The Average American Spends This Much Time on Their Tax Return. How Do You Compare?

How much does it cost to file your taxes

According to the IRS, the average taxpayer spends 13 hours preparing their return. This includes record keeping, tax planning, form submission, and other related activities. And this number can vary widely depending on how complex your taxes are.

Here's a more detailed breakdown of how long average Americans spend on their tax return, followed by some pointers on how to use your time as efficiently as possible.

It takes how long to file a tax return?

Non-business filers, who make up 68% of all returns, spend an average of eight hours on their returns, including three hours spent on record keeping, three hours spent filling out forms, and one hour spent on tax planning. For this group, filing the return costs an average of $110, which includes all possible methods of filing (e-Filing, tax-prep software, or a tax professional), as well as other out-of-pocket costs such as postage and photocopying.

For business filers, the average time jumps significantly to 24 hours. And this group doesn't just include corporations; a return filed by anyone with any type of business income (including revenue from rental property, freelance work, etc.) is considered a "business return." The most significant difference here is record keeping, which takes 13 hours on average for business filers, though the other areas of tax preparation take significantly longer as well.

It also depends on which version of the 1040 form you choose, which makes sense, given that your choice of form generally reflects the complexity of your taxes. Total preparation times vary from five hours for a 1040-EZ to 16 hours for a standard 1040 form.

Here's a complete breakdown of the average time spent on taxes (in hours) and the average cost of filing for each of these groups of taxpayers:

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How Much Does it Cost to Hire a Freelance Accountant?

How much does it cost to file your taxes

Keeping track of your day-to-day financials—not to mention the big picture of your business’s financial health—is crucial, whether you’re a startup, another small business owner, or a large corporation. But when you’re on the smaller side or just getting started—instances where every dollar counts and time is money—the often time-consuming responsibilities of accounting and bookkeeping often fall on the already full plates of business owners.

If you’ve always handled this type of work yourself, a freelance accountant can step in and handle many of the financial aspects of the business, which immediately frees you up to focus on the daily operation of your business. Hiring a freelance accounting professional to handle your bookkeeping, month-end close, taxes, or any other accounting work can be invaluable—but how much does it cost to hire a freelance accountant?

How much to budget for an accountant will largely depend on how much work you need, how quickly you need to complete the work, what kind of expertise or advanced degrees you need, and the complexity of tax laws in your industry and country. But with all the time and energy it can save you, the ROI can be a big one. In fact, a good accountant can pay for themselves in their ability to help protect you from fraud, loss, fines, and compliance issues.

In this article, we’ll break down some key cost factors to help you more accurately estimate the cost to hire an accountant for your business.

The first step in estimating a budget (and also the type of contract) is to determine whether you need a freelancer accountant for occasional projects or ongoing, day-to-day accounting operations. Depending on your needs, you can hire an accountant on a per-project basis and pay them hourly, or go with a fixed-price if you have a short-term project. If you need an accountant for an ongoing basis, you may need to consult your human resources partner or another advisor to verify the worker’s classification.

Next, determine types of services you’ll need from this professional. The good thing about hiring a freelance accountant to handle specific tasks is that you can narrow down what skills you need the professional to have. Skilled accounting pros on Upwork can provide many different important services, whether it’s tax season or you need expert advice on accounting issues that arise for your business all year round. They can handle your bookkeeping, analyze your financial records to check for inconsistencies and errors, prepare and file taxes on time, and even provide a complete audit of your business to make sure your records are accurate and up to date.

Will the accountant be handling paying vendors? Will they complete your monthly tax filings? How often will you need profit and loss statements generated? Asking these types of questions will help you create a job description that will get you closer to estimating a budget, and finding the perfect professional. In outlining the role and type of contract, other questions you should ask yourself are:

  • Is this for an Ad Hoc project or ongoing accounting operations?
  • If it’s ongoing, for how long?
  • What will they be doing?
  • What areas of the work you will delegate to them vs. continue to do on your own?
  • Is any specific system access required?

Also, consider what your accounting needs may be like in the near future. You may want to select an accountant who will be able to grow with your organization. Even though you may not need services like bookkeeping or payroll today, it’s a smart idea to ensure that your accountant will have you covered if a need arises.

Now that you’ve laid out an idea of the day-to-day tasks or project you’re hiring an accountant to handle, here are a few additional factors that can typically affect cost.

Are you hiring a freelance accountant for a one-off job (say, yearly taxes), a few hours a week, or for a more ongoing basis?

You may think that your startup is not big enough to warrant an accountant, and that you will not spend much time sorting out accounting issues. But unless you’re an expert in tax and finance (in other words, an accountant yourself), this won’t be the case. The financial aspects of running a business change on a regular basis–from keeping your books up to date, approaching funding sources or market analysis – an accountant provides your business with a great deal of essential support, time savings, and help to ease the load of setting up a company.

What you need them to do and how much time these tasks will take up will contribute to the cost to hire an accountant. What you delegate to them will take tasks off your plate, but make your accounting budget grow. For example, you might hire an accountant to help with:

  • Paying for everyday expenditures
  • Recording forms of income
  • Verifying deposits and other transactions
  • Balancing bank accounts
  • Billing clients directly
  • Managing past-due accounts
  • Preparing monthly financial statements
  • Handling payroll (with proper privacy and security measures) and withholding taxes
  • Generating business reports

Businesses definitely hire an accountant for their expertise in tax codes and number crunching and the other work listed above, but experienced accountants are capable of providing you with so much more—if you need it. A great accountant is also going to be an expert in business and how finance relates to your everyday operations. With expertise comes more reliability and often a higher cost—plus important traits like honesty, communication, and work ethics. The last thing you want is someone giving you an excuse when Uncle Sam comes knocking about overdue taxes.

Do you need an accountant with advanced training, specialized experience, or an advanced degree? This will also affect their rate, and your budget. Some bookkeepers may have advanced training or a degree in a field such as accounting, finance, or business administration. For example, some accountants on Upwork charge around $25-35/hour, while senior business consultants and analysts can charge as much as $180/hour. Others may specialize in certain job sectors such as law, health care, or automotive, which would give them certain insights that could make them a great fit for your project.

Those with specialized degrees may have a better overall (or more specific) knowledge of advanced tasks like loan packaging or preparing business plans. Do you require any professional certifications? While this isn’t necessary, belonging to an organization like the National Association of Certified Public Bookkeepers can show a deeper commitment to the field.

Some work translates accounting to higher-level tasks like consulting, planning, valuations, etc. Other advanced accounting tasks may include:

  • Business valuation
  • Consulting
  • Risk management
  • Strategic planning
  • Financial analysis
  • Writing a business plan

Typical Rates Charged by Freelance Accountants on Upwork*