How much does it cost to hire an accountant for a small business?

Even in your average small business (1-3 employees, less than $500k turnover) there will be a broad range of options for accounting and finance including getting specialise setup, tax structuring advice, finance systems and processes together with the everyday bookkeeping and accounting functions.

Is an accountant needed for a small business?

An accountant can offer comprehensive startup and ongoing small business advice, while making sure tax compliance is prepared and filed with the relevant authorities on time.

What is the role of an accountant in a small business?

Being a business owner can be a tough job, and it’s good to have a trusted advisor to lean on in times of complexity or uncertainty. An accountant will be able to help you navigate your business through these times, and help keep compliant with relevant tax authorities.

Xero is an integrated accounting platform that can complete all small business invoicing, receipts, bank transactions and reporting for the IRD. Being cloud based means your advisers can have access to your information in real time.

Is Xero Accounting any good?

Xero is a great tool for small businesses as it gives you real time access to the financial data of your business - information we couldn’t imagine being in business without.

Ideas to Optimise Pricing

We see the following scenario a lot:

An entrepreneur opens for business and then decides to charge slightly less than their competitors, but providing a much better product or service.
By the end of their first year in business there isn’t enough money to pay for tax, GST or themselves

In this scenario we need to take a look at the pricing levels needed to be achieved for the business to remain profitable. Raising prices has an immediate impact on your bottom line, as the same service is provided incurring the same costs:

Lets take a look at a simple financial scenario:

Sales $100

Costs $90

Profit: $10

And we increase prices by 5%:

Sales: $105

Costs: Same - $90

Profit: $15

In this scenario, profit has increased by 50% following on from a 5% increase in prices.

But how do businesses change prices without putting current customers offside? We have three methods for startups to try:

Breakdown Services

Breaking down what you provide to customers can show you services you aren’t charging for. These services provide value for your customers which gives you a link to increase pricing linking to value. This exercise also allows you to offer different service levels to customers wanting various services.

Only Change for New Customers

This method of segmentation means that your pricing changes will take longer to come into full effect. However because you’ll be testing prices on a small sample size, this can be helpful to determine whether new pricing will be successful for older customers too.

Grandfather Prices

This is very popular with SaaS businesses and basically is giving a long period of notice of an increase in price to current customers. An extended period (say 3-6 months) gives clients enough time to assess the market before having to fork out higher prices.

Accept Churn

Once startups accept that not all customers will be impressed by changing prices, it makes it much easier to change them. In an unprofitable business the alternative is usually far worse.

Have other methods that have worked really well? Please send us an to pricing@accountech.co.nz or get in touch