What an accountant does
An accountant turns financial records into decisions and filings: preparing financial statements, filing tax returns, advising on entity structure and deductions, and catching problems while they’re still cheap. Where a bookkeeper records transactions, an accountant interprets them — the division of labor is the whole subject of our bookkeeper vs accountant guide.
One thing to get straight before you hire: “accountant” is not a protected title. Anyone can use it. CPA (Certified Public Accountant) is a state-issued license requiring an exam, experience, and continuing education — and CPAs can represent you before the IRS and sign audited financials. An EA (enrolled agent) is federally licensed by the IRS specifically for tax matters. An unlicensed accountant may be perfectly competent for management accounting, but can’t do everything a CPA can. Verify any claimed license with your state board — it takes two minutes.
What it costs
Independent accountants typically charge $40–$150 per hour. Three things move the rate:
- Credentials — unlicensed accountants sit at the bottom of the range; CPAs cluster in the upper half.
- Work type — routine compliance work costs less per hour than advisory on entity choice, like whether an S-corp election makes sense for you.
- Complexity — multi-state operations, inventory, or investors push you toward the top.
Many accountants now quote fixed fees per deliverable instead of hourly, which is usually better for you. Full breakdown in our accountant cost guide.
How to choose one
Match the credential to the job. Tax filing and IRS representation: CPA or EA — see CPA vs tax preparer for how those tiers differ. Monthly management reporting and budgeting help: an experienced unlicensed accountant can be excellent value.
Then test for fit with one question: “What would you want to change about how my business handles money?” A professional asks for your books and last two returns before answering. An amateur answers immediately and generically. You want someone who treats your situation as a fact-finding problem, not a sales script.
Ask who actually does the work. Solo practitioners do it themselves; small firms may hand you to junior staff at senior prices. Neither is wrong, but you should know what you’re buying.
What to prepare before you start
Show up with clean-ish books, your last two tax returns, and a list of what’s bugging you — cash flow surprises, a tax bill that felt wrong, a decision you’re facing. An accountant working from organized records costs half as much per useful answer as one reconstructing your year from a shoebox. If your books aren’t ready, hire a bookkeeper first; paying accountant rates for data entry is the most common money leak in small-business finance.
Questions to ask before you hire
- Are you a CPA, an EA, or unlicensed — and in which state are you licensed?
- What's included in your engagement — bookkeeping review, tax filing, advisory, or all three?
- How do you bill — hourly, fixed-fee per deliverable, or a monthly package?
- Who does the actual work — you, or staff I'll never talk to?
- What do you need from me each month or quarter to keep things moving?
Red flags
- They imply they're a CPA without ever saying it — the license is state-issued and verifiable, so vagueness is a choice.
- They promise a specific refund or tax savings figure before seeing a single document.
- Every question you ask gets billed, but you can't get a fee schedule in writing.
- They want to start advisory work while your books are a mess and show no interest in fixing them first.