Agents: Aside from CPAs, tax preparation firms can also be composed of enrolled agents, professionals who are specially trained in federal tax work. They’ve acquired licenses from the IRS to represent their clients or businesses.
  • Tax Attorney: These legal professionals have postgraduate law degrees and have passed their bar examinations administered by their respective states. They have unlimited rights to represent their clients before the IRS regarding tax-related matters.
  • Non-credentialed tax preparers: Unlike the three types mentioned above, these tax preparers don’t have any accounting or tax law certifications. In some countries or states, non-credentialed tax preparers must take tax-related courses to apply for the position.

The type of tax preparers you will work with will also impact costs. For instance, since tax attorneys have more professional credentials and expertise in long-term strategizing, their services cost more than non-credentialed tax preparers.

However, companies can’t simply cut costs by hiring more affordable tax non-credentialed tax preparers because who they need will still depend on their operations, financial structure, and business model.

Tax Preparation Services Pricing Models

Tax experts handle a variety of responsibilities, including but not limited to completing, handling, signing, and filing tax returns on behalf of their clients. Here are the common pricing methods followed by tax preparation firms:

  • Per form: The tax professional will set a set fee for every tax form they’ve accomplished, which will be tracked and billed every fixed period.
  • Value-based: Essentially, this structure determines prices based on the subjective value clients perceive the work or service. Tax preparers usually will give an estimate based on the scope of the project and their competition.
  • Per hour: This time-based pricing model is the most commonly used by many accounting firms. Basically, tax preparers track every hour they spend on the job and clients are charged the hourly rate on how many hours were recorded. 

The model may vary from one firm to another or depending on their clients. For example, tax preparers might charge businesses with disorganized paperwork or records by the hour since it will take longer to prepare the paperwork.

Agency Fees Could Be Separate

In addition to the hourly work, some firms charge a separate minimum fee every month. These fees could be fixed even if the workload fluctuates, so it’s crucial to inquire immediately before signing a potential service provider agreement.

The flat fees typically cover the service provider’s overhead costs, such as office space, hardware needs, software subscriptions, and even professional membership fees. Some firms that charge set fees also consider their expertise, industry reputation, and niche.

Factors That Determine Tax Preparation Costs

As highlighted above, there are a variety of factors that can influence the cost of tax prep services. Understanding each factor is essential to knowing how much to expect and creating a budget for your business.

Here are the key variables affecting tax preparation service costs:

  • The complexity of the taxpayer’s tax situation or arrangements
  • Type of tax professional
  • Type and variety of business taxes involved
  • Business structure
  • Volume of documents
  • The variety of taxes involved
  • Client’s tax filing status
  • Additional tax forms for certain businesses
  • Timeline for the service
  • Business industry or niche
  • Geographic location of the service provider

The biggest factors that affect costs are complexity, type of professionals, volume of documents, and the types of tax involved. When you sit down and discuss with a potential service provider, they’ll ask different questions to understand those factors better so they can give a quote accordingly.

In addition, the industry or niche the client operates in is another big factor influencing costs. Since different industries need certain financial structures or additional taxes, there could be varying reporting requirements, tax regulations, and tax specializations involved. Certain industries like luxury, food and beverage, and automobile are required to pay their specific excise taxes.

Business sizes also affect the costs. Smaller businesses, including partnerships and sole proprietors, don’t usually spend more than $10,000 for tax preparation services since they generally only require basic tax services and have fewer employees.

Meanwhile, mid-sized and large corporations should prepare to spend more because of their more complex financial structures. Unlike small businesses, they will have more specialized taxes and employees covered. 

Before hiring a potential tax preparation partner, analyze your business to understand how the factors apply to the type of services you need.

Consulting from professional tax preparers can provide invaluable insights for firms looking to improve their tax strategies or steadily reduce their taxes. While strategic planning isn’t the first that comes into mind when considering tax prep services, it’s also crucial because effective tax planning is key to the long-term success of your business.

2024 Tax Preparation Pricing by Location

Browse hourly rates for Tax Preparation companies by popular locations

CountryAverage Cost per Hour
United States of America$100 - $149
United Kingdom$25 - $49
Canada$25 - $49
Ukraine$25 - $49
Poland$50 - $99
Mexico$100 - $149

*Countries ranked by Clutch traffic

Service providers from North America and Western Europe typically charge more than tax preparers from Eastern Europe, Africa, Asia, and other parts of the world.

However, legal limitations and regulations are involved when it comes to outsourcing tax preparation services to firms from other countries.

Legally, tax returns aren’t allowed to be sent overseas without the company or individual’s consent. Take a moment to discuss the matter with the service provider before enlisting them for your needs. Lastly, read up on related laws and regulations in your country to understand all of the requirements to outsource overseas.

Taxes are also a collaborative process, so your company should work with a provider in your region. 

Build a Better Financial Structure with Efficient Tax Preparation Solutions

Tax preparation is part of ensuring businesses remain compliant with laws. Streamline tax preparation efforts contribute to building a healthy financial structure for businesses while meeting legal obligations. Neglecting it can lead to broken stakeholder trust, damaged business reputation, or even heavy legal problems.

Beyond complying with laws, tax preparation, and strategic planning can help improve cash flow. It’s essential to helping businesses allocate resources efficiently, providing a better view for their long-term goal setting.

By hiring a proven tax preparation firm that meets your budget, you leverage their expertise to foster sustainable business growth. Maximize the information you learned from this piece when hiring a tax preparer. Compare quotes and seek recommendations from colleagues to make sure you get the most out of your investment.

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