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Hiring an Accountant Versus Doing it Yourself

1st Mar 2017
Compulsion Media
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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.

Replies (10)

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By mrme89
01st Mar 2017 14:43

Something isn't right.

If you are very busy with work, but cannot afford a few hundred pounds for an accountant, something is wrong. You are either working for peanuts, or are too tight to pay for a good, professional service.

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By PJAitken
01st Mar 2017 15:11

With the current setup, I only pay a couple hundred a year. My concern is that a full-time accountant would cost a few hundred a week. For a business turning over £100,000 a year, that's not an issue, but it is when only £20,000 of that is profit.

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Replying to PJAitken:
By mrme89
01st Mar 2017 15:21

A business turning over £100k doesn't need a full time accountant.

You need an accountant that can help make your life easier by using things such as Receipt Bank and cloud software. And it won't cost more than a few hundred pounds per annum.

Speak to a few of accountants and see what they can do for you.

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Hallerud at Easter
By DJKL
01st Mar 2017 15:16

I would not get hung up on the books and records and would more concentrate on getting an accountant who is familiar with tax and authors. (things like averaging/allowable costs etc)

I have no idea how successful you are but do know, from long distant experience with a writer whose career, at the time, was really just starting but which subsequently flourished, that planning can need done very promptly (as say contracts are being discussed, not after etc) and an accountant ,well versed in the industry, is usually not wasted money.

Ours client, shortly after I left that firm, got passed on to others, far more experienced, when television/film rights started to feature though not sure business books quite sell into the same market.

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Replying to DJKL:
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By PJAitken
01st Mar 2017 15:19

Thanks for the advice.

Most of my books are actually fiction, so I do have all those kind of rights to deal with (although they all come onto one royalty statement). I think my issue is that I live in the backend of nowhere. Out here, It's hard to find an accountant full-stop, let alone one who specializes in authors.

My accountant is really good, don't get me wrong. Maybe I just need to focus on bringing him in more.

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By Dick Stastey
01st Mar 2017 16:09

PJAitken wrote:

...Most of my books are actually fiction...

This has to be a wind up?

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Hallerud at Easter
By DJKL
01st Mar 2017 17:10

Not a problem, you can always send me a copy of,

The Online Writer's Companion: A Complete Guide to Earning Your Living as a Freelancer Paperback – 22 Sep 2016
by P. J. Aitken (Author)

I have always believed there is a book in everyone (however terrible the book may be) so may endeavour to scribble something once my bean counting days are over.

If I do I am near guaranteed at least two readers as I have a wife and two grown up children.

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Sparkly Orange
By Sparkly
01st Mar 2017 15:24

I think you need to find an accountant that can also give you some QuickBooks training so that this works for you, plus get you linked up to something like Receipt Bank that can automate a lot of the pain you currently experience as you just take a picture of your receipt/invoice on your phone through the app and it feeds through to your QB Accounts. I don't have any connection to either company other than as an accountancy practice customer. Both online sites have a "Find an accountant" Directory so that you can have a look at the services available in your area along with other factors such as price, qualifications, reputation (not necessarily in that order before I start a war on here!) I wouldn't have thought you would need to have an accountant working for you full time we have clients with Turnovers of over £1 million that don't have a full time accountant! They do have admin/bookkeeping assistance which is of course at a much lower cost. A decent accountant is worth paying more than "mates rates" for as they may be able to save you tax and more importantly your time so that you can concentrate on growing your businesses. You are unlikely to be in North East Scotland where I'm based but if you are and want a chat let me know!

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Replying to Sparkly:
Hallerud at Easter
By DJKL
01st Mar 2017 17:46

As a fellow Scot, and given you are from the North East, you might enjoy this.

https://www.youtube.com/watch?v=shCCmYbZQ8s

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By Vaughan Blake1
02nd Mar 2017 11:18

I'm going to be pedantic here and separate "accountants" from "bookkeepers".

It sounds like you could use a "bookkeeper" to get the paperwork into some order on a regular basis. You would only need a very part time one for a few hours a month. They would be self-employed, so you would not need to take the scary step of becoming an employer. They could also make sure that you are invoicing for all your work, ensuring you get all your royalties and managing your debtors. If you are turning over £100K what happens about VAT returns? Yearly/FRS I am guessing!

It's the old "opportunity cost" quandary, if you do it yourself you save £X, if you get someone else to do it, you can be out earning £Y. Which is the greater figure X or Y?

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