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Flat-rate billing is better when the work is predictable and you can name the scope in a sentence, such as a T2 filing or a year of bookkeeping. Hourly billing is better when nobody can say in advance how much work is involved, like cleaning up three years of neglected books. Most accounting services in Canada end up mixing the two.
We can’t say what either model costs in your city, because fees aren’t something we can verify. What we can do is show how the two behave, and what to ask before you sign.
When does a flat fee work in your favour?
When you care more about certainty than about the lowest possible price. You know the number in advance, you don’t think twice before phoning with a question, and the firm has a reason to work efficiently, since a faster job is its gain.
The catch is scope. A flat fee covers what was agreed. If your records arrive in a shoebox, or you add a second corporation halfway through, expect a conversation about more money. So ask what’s included, what counts as extra, and how a change gets priced.
When is hourly billing the fairer choice?
When the job is open-ended. A CRA review, a messy merger of two sets of books, or a year where the paperwork isn’t all in yet are all hard to quote. An hourly fee lets the firm take the time it needs and keeps you from paying a padded flat fee for a risk that never showed up.
You give up predictability, though. Ask for a cap or a written estimate, and for updates when the hours hit, say, 80% of it. That one request removes most of the sting.
What does the arithmetic look like?
Here’s a made-up example, to show the sums and not to suggest a price. Say a firm quotes a flat $1,800 for a year-end package, and you’d otherwise expect hourly billing of $150 for about ten hours. On paper, the hourly route costs $1,500 and the flat route costs $300 more. But if the work takes fourteen hours, hourly billing runs to $2,100, and the flat fee is the cheaper one by $300.
The break-even is 12 hours. Flat is safer if you think the work could go past that, and hourly wins if it comes in lighter. The percentage calculator shows how far a 20% overrun moves the hourly total: from $1,500 to $1,800, which is exactly the flat fee.
Picture Elena, who owns a bakery in Moncton. She expects ten hours, but a missing supplier statement and a payroll correction push it to fourteen. Under the hourly deal she pays $300 more than the flat quote. Under the flat deal she’d never have noticed the extra hours at all.
Does tax change the comparison?
Not the comparison, but it changes the bill. If the firm is registered for GST/HST, tax goes on the fee either way. On a flat $1,800 in Ontario, HST is $234, so you pay $2,034. You can check it with the GST/HST calculator, and use the HST reverse calculator when you only have the total.
If you’re the one billing, a small supplier is not required to register. The CRA’s rule is a $30,000 total of taxable revenue in a single calendar quarter or over four consecutive quarters. Once you pass it, you have 29 days from your effective date of registration, which is no later than the day of the sale that crossed the line. The CRA’s page on when to register for and start charging the GST/HST explains both tests.
Can you switch models partway through?
Often, yes, but say so early. Some owners start hourly for the first year, while the books are untidy and nobody knows the real workload. Once the pattern is clear, they move to a flat fee for the second year, with the hours from year one as the evidence for the price. The reverse also happens: a flat fee that keeps ballooning gets renegotiated into an hourly deal with a cap. Neither move is rude. Both are easier when the first agreement already says how changes get handled, and you’ve kept your own record of the hours.
What should you ask before choosing?
- What does the quote cover, in writing, and what doesn’t it?
- Who does the work: the person you meet, or a junior staff member?
- Is there a cap on hourly work, and how will you be warned?
- How are extra requests priced once the job has started?
- When is payment due, and is any of it up front?
A hybrid often answers most of these. A fixed fee for the known work, and an hourly rate only for the extras, agreed in advance.
If you run the firm, what should you watch?
Track your real hours on flat jobs for a few months. If the work keeps going over, the price is too low, and you’ll see it in the numbers long before you feel it. Our profit margin calculator shows the margin left after costs.
Where does the information come from?
The GST/HST small supplier rule is from the Canada Revenue Agency. The Ontario HST rate of 13% comes from our sales tax data. Every dollar figure in the billing example is invented for arithmetic. We could not confirm going rates for accounting fees in Canada, so none appear here. We’re an independent site, and no government body is behind it.
Frequently asked questions
Is flat-rate billing cheaper than hourly for accounting?
It depends on how many hours the job takes. If the work runs longer than the quote assumed, a flat fee is cheaper. If it runs shorter, hourly wins.
Does HST apply to accounting fees?
If the firm is registered for GST/HST, yes. The tax is added to the fee, whether it is flat or hourly.
When does a small business have to register for GST/HST?
When total taxable revenues pass $30,000 in a single calendar quarter or over four consecutive quarters. You then register within 29 days of the sale that puts you over.
Can I ask for a cap on hourly billing?
Yes. Ask for a written estimate and a warning when hours reach a set share of it.
What is a hybrid fee?
A fixed price for the agreed work and an hourly rate for anything beyond it.
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