Do I need an accountant for self employment?

sallysqueak · 13 November 2018 at 12:10PM

Hi

I've been self employed before, but after working for an employer for a couple of years, I'm now back to self employment again.

I've filed my own tax returns in the past, but I'll be earning almost double what I was in my past self employed life.

I've had an initial chat with an accountant, who told me at this stage, I'm better off staying as a sole trader, apparently I will be no better off forming a ltd company at this stage financially, as the accountancy costs will eat into any tax savings I would make.

My question is, do I really need an accountant? Is there any benefit to me?

To be honest, I was hoping this accountant would be offering me advice on what I could reasonably put through the books and deduct from my profits - but when I asked about this he just said 'The advice is on the internet really, we don't give any information as such'. Is this normal? Wouldn't a good accountant do this for me?

Or is it not an accountant I need? Would I be better off with a tax advisor or something similar? Honestly, I've never used any services like this before, but for £350 a year, I'd like value for money. I'm just not sure there is any real advantage to me even having an accountant after this meeting. I thought their purpose was to save you paying too much tax. Or am I barking up the wrong tree?

Lastly, if an accountant is recommended, would I be better off with one of these 'online accountants' such as Crunch?

Or is there some free accountancy software I can get where I can simply insert what I'm earning/spending and submit this to HMRC at the end of the year? Will that avoid the need for an accountant at this stage? Does such a thing exist?

Thanks in advance!

Pennywise · 13 November 2018 at 12:35PM

Sounds like the accountant you spoke to thought you're too small for him to bother with. I'd suggest you talk to 2/3 others. Giving basic tax advice is bread and butter work for most accountants. These days there is very little additional cost of using limited companies due to reduced statutory accounts requirements and streamlining of systems using modern software. For clients who are happy to do their own book-keeping to a decent standard using software such as Freeagent, our fees for limited company accounts/tax wouldn't be that different at all.

00ec25 · 13 November 2018 at 4:11PM

there is also the possibility that the accountant saw you as someone who simply wanted free answers and would not end up as a paying client, hence the steer to "DIY" answers on the internet. We certainly get a fair share of such people at initial meetings and tend to treat them similarly as they are not wanting to sign up as a paying client as that is after all what we are selling ourselves, our knowledge and how to apply it within the rules of tax law.

for those who are genuine, we most certainly would expect to offer them sensible and focused tax planning advice,

as ever with software, you can put a value in a box, it won't tell you if you have put the best figure in the best box, for that you still need human interface and applied knowledge / reasoning. Therefore, value for money comes from finding an accountant who gets you to do the data input and then you pay him/her for checking and advising and submitting the formal accounts in the statutory framework.

Yes software can split of a statutory template, but the knowledge is still worth paying for , just at a price that excludes paying for the donkey work bit which you can indeed DIY. hence as Pennywise says, something like FreeAgent is perfect as we get our clients to do the input to it leaving us to review and finalise.

Do I need an accountant for self employment?

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