Do You Really Need an Accountant If You’re Self-Employed?


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!

If you are new to self-employment it can be hard to know which camp you need to fall into.

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

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 returns.  

You can CHOOSE to use an accountant to handle your affairs but ultimately it is your responsibility.

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 fo their self-assessment tax return?

Well, there are a few reasons:

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 choose for someone else to take that burden 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.  Using an accountant means they access 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.

Do you want to learn about tax returns?

Doing anything new involves a period of learning. Do you have the time (and energy) to learn a new skill? Mistakes will be penalised by HMRC. I’ve lost count of the number of clients I have taken on who have tried to manage their own taxes and then been hit with penalties.  Penalties in excess of what they would have paid to an accountant to handle everything on their behalf.

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.  And once you have completed it once, then it will make it easier to do the following year.

But if it gets complicated then you may prefer to ask an accountant to do it for you.

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 it may be advisable to use 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 it Cost to Hire an Accountant if You’re Self-Employed?

That’s hard to answer.  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.

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.

Here’s how you can file your own Self Assessment Tax Return:

On the HMRC website by logging into your Government Gateway Account

Log onto HMRC Online and File Your Tax Return directly with them.  Don’t forget there is plenty of advice here to help you too, so bookmark this page.

Use a Bookkeeping Software to Help File Your Tax Return

There is some automated bookkeeping software that helps you manage your numbers throughout the year and generates the numbers you need to fill out your tax return.

The two main products out there designed with the self-employed in mind are Quickbooks and Freeagent.

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