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Small businesses that want to get to the next level need to have a firm grasp of their finances and the capacity to plan for growth. One great solution is hiring an online accounting firm that can fulfill the need for a reasonable budget.
Beyond general journal and ledger bookkeeping, an accounting firm also can perform account reconciliation, payroll processing, cash flow management, monthly statement preparation, and tax services. It also can provide additional layers of accounting functions to accommodate a growing business's expanding needs.
The challenge for small businesses is finding the right accounting firm out of the dozens available to fit their needs. Using a set of criteria that includes cost, range of services, software compatibility, and small business expertise, we reviewed 20 online accounting firms to find the best in five categories.
Best Overall : inDinero
inDinero blankets its clients with a wide range of accounting services, an easy-to-use platform, access to in-house experts, and a dedicated customer support team, making it our choice as the best overall accounting firm.
Extensive array of services
Great customer support
Base package on the expensive end of the spectrum
Lack of advanced features such as time-tracking and project manager
Since its founding in 2009, inDinero has been perfecting its offering of an all-in-one accounting service for small businesses. In addition to one of the widest arrays of services, inDinero offers clients access to a team of staff accountants and financial experts, just a click or call away with its easy-to-use dashboard or mobile app. InDinero checks all the boxes, making it our choice as the best overall accounting firm for small businesses.
While inDinero's base plan may be a little pricier than other firms, its all-in-one accounting services still will save fledgling businesses time and money. For $300 a month, the Essential plan is stacked full of functions including easy invoicing, P&L and balance sheet creation, accounts payable and receivable tracking and reporting, monthly reconciliations, employee reimbursements, financial reporting, and document management. It also comes with a mobile app and a dedicated account manager. The Essential plan is designed for startups and smaller businesses that use cash basis accounting. If you need accrual basis accounting, you will need to step up to its Growth plan.
At $900 per month, the Growth plan is designed for more established small and medium-sized businesses. It's pricier, but it adds some significant features, such as regular controller support and growth-focused reports and insights. Businesses that use the Growth plan are provided with processes that can be scaled as they grow.
For additional fees, inDinero offers tax support for filing state and federal taxes for current or previous years. You also can add a fractional CFO to help with financial projections, cash management, business analytics, and budgeting. Plus, if you've been neglecting your books, inDinero offers catch-up bookkeeping.
For larger companies with more complex accounting needs and the need for business metrics analysis and audit support, inDinero will design a custom plan that includes fractional CFO services, multiple entity support, cash flow projections, and payroll support.
In addition to its real-time dashboard, which offers self-support features, clients can tap into inDinero's support team via phone, email, or live chat.
On the downside, if you aren't using Gusto, Justworks, Stripe, PayPal, or TriNet, you'll have to use inDinero's software, which is very powerful, but it's not portable if you ever decide to switch firms.
Best Basic Plan : 1-800Accountant
For small businesses with straightforward accounting needs, 1-800Accountant offers a solid basic plan for a flat fee of $115 a month, making it our pick as the best accounting firm for basic plans.
Low flat fee regardless of the number of transactions
Dedicated local accountant
Reasonably priced tax preparation and filing services
Base service is somewhat limited
Costs increase substantially for add-on services
Founded in 1999 by two former members of Price Waterhouse, 1-800Accountant is one of the more established online accounting firms. It combines personal support from a nationwide team of experts with the convenience of digital technology for a flat rate, which is why we selected it as the best accounting firm for a basic plan.
1-800Accountant offers a nationwide team of Certified Public Accountants (CPAs), enrolled agents, tax professionals, and other experts lending their expertise to a full array of accounting services. Clients are matched with a local accountant or bookkeeper who can provide state- and industry-specific guidance in managing their books.
For just $115 a month, clients receive real-time bookkeeping services that include regular check-ins, detailed monthly reports, creating and sending invoices, and preparing financial reports. A dedicated bookkeeper sets up your account and connects your bank and credit accounts for synchronized transaction reporting. The software used by 1-800Accountant integrates with many of the top accounting software packages.
From there, clients can add services as needed for additional fees. For example, if your business reaches a growth threshold, you can pay $219 a month for more features, including income and expense tracking, bills management, and other professional guidance. This plan also will prepare and file both your personal and business taxes.
One of 1-800Accountant's most common services saves its customers an average of more than $12,000 when they restructure from a sole proprietorship with a DBA to a pass-through entity (specifically S corporations).
You also can add bookkeeping, priority support, and financial reports for $349.
Payroll services also are available from 1-800Accountant for getting your employees paid, withholding taxes, and taking care of your payroll taxes. The service maintains all required employee records.
Also, 1-800Accountant offers every business a free tax savings consultation with an expert. Better yet, 1-800Accountant guarantees its customers maximum tax savings by finding every deduction.
Once your account is set up, you have secure access to your assigned accountant via messaging, phone, email, or chat. A mobile app keeps you in contact with your financials.
Best for Hiring Freelancers : Paro
Businesses that prefer more direct business relationships can use Paro to match with an accountant or bookkeeper that best meets their finance and accounting needs. That makes Paro our choice as the best accounting firm for hiring freelance accountants.
Flexibility to choose who to work with and dictate project scope
Direct relationship with a financial pro
Extensive vetting process
Pay base hourly rates
Can be more expensive than paying a flat fee for services
Paro is not an accounting firm in the traditional sense. Instead, it operates as a marketplace that brings together businesses with highly vetted finance and accounting experts to directly work with you. For that, Paro makes our list as the best accounting firm for hiring freelancers.
Paro uses a multi-step vetting process to review more than 50,000 applications to build a database of nearly 2,000 CPAs, financial analysts, internal auditors, finance vice presidents, and bookkeepers. The vetting process, which consists of background and reference checks, a skill assessment, interviews, and completion of a hands-on project, has screened out 98% of its applicants, leaving only the top talent in its database. Nearly half of Paro's freelancers hold postgraduate degrees, and many have worked at highly respected companies such as Deloitte, Ernst and Young, KPMG, and the IRS.
Freelancers, who must be approved by Paro, establish their own fees, but Paro does not list a range of typical rates you should expect to pay. According to Indeed, Paro freelancers earn an average of $45.54 per hour with a low of $33.00 per hour and a high of $62.84 per hour. The great thing about hiring a Paro freelancer is you pay only their base rate, which is a fraction of the cost of hiring one of these professionals through an accounting or bookkeeping firm.
Once you complete a short questionnaire, Paro works with you to find the right match based on the size of your business, the financial role that needs to be filled, and your industry. It also will look for candidates who are conversant in your software, such as QuickBooks, Xero, Netsuite, ADP, or any other program.
Paro handpicks a few candidates for you to screen and, when you find one you want to hire, Paro makes the introduction. Paro claims that 95% of its clients end up working with the first or second candidate they hire. You also are assigned a dedicated account manager to help facilitate the completion of the project.
Best for Bookkeeping Services : Bench Accounting
For businesses with straightforward financials that are ready to outsource their bookkeeping, Bench Accounting is equipped to take it all on, making it our pick as the best accounting firm for bookkeeping services.
Offers both cash basis and accrual basis reporting
Supports tax preparation with a year-end financial package
Proprietary software makes it difficult to switch providers
Services don't include bill pay, invoicing, or check writing
Bench Accounting was launched in 2012 for the sole purpose of serving the bookkeeping needs of small businesses for both cash basis and accrual basis reporting. It's now the largest bookkeeping service, with more than 400 in-house professionals doing the bookkeeping for more than 11,000 business owners, which is why we chose it as the best accounting firm for bookkeeping services.
Although it's a virtual service, Bench personalizes its clients' experiences by assigning them a dedicated team of in-house professionals. The team takes over all bookkeeping functions, including setting up your account and linking it with all your financial accounts to upload data. The team then categorizes all your transactions, reconciles your bank accounts, and prepares monthly financial statements.
For an additional fee, Bench offers catch-up bookkeeping if you're behind on your financials. It also offers limited support for business taxes by preparing a year-end financial package for your CPA. You can pay for additional tax services by adding BenchTax to your bookkeeping services. A licensed tax pro will prepare and file your taxes.
One downside to Bench is its use of proprietary software. Although it is powerful and effective, it doesn't sync with industry standards such as QuickBooks or Xero. That will make it difficult to switch providers in the future. The other downside is that its services don't include bill pay, sending invoices, or writing checks.
Bench's reporting functions also are limited. If you already work with an accountant or CPA, chances are good they prefer to work with QuickBooks rather than with proprietary software like Bench.
Clients can contact their team members during business hours from their computers or mobile app and expect a response within one business day or they can schedule a call.
Bench's pricing starts at $299 per month for the Essential plan while the Premium plan that includes tax advisory and filing runs $499 per month.
Best for Startups : Pilot
Pilot is a relatively new firm established by former startup founders backed by entrepreneurs who clearly understand other startups and their accounting needs, making it our pick for the best accounting firm for startup companies.
Dedicated account manager
Accrual basis accounting
No cash-basis accounting
Fees on the higher end of the price spectrum
Started by successful startup entrepreneurs, Pilot understands the challenges other startup entrepreneurs face in keeping the books and preparing their businesses for growth. That's why we chose Pilot as the best accounting firm for startup businesses.
The handholding begins as soon as you sign up with Pilot and are immediately assigned a dedicated bookkeeper as your account manager. That person is your point of contact who will come to know you and your business.
The next step is to work with your account manager to integrate your existing software and processes with QuickBooks. From that point on, you will receive monthly reports, including cash flow, profit and loss, and balance sheet statements.
In addition, Pilot performs automatic transaction imports, monthly account reconciliations, and cash forecasting. Inventory tracking, accounts payable and receivable reporting, as well as tax preparation and filing, are add-on options for an additional fee. That's a comprehensive offering for startups or small businesses that want to scale up quickly.
If your business does only cash-basis accounting, you'll need to look elsewhere because Pilot does only accrual-basis accounting. They insist that accrual-basis accounting is better for businesses that want to grow. For companies on the fast track, Pilot also offers CFO services for an additional fee.
All price plans include unlimited accounts and are billed annually upfront with no early termination fee. The Core plan starts at $599 per month with companies with monthly expenses between zero and $30,000. But the higher your monthly expenses go, the higher the fee. The Select plan starts at $849 per month and includes expedited books delivery and monthly phone reviews. This plan also has a sliding scale based on monthly expenses. Pilot offers custom pricing that includes support for multiple entities, accounts receivable, and payable reporting along with a fully customizable chart of accounts.
Pilot offers a one-month free trial, and pre-revenue startups receive a $200 per month discount.
As this list shows, the offerings and pricing of accounting firms for small businesses vary widely. The key is understanding your accounting needs and the value of having someone from outside your business fulfilling those functions. Even the most expensive firm on this list is probably less costly than hiring someone to perform them in-house.
If your budget is a concern, you can consider low-cost options, such as 1-800Accountant or Bench Accounting. However, if you're looking for the best all-around accounting firm, you can’t go wrong with inDinero for its comprehensive offering, excellent customer support, and reasonable pricing.
|Best Accounting Firms|
|inDinero||Best Overall||Starting at $300/mo|
|1-800Accountant||Best Basic Plan||$115/mo|
|Paro||Best for Hiring Freelancers||$40/hr for bookkeeper; $120/hr for CPA|
|Bench Accounting||Best for Bookkeeping Services||Starting at $299/mo|
|Pilot||Best for Startups||Starting at $599/mo|
What Is an Accounting Firm?
An accounting firm is fully staffed with experts to offer bookkeeping and accounting services for your business. It prepares financial records to help you track your revenues and expenses. It can also conduct an audit to organize your processes and controls to ensure records are properly kept with taxation services to help you prepare tax returns and advise you on how to reduce your tax liability. Accounting firms help you with your long-range planning with cash flow projections and advice on how to allocate your capital for an additional cost.
Online accounting firms use sophisticated data-encryption and communications technology to link clients to their services via an online platform. Source documents and data can be uploaded to cloud storage where they can be accessed from any remote location.
Firms typically bill for their services at a fixed monthly rate, benefiting a business from a budget planning standpoint. Some services may be billed on a pay-for-performance basis.
Who Should Use Accounting Firms?
For businesses on a growth track, the cost of not outsourcing bookkeeping and accounting can be detrimental to the business. This happens when performing the functions in-house interferes with essential business growth activities. Every hour you spend on bookkeeping or accounting is one less hour spent marketing your business, building client relationships, and other business development activities. At some point, the cost to your business in terms of lost growth opportunities becomes immeasurable. That's when you know it's time to outsource your accounting function.
You know you need to hire an accounting firm when
- The growth of your business outpaces your capacity to efficiently manage your cash flow
- You need to raise capital through bank financing
- You need to create a solid business plan
- When you need advice about your business's legal structure
- When you need help preparing your taxes
How Do You Choose an Accounting Firm?
Small businesses have a wider range of needs than individuals, so it's essential to work with an accounting firm that caters to small businesses—even better, one with experience working with businesses in your industry.
Fees also are an important consideration. The cost of outsourcing these functions must make sense for your business based on the level of service it needs and your budget. You should expect to pay more for accounting services as a business than you would as an individual because there are more functions to perform.
If you already are using an accounting or bookkeeping software program, it would be ideal to work with a firm that utilizes the same software. Many firms accommodate multiple software programs. If you don't already use a software program, the accounting firm will recommend a package.
Finally, look at the range of services offered. You may need only account reconciliation services now but will need to layer on financial and cash flow management services later. If a firm only offers a package that includes services you don't need, you may pay more than you should at this stage in your business.
What Do Accounting Firms Cost?
Online accounting firms typically charge a monthly fee, which can help businesses to plan their expenses. For many firms, the monthly fee is based on the level of services you need. You can pay as low as $150 a month for a starter package that includes day-to-day bookkeeping, account reconciliation, and financial report preparation. With some firms, you can then layer on services or choose a mid-tier package that provides for cash flow management, accounts payable and receivable, and expense tracking for $300 to $500 a month.
Many firms that charge a flat monthly fee also offer tax filing services for an extra fixed annual fee in the range of $750 to $900. Some offer payroll services as an extra for $40 to $80 a month.
As you'll find with some of the firms in this review, billing methods can vary beyond a monthly fee, such as an hourly, pay-for-performance fee, or rates based on the number of monthly transactions. In all cases, it's important to crunch the numbers to see what rate or form of billing makes sense for your business.
How We Chose the Best Accounting Firms
If you've done your own search for accounting firms, you know there are dozens from which to choose. So, narrowing your choices to the ones that best suit your needs can be daunting. With this review, we did most of the leg work to narrow the list from 20 of the top online accounting firms to five of the best in various categories. In reviewing the list through a small business lens, we applied a strict set of criteria that included length of operating history, small business focus, range of services, distinct features or services offered, cost, and level of customer support.