Being your own boss, steering your own path, choosing your work hours. The idea of self-employment is both exciting and attractive; which might explain why it is the fastest growing type of employment in Britain.
However, for all the perks, one responsibility that many self-employed individuals could do without is managing their own finances. If you are struggling with the number crunching it could be time to get some professional help.
Here are three of the biggest warning signs that indicate it is time to hire a small business accountant:
1. Managing finances is taking way too much time.
When you are self-employed, you most likely have to juggle a multitude of different tasks from clients and projects to meetings and reports. As a result, running a small businesses tend to mean you’ll work longer hours than traditional employees.
Time for self-employed entrepreneurs then is tight, and that’s before you factor in managing your finances. With different business taxes to pay and forms to fill out, you can spend a lifetime trying to make sense of unorganized financial records and invoices making sure you’re paying the right amount.
The issue here is, whether it is getting in the way of your work or your personal life, spending a lot of time on business tax returns and other business finance activities is using up valuable hours. If you find that you’re losing days to managing your finances, get an accountant, so you can concentrate on what is really important—expanding your business and enjoying time with friends and family.
2. You find business finances to be really confusing.
There are many areas of managing your business finances that can lead you down a stressful road that inevitably ends up with you in the fetal position. Whether it’s the different types of taxes, the definition of what is covered under expenses or accounting jargon that seems like a foreign language, it can seem almost impossible to be totally in control of what is going on.
This, however, is a big problem. If you are not 100% sure about what is happening with your business finances, there are likely to be mistakes happening, and mistakes could lead to unnecessary payments or even an audit.
3. You are facing an audit.
If you are currently self-employed, the idea of being audited may fill you with a stomach-churning fear that even the scariest movie franchise couldn’t recreate. During this time, every detail of your business finances from the last three years are analyzed and examined by experts looking for any discrepancies in your business tax returns.
The issue is, unless you are an expert in dealing with business taxes, mistakes can easily be made. You may have forgot the carry the 1, you might have forgot about a minor source of income or any other type of mistake that may have seemed innocuous at the time, but can have legal ramifications if discovered.
Having to deal with these types of discrepancies can be disastrous, including legal action for fraud in worst case scenarios. Accountants can essentially act as an internal auditor, looking for financial discrepancies before they are found by the auditors themselves. This gives you time to make adjustments and declarations to avoid any major financial or legal ramifications.
A skilled accountant then, is your lifeline to sanity when running your own business. They help juggle the problems that you simply don’t have the expertise in dealing with, problems that are unfortunately a part of the self-employed lifestyle.
This article has been edited
Russell Smith, founder and Managing Director of Russell Smith Chartered Accountants, began his accountancy business over a decade ago. Starting from the very bottom, he now has offices all over the UK and an expanding client base. Russell knows everything there is to know about accounting and the trials of being self-employed. Connect with @rsaccountancy on Twitter.
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