When Accounting Firms Need to Provide Estimates
Not every engagement can be quoted with precision upfront. When a new client approaches with three years of unfiled tax returns, a shoebox of receipts, and a QuickBooks file that has not been reconciled since 2021, you cannot know the exact scope until you dig in. An estimate gives this client a realistic cost range and demonstrates your structured approach to solving their financial chaos.
Estimates are also essential for advisory and consulting engagements. A client asking, "What would it cost to restructure my business from an LLC to an S-Corp?" needs a ballpark before they commit. The final cost depends on factors you will only uncover during the engagement — existing operating agreements, state filing complexities, payroll restructuring needs.
What to Include in an Accounting Estimate
- Engagement description — what problem you are solving: "Catch-up bookkeeping for FY2022 and FY2023"
- Estimated hours by task — "Transaction categorization: 15-25 hrs. Bank reconciliation: 5-10 hrs."
- Hourly rates by staff level — partner, senior associate, staff accountant, bookkeeper
- Estimated total range — low and high based on complexity factors
- Variables that affect final cost — volume of transactions, quality of existing records, responsiveness of client
- Potential additional services — "Amended returns may be necessary if errors are found in prior filings (estimated $300-$600 per return)"
- Timeline estimate — how long the engagement will take given current workload
How to Estimate Accounting Engagements Accurately
The biggest variable in accounting work is data quality. A client who provides clean, categorized transaction data from a well-maintained QuickBooks file takes a fraction of the time compared to one who hands you bank statements and a folder of unsorted receipts. Ask pointed questions about record-keeping before estimating: Do you use accounting software? Are bank accounts reconciled? Are receipts organized?
For tax preparation estimates, ask about income sources and deduction categories. A W-2 employee with a mortgage is straightforward. Add rental properties, K-1 income, stock option exercises, and foreign income, and the complexity (and your estimate) increases significantly.
Build in a review phase at the estimate's midpoint. After completing initial data review or the first year's returns, you will have a much clearer picture of the actual scope. Offer to refine the estimate at that checkpoint so the client is not surprised by the final bill.
Create Accounting Estimates with BillThemToday
BillThemToday's free estimate generator lets accounting professionals create detailed engagement estimates with hour ranges, staff rate breakdowns, and complexity factors. Download professional PDFs that give prospective clients the financial clarity they are seeking from their future accountant.