Having an accountant isn’t a requirement for running a successful freelance writing business. In fact, you can save money by doing your own accounting. But, there are certain situations where hiring an accountant makes more sense than doing it yourself.
You’re too busy to focus on bookkeeping and other financial tasks.
As your freelance business grows or your life outside of work changes, you may find that you have little time left for finances after you’ve finished client work. Once your business grows to a certain size, it’s natural to consider hiring an accountant. This may become more critical if you’ve incorporated your writing business and need to know the important details about being an employee of a company you own.
You’re not doing a good job of managing your finances.
At this point, we’re all good at the basic mathematic functions necessary to manage finances. You can easily add up the number of invoices you received this month and subtract the money you’ve spent. But, no matter how good you are at pressing + on the calculator, you still might not be good at keeping up with invoices, receipts, bank statements and other financial documents. Plus, tax are often difficult for the average taxpayer since there are so many rules and loopholes.
Is The Cost Worth It?
Accounting costs range from a few hundred to a few thousand dollars a month depending on what services you need and how often you need them. Having an accountant do your finances year round will typically be more expensive than having someone who just does your taxes.
If all you need someone to prepare your taxes, you can save money by using a tax preparer with has small business tax prep experience rather paying a Certified Public Accountant. (I envy the writers who are married to accountants and tax preparers.) The fee you pay to an accountant or tax preparer is usually a tax-deductible business expense.
Also Consider an Accountant If...
If you’re just getting started and you need to know what bookkeeping and accounting practices you need to have in place, you might pay for a consultation with an accountant. It’ll still be cheaper than having the accountant handle your finances full-time. If you have questions about a specific situation and you can’t find the answer, getting professional advice from an accountant is wise. An accountant can also give some perspective on whether you’re making the right financial decisions, e.g. putting enough money aside for retirement.
The Middle Ground Between DIY and Paying Someone
An invoicing/bookkeeping/accounting software is a compromise between totally doing it yourself and hiring an accountant. I use MacFreelance and Paypal for invoicing, file folders and Excel for organizing receipts/bookkeeping, and TurboTax to prepare and file my income taxes. Other options include Quickbooks, Freshbooks, and SimplyBill. I’ve never used any of these, so I can’t tell you anything about them. I've read good things about Freshbooks though.
You can always try out an accountant for a few months and go back to doing your own finances if you find that it's not money well spent.
Have you thought about hiring an accountant? Or, if you've hired an accountant, when did you know it was time to make that decision?