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These 2 reasons stop sole traders from using accountants – how can you change their minds? 

11th Aug 2022
Brought to you by
Coconut
Coconut’s simple bookkeeping and tax app is specifically designed for sole traders, helping them...
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Only 21% of sole traders currently use an accountant. But with the arrival of MTD ITSA, more than ever are going to need support. We found two key problems that accountants need to solve when it comes to winning more sole trader clients – and how to solve them.

Sign saying no and a megaphone on a yellow background
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In our recent survey of 500 UK sole traders to understand their views on Making Tax Digital for Income Tax, we found that accountants are missing a huge opportunity – to the tune of £360 million per year. The majority of sole traders are thoroughly unprepared for the changes, unsure of how to handle the increased workload, and a large number are open to paying for third-party support.

That leads us to the big question – why don’t more sole traders use an accountant? It turns out that there are two key reasons that accountants need to address. So let’s find out what the problem is and what accountants can do about it.

Blockers for sole traders

According to our survey, currently only 21% of sole traders use an accountant. When asked why they didn’t use accountant, there were two reasons that stood out:

  • Price: 82% of sole traders don’t want to pay for an accountant
  • Change: 56% worry they’d have to change the way they record their finances to fit around an accountant, such as using new software. 

This shows that accountants still have some work to do when it comes to demonstrating their value to this large and valuable market. As sole traders see it, accountants aren’t worth the price or the effort, relative to what they would get out of the arrangement. 

Given that MTD ITSA is about to push a lot more sole traders into changing their tax arrangements, it’s in practitioners’ interests to change these perceptions. Sole traders will need support to cope with these changes, and those accountants who can address these issues proactively have a chance to dramatically grow their client book. 

So how should accountants go about changing these views?

What are accounting services worth?

For better or worse, accountants have been largely associated with compliance – and for sole traders with simple tax affairs, they may simply have not felt the need of a professional to help them with their figures. 

However, as accountants well know, the value of a trusted advisor goes far beyond ticking the box for HMRC. Luckily, sole traders who use accountants know this too. When we asked those who use an accountant what benefits they received from working with one, we found a wide range of positive effects:

  • 77% said that using an accountant has significantly reduced their stress levels.
  • 80% said that using an accountant frees up time for them to focus on running the business
  • 89% said that their accountant gives them reassurance that everything is filed correctly

This lines up closely with what we found about sole traders' biggest worries about MTD ITSA, where 61% of them thought that the Making Tax Digital programme sounded complicated and 53% thought it would take them away from my primary job of running their business.

On the bottom line of the business, 75% of sole traders believe that not using an accountant would be more costly to their business, in terms of taking up time, increased risk of errors, additional tax bills.

The challenge for accountants is to make this value tangible to potential customers who are skittish about price. Options can include:

  • Fixed monthly billing to reduce the sticker shock of annual billing
  • Clear outlining of price-benefit services during initial meetings 
  • Offering consultation or support services to offer additional peace of mind 

Managing the fear of change

The irony of the second major objection – not wanting to change their processes – is that change is coming whether sole traders want it to or not, via MTD ITSA. The challenge for accountants is to show why clients would be best off changing with you.

Sole traders are not limited companies – they’re used to working with simple workflows and processes, so it’s important to match your service to their needs. That means:

  • Speaking their language, not using technical terms that will alienate them
  • Choose an accounting platform that is suited to their needs and price point, such as Coconut
  • Offer them processes that fit with the way they already work and products they already understand, such as running their finances from their mobile and capturing transactions on the go with the Coconut mobile app
  • Tie your choice of product to the challenges they’re facing in their business, such as time spent on bookkeeping, tracking real-time financial data or up-to-date visibility on their tax position
  • Have a clear process for onboarding them onto new systems that helps them feel confident in using it, saving you time on customer queries

Building a strong message

As MTD ITSA approaches, more sole traders are going to be looking for tools and support to help with the transition. It’s up to you to ensure that you’re speaking the right language to catch their eye.

On your website, social presence and marketing materials, address these concerns proactively, showing how you understand their needs and dealing with these questions in advance. You can also back messages these up with quotes and testimonials from existing clients that acknowledge and address their specific objections.

Grasp the sole trader opportunity 

For sole traders, MTD ITSA is the biggest shakeup in decades. Accountants have the chance to take a leading role in helping them adapt, but this starts with understanding your customers and what they really need. 

At Coconut, sole traders are our business. Our goal is to build the very best solution for them and their accountants to help both sides make the best of the move to MTD ITSA. To find out more about the findings from our in-depth report as well as specific advice on how accountants can build a tailored, valuable service, download the report now.

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