Do I Need An Accountant If Self-Employed
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A common accounting question is: do I need an accountant if self-employed? H. Stone & Co Limited offer Tax Accountant Services for Cheadle Hulme, Manchester, Cheshire. We look at why self-employed people rely on accountants for help and if you would benefit from it.
Do I need an accountant if I'm self-employed?
Starting out as a self-employed professional is an exciting time. You'll have the freedom to work your own hours with a flexible career. However, what most people don't account for is the added costs. When you're self-employed, you're the only one footing the bills.
It's understandable that self-employed individuals would want to make cutbacks to save money. One of the main areas these cutbacks occur is in additional services. But what most people don't consider is that these services are usually there for a reason.
One of the most common services self-employed people think they can do without is accountants. Of course, you can be self-employed and file your own accounts. However, many will find that going without a professional accountant will actually cost them more money in the long run.
Whatever your financial standing, if you are self-employed, it's always a good idea to have a qualified accountant on your side. One of the main benefits is that they help you meet your financial obligations. Which ultimately helps you avoid trouble in the future.
So, there are many advantages to going it alone as a self-employed professional. The freedom in your schedule can be a truly transformative experience. But you should bear in mind that heading out on your own also brings the responsibility of handling the risks involved.
Why is accounting important?
Whatever your business, and whichever sector you work in, accountants can simplify your finances. From filing taxes to finding ways to improve your profitability, these experts have a wide range of skills. Any professional can benefit from having a professional accountant by their side.
When you hire an accountant, their main duty will be to gather financial your financial information and assess it. When they assess your financial activity, they can offer expert advice for your business operations. They can calculate profits, suggest where you might be able to make more and inform you about your tax liability.
Most self-employed business operations will usually be small, to begin with. Which is why many people don't believe hiring an accountant is necessary. However, many businesses and self-employed individuals do rely on accountants for professional assistance. And it's important to understand why.
There are many reasons why the duties an accountant performs are vital for your success. By recording and analysing your financial information, your accountant can provide the following services:
Generating accurate information about your incomings and outgoings
Measuring and tracking your profits and losses
Helping you make sense of where your money is going and how you are spending it
Ensuring that you meet your tax liabilities accurately and on time
Why do self-employed rely on accountants for help?
Putting cutbacks to one side, there are elements of your self-employed work that you may need to outsource. For example, you might delegate your website design or social media posts to a second party. Relying on the expertise of other professionals to help your business succeed.
So, if people are willing to outsource their social media, why wouldn't they do the same with their financial needs? It only makes sense to delegate these responsibilities to those who are experts in that area. Accountants offer truly useful assistance when managing your finances.
There are many reasons why a self-employed individual would seek professional help from an accountant. These reasons include:
Everyone working in the UK has to pay taxes to HMRC. But, this financial responsibility is changing, thanks to the government's "Making Tax Digital" initiative. The aim of this initiative is to make it easier for businesses, sole traders and other workers to pay their taxes online.
However, if you've never filed taxes before, it's still a complex process. Tax legislation changes all the time, and it can be tricky to stay on top of the current rules and regulations. If you fail to meet your quarterly tax payments, you could face significant penalties. This is where your accountant comes in.
Since they will be managing and analysing your financial information, they are in the best position to file your taxes. An accountant can ensure your taxes are paid in full and on time, helping you stay on the right side of HMRC.
Minimising tax liability
Depending on your income, you will pay different levels of tax. Besides ensuring your taxes are paid properly, your accountant can help reduce your tax liability, where appropriate. This will help you hold on to as much of the money you earn as possible. Making sure you don't pay too much tax is an essential duty your accountant can perform.
There are legal ways to reduce your tax bill, which your accountant can help you realise. This ultimately allows you to enjoy more of your income, whether you want to reinvest it into your business or any other way you want to spend it.
By staying up-to-date with the latest tax rules, your accountant can find ways to make these benefit your business. Some rule changes will benefit you as a self-employed professional, while others won't. And it takes the skills of a professional accountant to know which best suits you.
Save you time
Another fantastic reason to hire an accountant is the time they can save you. This is possibly more important for self-employed people than others since you'll need to spend more time focussing on your work. With professional experts managing your finances, you're free to spend your time on your business.
Accountants can ensure you meet all your financial obligations while you continue to grow your business. This becomes even more valuable once your business does start to grow. With more clients and a more demanding schedule, you'll have even less time to devote to your taxes.
Can I Be my own accountant?
Some self-employed people will be able to do their own accounting. If they have experience managing their finances and have the time to spare, it's entirely possible. Therefore, there are some people who won't need to hire professional accountants, so long as they have the right skills. But for many who don't have these skills, hiring a professional accountant is the best way forward.
They can help you manage your books and control your finances in a more in-depth way. Whether it's creating an online bookkeeping resource, supplying invoices to clients or managing your taxes. If you are going to try and do your accounting yourself, you should be sure you understand the processes and procedures involved. You should also be sure you can be strict with yourself.
When it comes to accounting, having responsible business habits is vital. Not to mention making sound financial decisions. Many people inexperienced with accounting won't have these skills and can quickly run into trouble. Without accurate figures and data, you won't have a clear picture.
Not understanding the financial health of your business can lead people to make poor decisions, ultimately impacting their overall business. This is why accounting expertise is so vital for the value of your business. Even basic bookkeeping can mean the difference between successful and unsuccessful self-employment. But if you're set on doing it yourself, you'll want to take on some extra homework.
There are bookkeeping and accounting courses online where you can learn the skills you need. But this will take valuable time out of your day. While upskilling is important in all areas of business, it shouldn't come at the cost of your business itself. Being at least somewhat financially savvy is good for any business. But when it comes to serious obligations like taxes, you don't want to risk making any mistakes.
Additionally, keeping track of your profits and cash flow is vital to knowing where your business stands. So, if you aren't going to invest in new skills and don't feel confident in your financial abilities, professional accountants are your best option. They remove the hassle and complexity of your financial obligations, allowing you to focus on your business and your profits.
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