There are an estimated 4.76 million people working as self-employed in the UK (Office for National Statistics, 2018), which clearly shows the desire for people to work for themselves whether it be for the flexibility, passion for a specific role or for the potential increase in earnings.
There has been an increasing trend in people using their skills to work for themselves in the UK, which is great, but this decision to go it alone increases the administrative tasks that employers would normally complete.
This can cost in time and money along with increasing stress for those trying to generate work, complete jobs and ensure their legal obligations are fulfilled. Depending on the nature of your business, the amount and frequency of your income and the variety of work-related costs may have led you to already have an accountant who helps deal with this aspect for you- ensuring you’re are complaint with your tax obligations and that you don’t have to worry too much about your financials. However, many self-employed individuals complete their accounts and tax returns themselves.
It may be relatively simple for you to keep track of your income and expenditure for your business-related activities and complete your self-assessment form each year. However, for some, this can be a particularly stressful time, endlessly looking at bank account statements and going through old receipts. This can be alleviated with the use of software and phone apps that help organise information and generate financial statements automatically, but is it worth going the extra step and having a professional manage this for you.
So, what are the advantages of using an accountant?
Cost is relative
You may think that any cost associated with work that is physically possible for you to do yourself simply reduces your income for no reason. This may not be necessarily true.
Accountancy fees can vary depending on the work that needs carrying out, but for self-employed individuals, the accounting work can be completed for monthly package fees or one-off yearly costs. You may feel any cost is too great, but have you ever worked out how long it actually takes you to complete your financial statements and submit all of the relevant information each year? It could be a useful exercise to determine how many hours are actually spent completing these tasks to see if it is truly saving you money. For example, if you were to charge your time out for a specific job or task, how much would you charge per hour? Then you could use this hourly rate to determine the actual cost of your time to complete your financial obligations in a given month and over the year.
So, in theory, you could have been completing paid work and generating income during the time spent completing your accounts. Although you could argue that you only spend time in the evening or weekends (if you don’t work normally during these times for clients) completing your administrative financial tasks, this is still time that you could have used to help generate new business or simply use doing something you enjoy. It may be the case that you do enjoy doing these tasks as many people want to be in full control of their financial affairs, but is that actually coming at an additional cost to using professional help?
Emotional cost
Even if you find that paying for an accountant would cost a little more than the time you would spend completing your financial affairs, is the extra cost worth it for the convenience? Just as you may pay for a window cleaner despite being able to do it yourself, the convenience of an expert completing your financial tasks may free you up to spend more time doing what you love, which could be seen as much more valuable. Depending on your situation you could also work the cost of your accounting fees into your pricing to ensure that it doesn’t actually cost you anything extra, then you could simply enjoy spending more time on yourself and your work. Even if you enjoy understanding the financial aspects of your business, you can still remove yourself from the administrative tasks and simply look over the statements yourself, keeping yourself in the loop.
Expertise
Although basic accounting can be self-taught, a professional accountant who has worked full time for a number of years after specific training is inevitably going to have a much greater understanding of the subject. This means they may be able to improve your financial efficiency, provide useful advice and help you plan for the future in ways that may have been out of your technical know-how. This also means you don’t have to keep updating your knowledge of new legislation that may affect your tax obligations or update your knowledge of new software and processing methods. This can be handled by someone who will have extensive experience with these changes over time. Additionally, accounting can become very complex depending on specific work carried out and claimable expenses, so it could be cost effective to have an expert ensure you are maximising your income. This kind of expert knowledge would take you many years to learn, which also has a cost to you.
Ultimately, some people work for themselves to be in complete control of their lives, which includes completing their own accounts and managing their own financial affairs. Hiring an accountant may mean you have to put a lot of trust into someone other than yourself, which may be hard for you to do. However, a good accountant may pay for themselves many times over from both a financial and well-being point of view.
If you would like to discuss how we could help you with your financial affairs, feel free to get in touch with our friendly team so we can help remove this burden.
Call us on 0330 024 0406 or check out our all-inclusive accountancy package for just £85 + vat per month.
