As an independent professional, having an organised and legally compliant operation is crucial for success. But between securing new contracts, delivering work and general admin, keeping on top of your accounts can easily slip down the priority list.
This is where bringing an accountant on board can transform how your business operates. Beyond just submitting paperwork, a good accountant becomes a trusted advisor empowering you to make the best financial decisions.
Here are six compelling reasons hiring an accountant is an excellent investment for your freelance or consultancy:
1. Maximise Your Earnings
Rather than simply compiling records and filing taxes annually, proactive accountants analyse your finances to uncover ways to retain more income. This includes utilising appropriate allowances, expenses and tax relief to legally minimise your obligations. A great accountant spots things you never knew you could claim for.
2. Save You Time
Trying to stay on top of income, expenses, record keeping, tax returns and compliance is demanding for any solopreneur. Handing this workload to a skilled finance professional frees up hours you can reinvest into winning new business.
3. Help You Plan For Contingencies
From unpaid invoices to periods without contracts, unpredictable fluctuations in earnings can spell disaster for consultants without financial safeguards. Forewarning from your accountant allows you to budget, save and have credit ready for the lean times.
4. Fund Your Future Goals
Savvy accountants help map out tax efficient ways for you to build longer term wealth. This makes buying a home, saving for retirement or planning a sabbatical far more achievable on an inconsistent freelancer’s income.
5. Ensure You Are Legally Compliant
Remembering deadlines and keeping compliant with legislation like IR35 for contractors is hard alone. Accountants handle submissions to prevent nasty fines plus advise you on operating legally.
6. Provide Ongoing Business Guidance
Beyond number crunching, great accountants share recommendations on everything from the best business structure and insurance to contracts and software. This holistic guidance can be invaluable.
The Risks Of Going It Alone Without An Accountant:
It’s tempting as a lean startup or bootstrapping founder to try tackling finances yourself. But attempting to self-manage accounts when lacking expertise carries huge risks that can sink your business.
Financial Penalties
Miss a tax return, submit erroneous figures or overlook notifications from HMRC and you can rapidly incur fines running into the thousands. With an accountant reviewing everything, these kinds of expensive oversights become far less likely.
Cash Flow Crisis
If you lack financial oversight, it becomes incredibly easy to mishandle cash flow. Poor budgeting when income fluctuates means you can suddenly be unable to cover costs. An accountant projecting ahead spots potential cash flow crunches.
Non-Compliance
Keep sloppy records and you may struggle proving income sources or allowable expenses if HMRC investigates. Formalised accounts show you are transparent and fully compliant.
Incorrect Business Structure
Choosing the wrong business structure has huge financial implications down the line for what you can claim, admin needed and tax obligations. Accountants ensure you pick the optimal route.
Lost Money
DIY accounting often fails to utilise available tax relief, allowable expenses and additional income streams. Great accountants know the intricate rules around legitimate deductions to save you money.
While temporarily managing things yourself seems attractive, the risks posed make working with a specialist essential. The penalties and costs associated with getting things wrong will always outweigh accountancy fees.
Professional Talk:
What about you? Do you already have an accountant to manage your financials, or are you trying to manage it yourself? Would you recommend an accountant for freelancers and brand-new start-ups, or have you been able to navigate NIC and VAT without one?
Until next time, make sure it’s Professional Saver.
