When to hire an accountant if you’re self-employed

Are you a sole trader or company director confident, and happy, to handle all your financial matters? Or does the thought of dealing with taxes and HMRC feel scary and overwhelming? While we’ve produced a wide range of guides on tax, IR35 and financial wellbeing, knowing when to hire an accountant if you’re self-employed can help people in both camps save time and money.

Some freelancers and contractors might feel they don’t need specialist financial advice, particularly if they've been working for themselves over a period of years without any major issues. Others might put it off due to embarrassment if they’ve been operating in a state of disorganisation for a while, or still struggle with the basics of self-employed invoicing or accounts.

Paying for help can also seem expensive, especially when there are useful budgeting and invoicing tools which can streamline a lot of the financial processes. But even if you’re a freelance financial specialist, an impartial third party might spot things you’ve missed. And for the rest of us, there are key reasons to know when it’s a good idea to bring in an accountant, even if you’re not relying on them throughout the year.

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  • Time saving: Every self-employed professional should invest time in understanding their finances. But learning all of the intricacies and spending time on documentation and tax submissions is time you can’t spend doing the work that earns you a living.
  • Money saving: You may already be claiming every possible expense, cost reduction or source of funding that’s available to you. But it’s unlikely, especially if you’re just starting out. Whether it’s the tax deductions for working from a home office, capital allowances and depreciation for business assets, or how you pay your salary.
  • Stress saving: A fairly simple sole trader set-up might be relatively easy to manage, but as your business grows, or if you’re in a limited company, then the worries about mistakes, missed payments, or keeping up with the regulations, such as Making Tax Digital, can cause a lot of stress.
  • Forward planning: A good specialist accountant can do more than just check tax deductions and that your accounts are in order. It’s likely they’ve dealt with similar businesses and industries, so can offer insights into growing your business, or mistakes others may have made.

If you’ve never received any expert advice before, then it’s quite possible the costs of bringing an accountant will be offset by the savings they can uncover for you. Or in some cases, you might even end up with more money in your accounts at the end of the year.

But when you don’t feel you need ongoing support each month, when are the key times to hire an accountant if you’re self-employed?


When to hire an accountant if you’re self-employed

When you’re just starting out

A qualified accountant may be useful in creating a business plan if you’re looking for significant funding or investment to create your own company. But in all cases, they can provide expertise and advice on choosing the right legal structure, setting up business accounts and any financial software you’re using, and ensure you’re organised in the right way from the start.

It’s never too late to sort your business finances, but it’s quicker and easier to have everything in place from the start rather than paying someone to untangle several years of financial records. And it means you won’t miss out on deductions and savings which could run into thousands of pounds.


Dealing with taxes and HMRC

If you’re a sole trader with relatively simple financial records, you may be happy to submit your tax returns every year without any outside help. But as your list of clients or customers grow, having a qualified expert check everything pre-submission can be a relatively cost-effective way to ensure there are no mistakes or omissions.

And if you’re in a limited partnership or the director of a limited company, then things can get a lot more complicated. Along with your statutory accounts, there’s the records of directors, share allocations, dividends to manage, along with specific cases like director’s loans.

Being audited by HMRC can be a stressful and time-consuming process. But having the assistance of an accountant will help you avoid the possibility by minimising mistakes in your tax returns, and means you can rely on their support during any investigation process. Some offer tax investigation insurance, which means you won’t pay fees for any work carried out during an official enquiry, review, investigation or audit.


Applying for financing and loans

Many banks and other organisations make it relatively quick and simple to access small overdrafts or financing options without requiring an accountant. But if you’re looking to secure significant funding, then having an accountant involved will help you choose the right option, and increase your chances of success.

You’ll also need an accountant to certify your business and personal income if you’re applying for a mortgage. Or alternatively, if you’re using one of the various options for managing personal debts, such as a DMP.


If you’re buying or selling a business

If you’re considering taking over an existing business to become self-employed, or growing through an acquisition, then it’s important to examine the company accounts in detail to cover areas like existing debts, ownership of assets, or other issues which could cause significant problems to you in the future.

And whether you’re selling up to retire or just cash out of your business, you don’t want any potential purchase to fall through due to an unforeseen issue. Or to receive less money from the sale due to your business structure or how you’ll receive payments.


When you need to start delegating

If you’re freelancing or contracting as an individual, there will probably come a time when your business and client list has grown to the point that you need to free up time previously spent on managing the smaller details of your finances.

An easy way to make the decision is whether you can earn more from your hourly rate than the cost of an accountant to free up that additional time.

But you might also find your growth involves partnering with other self-employed businesses, sub-contracting, or bringing on employees. Along with chasing invoices, finding new clients, and actually delivering work.

It may be that you choose to focus on the management side of your business, or you may want to concentrate on the work itself and start to delegate other areas. Whatever choice you make, it’s important to recognise when it’s time to start bringing in additional support. A few hours of accountancy will often cost less than losing clients, or making mistakes, because you’re trying to do too much by yourself. And you’ll also make better decisions for your business if you’re less stressed, and avoid the risk of burnout.


How to find an accountant when you’re self-employed

Given the complexities involved, it makes sense to look at accountants specialising in self-employment. For example, you’ll find some listed via the IPSE marketplace, offering significant discounts for IPSE members.

You can also find recommendations from other people in a similar position or industry, through communities including our own member’s forum, or the IPSE Community and Creative Freelancers UK Facebook groups.

A chartered accountant means that they are a member of either the Institute of Chartered Accountants or the Association of Chartered Certified Accountants, which require a series of exams and work experience for someone to join, whereas anyone can technically call themselves an accountant.

Along with checking their knowledge, experience and recommendations or reviews, it’s also worth making sure they’re a good fit for the way you work, and you can build a good professional relationship with them. Whether you prefer closer, more personal interactions or a hands-off approach unless you need to contact your accountant, it’s an important aspect to consider when you’re considering hiring someone or switching.

While cost is always a factor, it’s often worth paying more for someone who can bring more benefits to your business than saving a few pounds on their fees.

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