For the past few years I have been self-employed. I’m self-employed in every sense of the word, as I’m the only person in my business. Technically, I have several businesses as I work as an author, a freelance writer and a webmaster. But in all instances, it’s just me. There’s no one else to moan to, no one to lighten the load. I have to deal with agents, editors, publishers, developers, and I have to do all the work.
My business was launched very quickly after a book of mine became an overnight hit. Before I knew it I was a professional author, with offers for freelance work. Within months I had created my own websites and was using my time to juggle these three jobs. As you can imagine for a 28 year old who had no prior experience with self-employment tax, the end of the tax year came as quite a shock.
I was astonished at what I had to pay and what I had to do. I consider myself to be very adept with numbers. I was top of my class at maths (although if you’d seen my class, you’d know that wasn’t much to write home about). However, I didn’t have the time, I didn’t have the patience. At one point I even contemplated just disregarding my expenses and throwing money at the tax office to get it over with. Thankfully, I didn’t do that. Instead, I hired an accountant and he took the burden off my hands. After which I felt like kissing his feet and opening a shrine to him in my living room.
That same accountant helped me the next year and the next. But everything was a little disorganized. He was a friend of a friend, someone working as a favor and for a nominal fee. I would spend weeks sorting through my paperwork, give him all of it, and then wait for him to do his magic.
This worked and it was cost effective, but it was also chaos. I have experience in the US tax system as I have worked in the US. Our system is child’s play by comparison, but it's still difficult to get your head around if there is a lot of information to compute and no time in which to do it
So, I decided to use QuickBooks. On the first day of the tax year I installed it and I set about covering every expense and every morsel of income. This was fantastic…for a few weeks. After that, the constant streams of incomings and outgoings from all different angles meant that it just wasn’t reliable. At the end of the tax year I still had to go back through everything and I still had to give the paperwork to my accountant.
It seems to me that the only options I have are to continue what I’m doing (which is dreading the tax year and then running around like a blue-arse fly when it arrives) or hire an accountant on a full-time basis. But that’s where it gets complicated: I may have the incomings and outgoings of a big business, but my profits don’t yet justify putting an accountant on a retainer.
I feel like I’m stuck in the middle. I’m at a point where my workload justifies it, but where the profit does’t quite tip the balance in favor of getting that accountant on board. So, what do you guys believe that the cut-off amount is? What are the options? Bear in mind that my end-of-year expenses don’t allow for much wiggle room, so there is no room for an employee’s wages.