Small Businesses Expenses in California: Part 1
We have found that the accounting services and payroll services do not vary with the age of the company and hence the cost is the same for a new company. The average cost of accounting services is not dependent on the number of employees, according to our research, and ranges between $2,400-$5,000 annually in California. The average cost of payroll services for 10 employees ranges between $700 and $2,400 per annum in California. This cost varies with the number of employees. Below you will find a deep dive of the methodology and findings.
Despite our extensive research, we were unable to find any pre-compiled information for small businesses for accounting and payroll services in California. However, we were able to estimate the average expenses for these services by looking at the costs of a few accounting and payroll service providers in the state. During our research, we also found that in the cost estimates listed by these service providers, the age of the company is never mentioned. Hence, we have assumed that for these services, the age of the company is not a factor in determining the cost to the company. While estimating the accounting costs, we have also considered the bookkeeping and tax preparation services under the accounting costs' umbrella.
In order to estimate the accounting costs of businesses in California, we looked at the below accounting service providers in the state in order to estimate the costs.
1. John B Fullerton: This firm provides services for varied businesses, which include gift shops, restaurants, clothing stores, auto service repair services etc. and have filed over 1,300 tax returns per year for different types of corporations, Non-Profits, C Corporation, S Corporations etc. We chose this organization because it fits into the requirement for accounting costs for a small business.
This firm charges $800 and above for partnerships and corporations for tax returns. The prices vary depending on the type of return filed and the details can be seen here. For estimation, we will consider $800 as the starting price for tax returns charged by this firm.
For business accounting, this firm charges $350-$475 per month including the payroll services. The payroll charges per month, if opted as a separate service are charged at $150-$250. Excluding the payroll services, the accounting charges come to about $200-$225 per month (($350 minus $150) and ($475 minus $250))
Thus, the accounting services charged by this firm comes to a total of about $2,400-$2,700 per year (($200-$225)*12).
2. Michelle C Herting: This firm, based out of Southern California, charges $2,500 for individuals for tax projects and $5,000 for partnerships and corporations. This fee only includes basic tax preparations services and other services such as bookkeeping and administration etc. are billed separately.
3. Tax Help + Accounting Solutions: This is a tax and financial consulting organization based out of Santa Clara. They charge a minimum of $650 for tax preparation and consulting services for Partnerships and Corporations. For bookkeeping services, they charge $200 per month ($2,400 per year paid monthly) and a separate one-time set-up fee. The total, thus, for the accounting services comes to about $3,050 ($2400 +$650).
Taking the average range of pricing from the above three firms, we see that the price range for accounting services varies between $2,400 and $5,000 in California.
We looked at the below firms while estimating the price range of payroll services in California.
1. Quartermaster Payroll Service: This service based out of Irvine, California provides payroll services across the United States. For a company with 5 employees, Quartermaster charged $62-$160 per month. Assuming that this number would vary less than double for 10 employees, the fees for payroll services for a firm with 10 employees would be $100-$200 per month. Thus, per year, the company would charge between $1,200 and $2,400 for 10 employees.
2. TJH Payroll: This company, based out of Chatsworth in California, specializes in payroll services for small businesses and have about 2,200 clients across different states in the USA. Their charges vary according to the frequency of the payout. For a monthly payout, the firm charges $43 per payroll for 10 employees. Thus, for 10 employees for a year, the firm would charge $516 ($43*12 months). Including the tax filing charges ($100 per year) and other deposit fees, the total can be approximated to $700 per year ($516+$100+additional deposit fee).
Thus, the price range for the payroll services can be approximated to $700-$2,400 for 10 employees in California.
In short, the price range of accounting services can be estimated to be $2,400-$5,000 per year in California and for payroll services can be estimated to be $700-$2,400 per year for a small business with 10 employees. From our research, we found that the age of the company does not affect the fees charged by service providers for accounting services, although there is an initial set-up fee charged by a few service providers.