Choosing to become self-employed comes a whole host of decisions. Not only do you have to worry about drumming up enough business to keep yourself profitable; you also need to take into account that you are in charge of every element of your business – including your finances.
Now, if you have got a natural interest in bookkeeping, taxes and finance, then that’s great. Dealing with your self-assessment form should be easy.
However, if – like many self-employed workers – the thought of filling in this form fills you with dread, then it is only natural to consider hiring an accountant.
However, is it really necessary?
Why might you need an accountant?
Whilst it isn’t mandatory to hire accountant, managing the financial element of your business can be hard. From making enough money to pay yourself and your employees, to dealing with income tax, pensions and National Insurance… all of this can feel overwhelming.
Here is where an accountant can lend you their assistance. They can take over the management of your payroll, invoicing, paperwork, taxes and pension contributions, and ensure it is all completed on-time, so you don’t have to deal with any unnecessary fines.
Similarly, they can help you with the following:
- Minimise your tax liabilities
- Making sure you compliant with the Making Digital Tax Initiative (so you are equipped to pay your taxes every quarter)
- Save you time – instead of you wasting hours each week trying to figure it out, they are professionally trained to do it all
This means you can remain focused on doing what you do best – running your business and offering your specialist services.
However, if you haven’t got a team of employees to deal with or the self-employed work you do is simple; then you may find handling your own finances is easier and cheaper than you think.
How can you become your own accountant?
Often the hardest thing about filling in your self-assessment form is knowing what information to include and what you are entitled to claim for.
For instance, if the service you offer is done remotely, with no need to travel or physically meet with your clients, then filling in the form will be simple as you’ll only need to mention your earnings for the tax year and any expenses you have (e.g. electricity, heating, buying a new laptop etc.).
If on the other hand, you need to travel, meet with clients or you sell a product, then your form will become more complicated as you’ll need to mention your petrol and clothing costs, as well as any materials you need to buy in order to create your product.
Now, if you do fall into the latter category, don’t worry. Just because this makes the form more complicated to complete, doesn’t mean you can’t become your own accountant. The steps to doing so are simpler than you think:
- Keep a clear set of records – date and save all of your client invoices as well as keep an organised record of all your in-goings and out-goings. TIP: invest in online bookkeeping and invoice software packages. These will make it easier for you to fill in your tax return.
- Online bookkeeping and accounting courses – there are numerous of online bookkeeping and accounting courses that you can enrol onto that can increase your knowledge of how to manage your own finances. The bonus to doing an online course is that you can easily fit it around your business and do it at a pace and time that suits you. Similarly, they can help to enhance your knowledge on how to run a business and deal with cash-flow issues.
- HMRC forums – in the months running up to the January self-assessment submission deadline, the HMRC regularly run online webinars, seminars and live chats where you can easily contact a member of their team for advice. These are very useful if you are struggling to work out what does or doesn’t need to be included in your form.
So, should you get an accountant?
This will mainly depend on how you personally feel.
If the whole concept of forms, taxes and pensions leaves you feeling stressed, then hiring an accountant may be the right choice for you. If, on the other hand, numbers really interest you and you feel fairly confident in your ability to manage your own books; track your cash flow and fill in forms and invoices; then managing them on your own is possible – as proven with the tips above.
The question really is – do you really want to do it yourself?