What does an accountant do? A guide for small business owners

Published Friday 15 May 2026

Table of contents

• What is an accountant?
• What does an accountant do day to day?
• Types of accountants
• Accountant vs bookkeeper
• Skills and qualifications
• How much does an accountant cost?
• When your small business needs an accountant
• How accountants support your business strategy
• Managing cash flow and financing
• Supporting business growth and operations
• Tax planning and compliance
• How to find the right accountant
• Streamline your accounting with Xero
• FAQs on working with accountants

Key takeaways

• An accountant handles financial recordkeeping, tax preparation, and strategic advising to keep your small business on solid financial ground. The Bureau of Labor Statistics (BLS) reports a median salary of $81,680 and projects 5% job growth through 2034.
• Different types of accountants serve different needs, from tax specialists to management accountants. Knowing which type fits your business helps you get the right support at the right time.
• Hiring an accountant can cost $150–$450 per hour, but the investment often pays for itself through tax savings, better cash flow management, and smarter financial decisions.
• You don't need to wait until tax season to bring in an accountant. The sooner you get professional financial guidance, the stronger your foundation for growth.

What is an accountant?

An accountant is a financial professional who records, analyzes, and reports on your business's financial activity. They help you understand where your money goes, ensure you're meeting tax obligations, and provide guidance on financial decisions.

According to the Bureau of Labor Statistics (BLS), there are roughly 1,579,800 accounting and auditing jobs in the United States. The median annual salary for accountants sits at $81,680, and the field is projected to grow by 5% between 2024 and 2034.

For small business owners, an accountant can be a trusted advisor who turns complex financial data into clear, actionable insights. Whether you're filing taxes, applying for a loan, or planning your next phase of growth, an accountant plays a central role in keeping your finances organized and your business moving forward.

What does an accountant do day to day?

On a typical day, an accountant reviews financial records, prepares reports, and ensures your business stays compliant with tax laws. The specific tasks depend on your business's size and needs, but most accountants handle a core set of responsibilities.

Here's what you can expect an accountant to manage for your business:

• Preparing and analyzing financial statements such as income statements, balance sheets, and cash flow reports
• Managing accounts payable and accounts receivable to keep your books accurate and up to date
• Handling tax preparation and filing, including quarterly estimated taxes and year-end returns
• Ensuring compliance with federal, state, and local tax regulations
• Forecasting revenue and expenses to help you plan for the months ahead
• Reconciling bank statements and identifying discrepancies in your records

Beyond these daily tasks, many accountants also advise on financial strategy, helping you make informed decisions about pricing, hiring, and investment.

Types of accountants

Not all accountants do the same work. The type of accountant you choose depends on what your business needs most, whether that's tax expertise, financial reporting, or fraud prevention.

Here are the most common types of accountants you'll come across:

• Public accountants: These professionals work with a range of clients, providing services like auditing, tax preparation, and consulting. Many hold a Certified Public Accountant (CPA) license.
• Management accountants: Also called cost accountants, they work within a single organization to analyze financial data, create budgets, and support internal decision-making.
• Tax accountants: They specialize in tax planning, preparation, and compliance. A tax accountant helps you minimize your tax liability while staying within the law.
• Forensic accountants: These accountants investigate financial discrepancies and fraud. They're often called on during legal disputes or audits.
• Government accountants: They manage and audit public funds for federal, state, or local government agencies. Their work ensures taxpayer money is used properly.
• Internal auditors: They review a company's financial processes and controls from the inside, identifying risks and recommending improvements.

Which type does your small business need?

For most small businesses, a public accountant or a tax accountant is the best starting point. A public accountant offers broad expertise across taxes, bookkeeping, and financial advising. If your primary concern is reducing your tax bill and staying compliant with the IRS, a tax accountant is a strong choice.

As your business grows, you might also benefit from a management accountant who can help you build budgets and analyze profitability. The right fit depends on your current challenges and where you're headed.

If you're not sure which type of accountant is right for you, start by listing your biggest financial pain points. That list will guide your search and help you ask the right questions during consultations.

Accountant vs bookkeeper

It's common to confuse accountants and bookkeepers, but they serve different roles. Understanding the difference helps you hire the right person at the right time.

A bookkeeper handles the day-to-day recording of financial transactions. They enter data, categorize expenses, reconcile bank accounts, and maintain your general ledger. Their work keeps your financial records accurate and current.

An accountant takes that financial data and analyzes it. They prepare financial statements, file tax returns, provide strategic advice, and help you plan for the future. Accountants typically hold higher qualifications, such as a CPA license, and can represent you before the IRS.

Many small businesses benefit from having both. A bookkeeper keeps your records in order on a weekly or monthly basis, while an accountant steps in for tax season, financial planning, and bigger-picture decisions. If you're considering hiring a bookkeeper, check out this guide to hiring a bookkeeper for practical tips.

Skills and qualifications

A good accountant brings a mix of technical expertise and interpersonal skills. Knowing what to look for helps you evaluate candidates and find someone who fits your business.

On the technical side, accountants typically need proficiency in:

• Generally accepted accounting principles (GAAP) and financial reporting standards
• Financial analysis and interpretation of business data
• Accounting software and cloud-based platforms
• Federal and state tax law, including deductions and compliance requirements
• Budgeting, forecasting, and cash flow modeling

Soft skills matter just as much when you're working closely with an accountant. Look for these qualities:

• Attention to detail when reviewing records and preparing reports
• Clear communication skills to explain financial concepts in plain language
• Problem-solving ability to navigate complex tax situations or cash flow challenges
• Analytical thinking to spot trends and recommend improvements

Most accountants hold at least a bachelor's degree in accounting or finance. Many pursue a CPA certification, which requires passing a four-part exam and meeting state-specific education and experience requirements. A CPA can sign off on audited financial statements and represent you in IRS matters, making them especially valuable for growing businesses.

How much does an accountant cost?

The cost of hiring an accountant depends on the type of work you need, how often you need it, and where your business is located. For small business owners, it's worth understanding typical pricing so you can budget accordingly.

Here's a general breakdown of what you might expect to pay:

• Hourly rates: Most accountants charge between $150 and $450 per hour, depending on their experience and specialization. CPAs tend to fall on the higher end of that range.
• Monthly retainers: If you need ongoing support, many accountants offer monthly packages. These typically range from $500 to $2,500 per month for small businesses, covering tasks like bookkeeping oversight, financial reporting, and tax planning.
• Project-based fees: For one-time work like tax preparation or a financial audit, accountants may charge a flat fee. Small business tax returns often cost between $500 and $2,000 depending on complexity.

For context, the BLS reports the median annual salary for accountants at $81,680. If you're hiring a full-time, in-house accountant, you'll need to factor in salary, benefits, and overhead. Many small businesses find that outsourcing to a part-time or freelance accountant gives them professional expertise at a lower overall cost.

Several factors influence pricing, including the complexity of your financial situation, the volume of transactions, your industry, and whether you need specialized services like payroll or multi-state tax filing.

When your small business needs an accountant

You don't need to be a large company to benefit from professional accounting help. Certain milestones and situations signal that it's time to bring in an accountant.

Consider hiring an accountant when you:

• Register your business or choose a legal structure (sole proprietorship, LLC, or corporation)
• Start earning enough revenue that tax filing becomes complex
• Hire your first employee and need to manage payroll and withholdings
• Apply for a business loan or line of credit
• Expand into new markets or add new product lines
• Face an IRS audit or receive a tax notice

Even if your finances feel manageable today, an accountant can catch errors early, identify tax savings, and set you up with systems that scale. The cost of fixing mistakes later often exceeds the cost of getting it right from the start.

If you're unsure whether your business is ready, a one-time consultation with an accountant can clarify your financial standing and highlight areas where professional support would make the biggest difference.

How accountants support your business strategy

An accountant does more than crunch numbers. The right accountant becomes a strategic partner who helps you set goals, allocate resources, and measure progress.

Setting business goals and KPIs

Your accountant can help you define key performance indicators (KPIs) that align with your financial goals. Whether you want to improve profitability, reduce costs, or increase revenue, your accountant translates those ambitions into measurable targets.

They'll analyze your historical data to set realistic benchmarks and track your performance over time. This gives you a clear picture of whether your business is on course or needs adjustments.

Creating actionable budgets

A well-built budget is one of the most powerful tools for running a small business. Your accountant can create budgets based on your actual revenue, fixed costs, and growth plans.

Instead of guessing how much you can spend on marketing or new equipment, you'll have data-backed projections. Your accountant can also update your budget throughout the year as conditions change.

Analyzing performance and identifying opportunities

Regular financial analysis reveals patterns you might miss on your own. Your accountant can identify which products or services generate the highest margins, where you're overspending, and where there's room to grow.

This kind of insight helps you make smarter decisions about pricing, staffing, and investment. Rather than reacting to problems after they appear, you can plan proactively with solid financial data behind you.

Managing cash flow and financing

Healthy cash flow is the foundation of a sustainable business. Your accountant helps you keep money moving in the right direction and plan for both expected and unexpected expenses.

Improving cash flow management

Your accountant can set up cash flow forecasts that show when money is expected to come in and go out. This helps you avoid shortfalls and make better decisions about when to invest or hold back.

They can also recommend strategies like adjusting payment terms with vendors, sending invoices sooner, or setting up automated payment reminders to keep cash flowing steadily.

Securing business loans

When you need financing, lenders want to see organized, accurate financial records. Your accountant prepares the financial statements and projections that banks and lenders require.

They can also advise you on which type of financing best suits your situation, whether that's a term loan, a line of credit, or an Small Business Administration (SBA) loan. Having a professional present your financials increases your chances of approval.

Managing debt

If your business carries debt, your accountant helps you develop a repayment strategy that doesn't strain your cash flow. They can prioritize high-interest obligations, negotiate better terms with creditors, and ensure your debt load stays manageable as your business grows.

Dealing with unpaid invoices

Late payments from customers can seriously disrupt your cash flow. Your accountant can set up systems to track outstanding invoices and follow up on overdue payments.

If invoices remain unpaid for an extended period, your accountant may suggest options like invoice factoring to convert receivables into immediate cash.

Supporting business growth and operations

As your business scales, your accountant helps you manage the financial side of growth. From hiring to inventory, they provide the numbers you need to expand with confidence.

Hiring and payroll management

Bringing on new employees comes with financial responsibilities. Your accountant helps you understand the true cost of each hire, including salary, benefits, taxes, and insurance.

They can also set up and manage payroll systems, ensuring your employees are paid accurately and on time while keeping you compliant with federal and state employment tax requirements.

Inventory management

If your business sells physical products, your accountant can help you track inventory costs and optimize stock levels. They'll calculate metrics like cost of goods sold (COGS) and inventory turnover to identify waste and improve purchasing decisions.

Effective inventory management ties directly to your profitability. An accountant ensures you're not tying up too much cash in unsold stock or running out of your best sellers.

Improving business efficiency

Your accountant can review your operational costs and pinpoint areas where you're spending more than necessary. This might involve renegotiating supplier contracts, streamlining workflows, or finding more cost-effective tools and services.

Small improvements across several areas add up quickly. An accountant with a clear view of your finances is well-positioned to recommend changes that save you time and money.

Tax planning and compliance

Taxes are one of the biggest reasons small business owners turn to accountants. A skilled accountant doesn't just file your returns; they plan ahead to minimize what you owe and keep you on the right side of the IRS.

Year-round tax planning involves reviewing your financial position throughout the year, not just at filing time. Your accountant can help you with:

• Estimating quarterly tax payments so you avoid penalties
• Identifying deductions and credits you might overlook, such as home office expenses, equipment depreciation, or retirement plan contributions
• Choosing the right business structure to optimize your tax position
• Staying current with changing tax laws and regulations that affect your business
• Preparing for and managing IRS audits if they arise

Proactive tax planning can result in significant savings over time. For example, switching from a sole proprietorship to an S corporation at the right revenue threshold can reduce your self-employment tax burden considerably.

Your accountant also tracks filing deadlines, prepares all necessary forms, and makes sure your records are organized in case of an audit. This kind of year-round attention keeps you compliant and removes the scramble that often comes with tax season.

How to find the right accountant

Finding an accountant who understands your business takes a bit of research, but it's worth the effort. The right fit can save you money, reduce stress, and help your business grow.

Here are some practical steps to guide your search:

• Ask for referrals from other small business owners in your industry or local network
• Check credentials, including CPA certification, relevant experience, and professional memberships
• Look for someone familiar with your industry, since different sectors have different financial challenges and regulations
• Discuss their communication style and availability to make sure they're responsive and easy to work with
• Ask about their technology setup; an accountant who uses cloud-based small business accounting software can collaborate with you more efficiently

For a more detailed walkthrough, take a look at this guide on how to choose an accountant. You can also browse the Xero advisor directory to find qualified professionals in your area.

Streamline your accounting with Xero

An accountant brings expertise and strategy to your business, and the right tools make that partnership even more effective. Xero's cloud-based accounting software connects you with your accountant in real time, giving both of you a shared view of your financial data from anywhere.

With features like automated bank feeds, invoicing, expense tracking, and financial reporting, Xero helps you stay organized between meetings with your accountant. Your accountant can access your books directly, saving time on data entry and focusing more on advising you.

Get one month free and see how Xero and your accountant can work together to keep your finances running smoothly.

FAQs on working with accountants

Here are some frequently asked questions about working with accountants.

Do I need a CPA or will a regular accountant work for my business?

It depends on your needs. A CPA can handle audits, represent you before the IRS, and sign off on financial statements, which is valuable if you're applying for loans or dealing with complex tax situations. For basic bookkeeping, tax prep, and financial advising, a qualified accountant without a CPA license may be a perfectly good fit.

When should I start working with an accountant?

The best time is when you register your business or start generating revenue. An accountant can help you choose the right business structure, set up your books correctly, and establish tax-saving strategies from day one. Waiting until tax season often means missed deductions and last-minute stress.

How often should I meet with my accountant?

At a minimum, meet with your accountant quarterly to review your financial performance and plan for upcoming tax obligations. Many small business owners benefit from monthly check-ins, especially during periods of growth or significant change. Cloud-based accounting software makes it easy to stay connected between meetings.

What industries hire accountants the most?

Accountants work across nearly every industry, but demand is especially high in finance, insurance, healthcare, government, and professional services. Small businesses in retail, construction, and hospitality also rely heavily on accountants to manage inventory costs, payroll, and seasonal cash flow fluctuations.

What tools do accountants use?

Modern accountants rely on cloud-based accounting software, spreadsheet applications, tax preparation software, and payroll platforms. Many use tools like Xero to collaborate with clients in real time, automate data entry, and generate accurate financial reports. The shift to cloud-based tools has made accounting more efficient and accessible for small businesses.

Disclaimer

Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.