Do You Really Need an Accountant If You’re Self-Employed? Deciding whether to use an accountant can feel like a big decision, especially given the cost involved. If you are struggling to decide what is the best thing to do for you here are a few things to consider if you are trying to decide whether you really need an accountant.

When it comes to the question of whether you really need an accountant if you’re self-employed, it seems to me that there are two very clear camps.  

Those that use an accountant and those that don’t. With very strong opinions either way!

Internet forums are full of conflicting advice and strongly worded opinions about unnecessary accountants fees, countered by arguments about the tax savings they bring.

If you are new to self-employment it can be hard to know which camp you need to fall into. Especially if you are feeling out of your depth when it comes to taxes and are trying to figure where to get help.

So here is some advice from me to try to help you decide whether you really need an accountant if you’re self-employed.

Are you Legally Required to Use an Accountant if You’re Self-Employed?

No. There is no legal requirement for you to use an accountant.  

Self-Assessment means that you are responsible for working out your own taxes and filing your own tax returns.  

You can CHOOSE to use an accountant to handle your affairs but ultimately it is your responsibility to make sure all the right forms are submitted on time.

Why Do People Use an Accountant to Do Their Self-Assessment Tax Return?

So if there is no legal requirement why would people choose to hire an accountant to complete their self-assessment tax return?

Well, there are a few reasons they choose it:

They can’t be bothered!

Whether it’s because they are too busy running their small business or just don’t want to deal with tax forms, they need an accountant to take the burden of taxes and tax returns away from them.

They have complicated tax affairs.  

Perhaps their business is highly specialised, maybe they have more than one type of tax to pay like self-employment taxes and capital gains tax.  

In some cases, people need an accountant who has expert knowledge about how to handle their tax and fill out the forms correctly.

They want a safe pair of hands.

Accountants have specialised and up to date knowledge meaning they know all the rules to minimise tax legally. There is a lot of incorrect information on the internet or advice not bespoke to your situation.  

By using an accountant people choose to have peace of mind that everything is done correctly – so there is no risk of penalties if HMRC chooses to investigate at a later date.

How to Do You Know if You Need an Accountant?

If you are confused whether you need an accountant or not then here are some questions to ask yourself:

Can you afford an Accountant?

One of the main reasons self-employed individuals choose to do their own taxes is to save money.  And with accountants fees often being the largest administrative cost a small business can face, it’s understandable.

Depending on where you are with your business, you may not want to burden yourself with any additional costs.

Do you want to learn about tax returns?

Some people are keen to learn how to handle their own taxes and tax return – it gives them complete control over their finances, especially if they are fairly straight-forward.

If this is you, then don’t forget to join my mailing list for extra tax tips and free advice to help you handle your taxes correctly.

How complicated are your Business and Tax Affairs?

If you have basic tax and business affairs, then completing your own tax return may be straight forward for you to handle.

But if your finances get complicated then you may need an accountant to handle it for you. They’ll have the experience you need to make sure everything is correctly declared to HMRC as well as help you save some tax.

Do you have time?

Self-Assessment Tax Returns are due by 31 January each year.  If you are busy or running close to the deadline then you may need an accountant.

There is a £100 automatic penalty for not filing your tax return on time, along with further interest and charges on any unpaid tax.

Do you have tidy bookkeeping records

If you are on top of your bookkeeping and have all your paperwork neatly stored then using an accountant may be cheaper than you think.  

An accountant charges more for someone with messy books simply because it takes more time to prepare the information needed for filing a tax return.

If you have stayed on top of things or use something like Quickbooks, then using an accountant may be cheaper than you think.

How much Does An Accountant Cost For the Self-Employed?

That’s hard to answer how much an accountant for the self-employed charges.  There are figures all over the internet starting from £50 up to several hundreds.

But the amount you pay should be directly related to how complicated and time consuming your accounts and taxes are, as well as the state your paperwork is in.

That means it can be impossible to do a cost comparison between two people without going into the detail behind:

  • How much they earn;
  • What their business does;
  • What other forms of income they have;
  • How they keep their records.

Useful reading: Essential Questions to Ask Before You Hire an Accountant, Why are Accountants so Expensive

How To File Your Own Self-Assessment Tax Return

If you decide you don’t need an accountant and you’re self employed then you need to make sure you file your own tax return.  Don’t ignore it – HMRC penalties are issued automatically and chased aggressively.

Need help Completing Your Self-Assessment Tax Return? My easy to follow step-by-step guide to completing your self-assessment tax return is designed for self-employed individuals who handle their own taxes but need a helping hand from an expert.

Updated 28 June 2019