Price increases are not often favorable, but unfortunately, they are a reality of life. And accounting firms increase their fees from time to time for a variety of reasons. However, the Fuentes & Angel CPAs, LLC team takes fee increases very seriously.
If you’re curious about what conditions and reasons an accounting firm might have to increase its fees, there are several causes. And, of course, you will always be made aware of these changes and what this means for you moving forward. So, here’s a list of a few fee increase motives and why they occur:
The Economic Climate
As the economy changes, so do the laws and regulations that affect businesses. These can affect an accounting firm’s fees.
- Inflation: Inflation is a term used to describe the increase in prices of goods or services over time due to demand for those items. When inflation rises, prices for many goods and services rise as well. This also affects accountants who charge clients by the hour. As more people are needed at work because of economic pressure (unemployment), this will cause higher compensation required.
- Consumer Price Index: Inflation results from an increase in the consumer price index. This directly correlates to increased accounting firm fees because firms must maintain adequate resources and keep up with market rates.
- Salary Changes: The increased workload and responsibility of CPAs are some of the reasons why these rates are going up.
Demand for Services
Many people don’t realize that the fee charged by an accounting firm is often a reflection of how much time, effort, and expertise it takes to provide their services. For example, CPAs must meet certain requirements before they’re allowed to perform audits. This means that it’s not always possible for an accountant to just jump in and start providing these services immediately. As demand for this type of work increases, so do the fees associated with it — because now there are more professionals needed.
A lot of work goes into helping clients with their needs. However, if there is a case where extra services have been added, or there was a scope creep, it is necessary to up the fee to a proper level that reflects the work being done. An analysis will be performed, allowing the information about the increase to be presented to the client. Overall, this could happen because of added tax, compliance, disclosure requirements, or turnover issues.
Contact Us For All Your Business’s Accounting Needs
Don’t let the complexities of your accounting burden you any longer. Our small business and individual tax accountants can advise business clients with their day-to-day operations and assist individuals and companies in making decisions that would decrease their tax liability now and in the future. Get in touch with us here at Fuentes & Angel CPAs, LLC.