Accountant or software?

pulck

First time post - so please be kind.

I'm a freelance working in the media industry. For the last 6 years I've been self-employed and using an accountant to do my tax returns. He seems very good - I just give him all my expenses receipts, invoices and bank statements and he does everything for me.

That being said, I believe I have a simple set of accounts. I don't own or hire out equipment or office space, nor do I ever employ anyone else. I'm VAT registered, but on the flat rate scheme and I carry out my own (very simple) VAT returns. I used to ask him to do this for me as well, but he was charging me £600/year extra.

Unfortunately his fees for doing my tax returns have gone up considerably in the last few years and he now charges me nearly £1400/year. Despite my asking, he is unwilling to let me do some of the paperwork and thereby reduce his fees. He says it will complicate matters. It is also worth knowing that he offers me no financial advice whatsoever. He has a separate financial advisor in his office whom you have to pay to see.

I am not saying that he is a bad accountant. I simply want to investigate whether there is a cheaper and equally effective way of working.

So I'm now thinking about trying to do my own tax returns and wondered if there is computer software available to help me get started. I know that the HMRC website will allow you to fill in your tax returns form in advance and check your figures, but I'm completely green to this, having depended on my accountant entirely for the last 6 years. I'm hoping there might be a package which I fill in from day to day with details of all my expenses, assets, savings, income, etc and which will complete my tax returns at the end of the financial year. Ideally it would also give me indicators as to what can and cannot be rightfully claimed.

Perhaps I am being naive thinking that a piece of software can do the work of a qualified accountant. But like I say, my accounts are straightforward and, for the sake of nearly £1400/year, I thought it would be worth asking the question....

Does anyone on this forum know of or already use accounting software along these lines? I have seen mention of some packages, but I do not know of any other freelances who use such a system instead of an accountant.

Any help gratefully received.

zfrl

If your accounts are straight forward you can do them yourself quite simply. You do not even need complex expensive software. All you need to do is record all the information on receipts, income and outgoings - the same as the boxes on the tax form. I do mine on a spreadsheet. Then you transfer the totals when completing your on-line return.

I don't do a VAT return but again it should be straight forward.

Good luck & come back with specific questions if you need to as there are some great helpers on this site.

yorkshire_laura

i work in an accountants and we encourage our clients to do more for themselves to make it easier for us and to reduce their bills. if you feel confident doing it yourself i would just do it on a spreadsheet like zfrl said. you could get some quotes off other accountants if you aren't confident enough.

Careful_with_that_Axe

Maybe go to a halfway house for a while? Use a bookkeeper type person who works on a self-employed basis?

PlutoinCapricorn

Many self-employed people maintain their own records and file their own tax returns - filing is much easier when you use the online service.

A lot depends on the type of business that you run, the volume and complexity of your incoming and outgoing transactions, the time that you have available for record keeping and your need for professional financial, tax and accountancy advice and bookkeeping skills.

I just use a spreadsheet for each tax year with one page for monthly income, one for monthly and other expenses and one for the figures that I will transfer to the online form. I also keep another spreadsheet that lists all my invoices, client name, amount, date, date paid, payment method etc. All paperwork is scanned and anything older than 6 years is shredded once a year. I am lucky in that my affais are very simple, I am not VAT registered and my self employment income is below £15,000.

I assume that you are a sole trader not a limited company: why not give it a go? Have you submitted the 2008/09 return yet?

fengirl_2

I think your accountant is stringing you along a bit by not encouraging you to keep proper records he is able to charge you top dollar for him to do it. Ask around and find another accountant who will show you what records to keep to enable a set of accounts to be produced more economically.

Pennywise

www.freeagentcentral.com is the closest thing I know of that integrates the year end tax with the basic book-keeping. It was written for freelancers. You enter your sales invoicing details and your expenses etc and it will produce the profit & loss account, and uniquely I think, give you a running total of forthcoming income tax liabilities. It won't do your personal tax return for you, but you can just take the figures straight out of the system to enter into the tax return. Trouble with any software though is that you have to know what is and isn't allowed before you enter it onto the system - if you enter things that are not allowable the computer won't know that, so you have to know yourself and make sure that you don't put anything in that you shouldn't - conversely, make sure that you put everything in that you should. To my mind, the optimum solution is to do the basics yourself, i.e. the basic book-keeping, and then hand it over to the accountant to do the year end accounts and tax return. A good accountant will tell you what to do in order to make things as quick and simple as possible for the accountant, therefore making their charges a lot lower.

rupee99

Most people with straightforward businesses can prepare their own accounts and submit them to HMRC. Where they are unlikely to have expertise is in what can be deducted and what is not allowable as an expense. Getting that wrong can be expensive but you will have to assess whether the risk is worth the expense of using an accountant.

Accountants are fond of saying (like lawyers with wills), they make much more money out of people who do not take advice than those who do. But in the words of Christine Keeler, they would say that wouldn't they.

TM1976

From what you say here it sounds like you have a bookkeeper rather than an accountant. For this what your are paying sounds a bit steep. The basic record keeping stuff that they are doing you could do yourself but I would recommend that you still use an accountant to put together your final accounts and do your tax return because here you need a degree of technical knowledge.

You should probably go and speak to a couple of accountants and get some alternative quotes.

Lots of people always post on here and say you can do all this yourself I still think you should get an accountant. OK I am an accountant so I am biased but I have dealt with hundreds of people doing this and they always get some aspect of it wrong. If you submit your tax return to HMR&C there is a good chance they still won't pick up on it straight away so you might not know unless you have a tax inspection. Even then they generally focus on errors that result in you paying them more tax. It depends how much you care about getting your tax submissions right.

CLAPTON

rupee99 wrote: »

Most people with straightforward businesses can prepare their own accounts and submit them to HMRC. Where they are unlikely to have expertise is in what can be deducted and what is not allowable as an expense. Getting that wrong can be expensive but you will have to assess whether the risk is worth the expense of using an accountant.

Accountants are fond of saying (like lawyers with wills), they make much more money out of people who do not take advice than those who do. But in the words of Christine Keeler, they would say that wouldn't they.

well, actually it was Mandy that said that and not Christine....

SailorSam

When i was self employed i had an accountant at first, but my accounts were very simple ( i was a taxi driver ), so started doing my own tax return. What i found is if you take your figures into the taxman rather than send them, and try to go when they're not busy, they help you with any problems that you're unsure about.