Why Freelancers Need Accountants

We often get asked if freelancers need accountants. In this article we will be discussing why an accountant is still important for a freelancer.

28 September 2022
Reading time
Around 7 min
#Accounting Advisory

Accountants for freelancers

Your time is limited and you juggle a lot more than most people working on multiple projects and trying to score bigger clients. Accounting isn’t always the first thing on your mind but that doesn’t mean it’s any less important - in fact, quite the opposite! It’s likely you need help but not just anyone will do. You need an accountant that fits the freedom and flexibility of your lifestyle.

Why should you hire an accountant if you’re a freelancer?

Any business owner can handle their finances by themselves but that doesn’t mean they should. You didn’t start your business to research HMRC compliance, tax laws or fiscal regulations. It’s definitely not illegal to file your taxes or accounts yourself but unless you have someone helping you, you’ll struggle to keep up with how demanding accounting really is - especially as your business grows and you gain new clients.

What are the benefits of hiring an accountant for your small business?

As a freelancer, there’s nothing you need more than your time and energy. Unfortunately, these are both limited resources. When you mismanage your time or don’t have the energy to dedicate to your clients - your business suffers. On the flip side, for every hour you work, you gain income. This makes your time more precious than most people’s. Why hire an accountant? Simple! It lets you earn more money.

Get help filing your taxes

Everybody wants to conduct their finances in the most tax efficient way possible but not everybody knows how. Accounting experience and knowledge is key if you want to pay your taxes lawfully and compliantly. Being tax efficient improves your cashflow and allows you to spend more investing in your business. Accountants can tell you when they spot ways to improve cashflow from taxes.

Keep up to date with the latest HMRC changes

As accountants, we get the latest news on UK financial law and HMRC or Companies House guidelines and know how to act on them quickly and lawfully. Changes happen quickly nowadays and often go under the radar unless you’re not in the loop. Accountants get notified when amendments affecting your finances are made and reflect this in our work so your accounts are always compliant and up to date.

Never incur penalties for non-compliance

When you do your accounts yourself, there’s a very small margin of error for you to work with. Without pinpoint precision when you work on your finances, you could get fined for accidentally non-complying. Most freelancers agree that self-assessment tax returns or National Insurance contributions are the bane of their lives - hire an accountant to do these for you.

What should I look for in an accountant?

As a freelancer, your needs and preferences are different to that of small or limited business owner. When you look for an accountant, you should check a few things first:

  • Do they have experience working with freelancers?

    Not all accountants know how to handle freelancers because you might have multiple streams of income or unique business expenses that more traditional business owners don’t have.

  • Do you need them to be local or work remotely?

    Since you’ll communicate with most of your clients online and you might want to work flexible hours, it’s probably also important that your accountants are willing and able to work remotely for you and fit your schedule.

  • Can they be contacted quickly when things go wrong?

    When you’ve got multiple clients, they might fall through or come up pretty quickly. This makes your cashflow more volatile than other businesses. Make sure your accountants can be contacted directly when you need to inform them of changes or ask for their help.

  • Can they store and protect confidential information?

  • You might have to send your accountants sensitive information about your clients so they can accurately keep records for you. It might sound like a simple process but keeping information secure is much more complicated and harder than it seems. Make sure your accountants have the infrastructure to keep yours and your clients’ details safe.

Making Tax Digital (MTD)

At the end of every tax year, you’ll need to report your monthly earnings and outgoings to HMRC. This could include invoices, paper receipts and more. To submit your accounts efficiently, you’ll need to keep a constant eye on it all year round - not just close to the deadline! If you have a lot of expenses, buy and sell stock or purchase trade tools often - this is even more important.

Digitising your accounts can help you keep track of this and as per new regulations, all your accounts will be required to be processed electronically anyway. If you’re a technophobe or simply don’t have the money to spend on an accounting software like Xero, hiring an accountant is more cost-effective especially when you consider the other benefits that come included when you invest in one.

What is Making Tax Digital?

HMRC wants be one of the most “digitally advanced tax administrations in the world”. Their aims are to make tax admin effective, efficient, accurate and easy for businesses. MTD is the initiative to achieve this. If you have a HMRC online account, this will get shut down. Instead, you’ll have to submit your VAT records and taxes using compatible accounting software and you won’t be able to use your HMRC account anymore. Going paperless is more essential now than it ever was.

Grow your business

At Finance Box, we help you strategise your whole business journey from inception to exit. Regardless of where you at in your career, we’re here to assist you in making sure it’s a financially successful and rewarding venture for you. With the help of our intelligent software suite, we can optimise your cashflow, identify problem areas, run prediction models and streamline your invoices. All of this saves you money so you can grow more quickly.

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