There are two kinds of people in this world, those who are excellent at keeping track of financial matters, and those who aren’t. Luckily, for the majority of the world, income tax, where the bulk of your financial affairs reside is usually handled by your employer. Of course, with the world now gravitating towards the gig economy and startup culture, we’re seeing more and more employees turning into freelancers and small business owners, taking up more financial responsibility in the process without access to the company accountant.
The idea of breaking free of the usual 9 to 5 routines common to typical jobs is more freedom. The freedom to choose what work you’d like to be doing and how to do it. That freedom of course comes with the caveat of more responsibility, specifically one that deals with accounting and taxes. Make no mistake, the difficulty of doing small business accounting or even your own personal one is not to be underestimated, which is why you should consider hiring a professional accountant to help you with those issues.
Hiring an accountant for freelancers
If you’re just starting out as a freelancer, you might be having an idea that taxes and accounting are things that you’d be able to do by yourself. I say try not to get ahead of yourself. On top of the judicious bookkeeping you’re going to have to do, keeping a record of each and every single one of your business transactions, you’re going to have to familiarise yourself with tax laws and deductions that might apply to your situation.
On top of that, you’ll have to estimate yourself how much tax you’d have to pay at the end of your financial year to ensure you won’t be caught off guard come tax season. The ATO makes this somewhat easier by providing pay as you go instalment services but you’d still be missing out on potential deductions this way and you know what they say, a penny saved is a penny earned. For those who are just starting out, having a professional taking care of your books could be a blessing.
The benefits of hiring an accountant for a freelancer
If you think that the only benefit from having an accountant is saving you from having to decipher the arcane and unintelligible text that is the tax code, I’m very happy to say that you’re wrong. Having a personal accountant of your own, one that you keep throughout the year instead of solely for the purpose of tax can help you in a number of ways, some of which are:
Saves you time. A lot of time
Unlike typical office workers whose salary are usually stable throughout the whole year, a freelancer’s pay check is directly connected to the amount of work they do. If it’s contract-based, the more contracts you could handle, the more money you’re going to get. If it’s time-based, the more time you could spent working means more money for you.
By having an accountant on your repertoire, you can spent more time earning money and polishing your skills instead of sweating your brows over taxes. Accounting is not exactly hard, but it’s a time-consuming and laborious work that requires careful attention and your focus is better served on your actual work.
As an adviser on how to handle your business
The mistake that people usually make is that they hire an accountant close or even during tax season, which is like paying your electricity bill once power has been cut off to your house. An accountant should be kept throughout the year because they could also act as a financial adviser, giving you tips on how you should handle the financial matters of your business. They could help you do your bookkeeping throughout the year and tell you which deductions apply to you, which leads me to my next point.
They help save you money
In the overall scheme of things, deductions are mostly minor, but taken as a whole, it could actually be big enough to offset the money you use to hire an accountant in the first place, not to mention the fact that the cost of the accountant itself is actually eligible for deduction from the ATO.
Sure, it might cost you the same to simply do your taxes yourself but as mentioned before, the time you’d be saving is worth more than money. Additionally, you could pick up a few things or two from the advice you’ve been getting that you’d be well placed if you ever want to go solo in the future.
Choosing the right accountant
Accounting is a surprisingly wide field. Corporate accounting, small business accounting and personal accounting all have their own unique traits. Before you hire an accountant, make sure that accountant specialises in your type of business. An accountant with proper expertise in freelancers and small businesses might know the esoteric in-and-out associated with small business accounting that corporate accountants aren’t aware of.
CEO of Papdan.com, a creative agency providing a suite of web development, design, E-Learning, application and mobile solutions, as well as SEO services.