Accountants Overhead Cost (Monthly) Calculator
Estimate your accounting practice's monthly overhead costs, cost per billable hour, and minimum revenue needed to cover regular expenses.
Overview
Use this monthly accountants overhead cost calculator to total the regular costs of running an accounting practice. Enter staffing, premises, software, professional, and other expenses, then compare them with expected billable hours and your desired profit margin.
How it works
The calculator adds the monthly cost categories to estimate total overhead. It divides that amount by expected billable hours to show the overhead that each billed hour must recover. Break-even revenue equals the total overhead. To calculate a revenue target with profit included, the calculator divides total overhead by one minus the target profit margin. The resulting revenue target is then divided by billable hours to estimate the average hourly rate required.
How to use this calculator
- 1Enter all regular monthly staff costs, including employment-related costs and contractors.
- 2Add monthly office, utility, software, insurance, professional, marketing, and other operating expenses.
- 3Estimate the total billable hours your practice expects to deliver in a typical month.
- 4Choose the profit margin you want the practice to retain after overhead.
- 5Review the monthly overhead, break-even revenue, and target hourly billing rate.
Example Calculation
Staff costs per month
$12,000
Office and utilities per month
$2,500
Software and subscriptions per month
$1,200
Insurance and professional costs per month
$800
Marketing and other costs per month
$1,500
Expected billable hours per month
300
Target profit margin
20%
Total monthly overhead
$18,000
With monthly overhead of 18,000 and 300 billable hours, the overhead cost is 60.00 per billable hour. A 20% target profit margin requires monthly revenue of 22,500, or an average billing rate of 75.00 per hour.
Frequently asked questions
What counts as overhead for an accounting practice?
Overhead generally includes costs that support the practice but are not directly assigned to one client, such as payroll, rent, software, insurance, memberships, marketing, and administration.
Should partner or owner pay be included in monthly overhead?
Include it if it is a regular cost that the practice must fund. How you classify drawings, salary, and profit distributions may differ, so use a consistent approach for planning.
Why is billable hours important in this calculation?
Billable hours spread your overhead across the time you can charge clients for. Fewer billable hours mean each billed hour must recover a larger share of costs.
What is break-even monthly revenue?
It is the estimated revenue needed to cover the monthly overhead entered, before allowing for profit, taxes, financing, or unlisted costs.
How is the target hourly rate calculated?
The calculator first finds the revenue needed to cover overhead while retaining your chosen profit margin, then divides that revenue by expected monthly billable hours.
Should I include one-off purchases?
For a monthly planning view, you can either exclude unusual one-off purchases or spread their estimated cost across several months if that better reflects your budgeting approach.
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Assumptions and warnings
Assumptions
- All entered costs are recurring monthly business overheads.
- Billable hours represent the total hours expected to be charged to clients during the month.
- The target profit margin is calculated as a percentage of revenue after the listed overhead costs.
- The calculation excludes variable client-specific costs, taxes, debt repayments, and one-off expenditure unless you include them in an input category.
- Results are planning estimates and depend on the completeness and accuracy of the costs entered.
Warnings
- This calculator provides a business planning estimate only and is not accounting, tax, or financial advice.
- Review actual costs regularly, especially when staffing, premises, software, or regulatory expenses change.