When you’re self-employed, it can be difficult to decide whether you need to hire an accountant.

It may seem like an extra cost for your business at the start, but in reality, it can prove to be a good way of saving not only time but money as well.

Here are several reasons why we think you should consider hiring an accountant.

Never miss a deadline

As a self-employed individual, you’ll be legally required to prepare and file your self-assessment tax return every year (if you’re a sole trader) or corporation tax return (if you run a limited company). Meeting these deadlines is incredibly important if you want a clean tax record with HMRC.

Everyone who files a self-assessment has until midnight on 31 January each year (for online returns) to submit their return and pay any tax they owe to HMRC. Missing this cut-off point will automatically result in a £100 fine.

If you don’t manage to submit your return three months after your deadline, you may have to pay a £10 daily penalty which maxes out at 90 days.

At six months, you have to pay a further penalty of 5% of the tax you owe, or £300, whichever is greater. Anyone who fails to file their return after one year will pay 5% of the tax they owe or £300, but also there is a large chance of having to pay 100% of the tax you owe as a penalty.

This could all be easily avoided by hiring an accountant to look after your tax obligations. An accountant will likely have completed hundreds of self-assessments in their time, so they will make light work of yours too.

Focus on your work

If you’re a sole trader and run your own business, having an accountant by your side can make things a lot more efficient.

Instead of having to spread yourself thin over your daily operations and financial work, you can have the added support that will allow you to shift your focus solely onto your business.

As you’ll have more time to run your business, you may find yourself able to look at opportunities to expand and develop. If this is the case, having an accountant will prove invaluable, as they’ll be able to help you with funding options and advise you on forecasting your future sales and expenditure.

Reducing your tax liability

It can be quite easy to fall into the trap of paying whatever you’re told to by HMRC, especially if you aren’t experienced in dealing with your tax returns and finances.

By hiring an accountant, you could actually find yourself saving money on your annual tax bill. This is because, as trained professionals, accountants are well-versed in tax reliefs and allowable expenses, reducing your tax liabilities significantly.

This is especially true for company directors, who can pay themselves with a mix of salary and dividends. By paying yourself slightly under the annual personal allowance of £12,570, you can avoid paying income tax and then top up your wages with dividends (which also have a tax-free threshold of £2,000).

Dividends have lower tax rate bands when compared to income tax thresholds.

We can help

Although it isn’t essential for self-employed people to hire an accountant, it can be a huge help which will take some of the weight off your shoulders.

At Smith Butler, we have helped countless self-employed workers with their finances and tax return, and we can help you too.

Get in touch to find out how we can help.