Self-employed, need accountancy advice
rubyjones13
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Hi MSE forum! My partner has just gone self-employed and wants to know your experiences with accountants. Is it worth it? What's a rough estimate of how much he should be paying monthly for someone to do his accounts/tax returns? Is it worth trying a self-employed tax app first (e.g. Coconut?). Any advice much appreciated.
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We use an accountant but we are a partnreship and they also deal with payroll / pensions for our employees, auditing etc are required by our regulator and so on, so not really comparable.
If he isn't already, I'd recommend that he has a separate bank acount for the business finances and ensures that he is keeping good records of all invoices, expences etc. as he goes along, and that he is putting mney aside for tax .
Maybe suggest that he has a look at the tax forms to see how daunting he thingks they will be?
He would be able to use an accountnat to help prep his returns, he might find it helpful to set up a meeting now to check on what they would need and to talk about timescales and costs.
An app may mean that he can manage the information more effectively during the year so he hasd eveything in one place to provide to the accountnat when he needs to do his tax return and (hopefully in time) VAT returns
I don't currently use an accountant because my business is very simple and has very few transactions going on, minimal invoices and expenses etc. I find it really easy to keep up with things using spreadsheets. I wouldn't make back the money I'd pay an accountant in savings they would be able to help me make, because there aren't really many savings to be had when things are as simple as mine. I literally send 3-4 invoices a month to my clients and have 2-3x monthly expenses to log, plus the payments I make to myself as salary. Takes me half an hour per month if that.
I set aside 30% of everything that comes in for tax (I'm 20% tax band), national insurance and student loan repayments and there is a bit of a buffer there come tax time when you factor in personal allowance - meaning I can give myself a rebate which feels just as good as when HMRC do it
I have also recently started using Quickfile, a free bookkeeping platform if you have under a certain number of transactions, think it's 1k - but that's more so I can get used to using software well in advance of MTD coming in and to back up my spreadsheets so I know I'm doing things right there.
We pay £90/month for PAYE payroll for 2 people, VAT, Corporation returns/tax and Self Assessment for 2 people. We've paid the same amount for 12 years now.
Ours is not officially an advisory service but if you want to ask a Q about getting an electric car as a company car or ask them to provide statements to a mortgage lender etc they've always done it without additional fees. Similarly when I messed up and pay the VAT money to HMRC's PAYE account they sort it out in minutes whereas it'd take me hours even to get through to HMRC.
As a sole trader doing cash accounting with a modest turnover then self assessment would be fully achievable.
Have a look at Kashflow.com which is one of the best for beginners/non-accountants to use.
1) HMRC are (in my experience) difficult to deal with. They are understaffed, so long waits occur and when they audit or check anything, they go into infinitesimal detail
2) An accountant will know the specific business & tax rules, which could actually save you money vs doing it yourself, for example being able to claim certain tax reliefs.
So I'd say go for an accountant. Word of mouth is the best way to get a good accountant, but go for someone with experience in your sector who knows about tax.