Should you get an accountant? It's a question every freelancer faces at some point in their career.


I’m a freelancer – do I need an accountant?

Written by Ozkan Accountants

As a freelancer, should you get an accountant? It’s a question every freelancer asks at some point in their career, often prompted by changes to their business or legal requirements from HMRC. With Making Tax Digital just around the corner, we’ve noticed more and more freelancers looking for a definitive answer to this question.

Well, there isn’t necessarily a definitive answer, but we can offer guidance to help you make your choice.

But first… isn’t it expensive?

An accountant is an annual cost, typically paid in monthly fees. Depending on how much you’re earning, it’s worth looking at this as a percentage of your earnings instead of a lump figure. If your accountant charges £1500 per year and you’re earning £12,000, that’s 12.5% of your total income. For someone on £40,000, the fee amounts to just 3.75% of your income. The smaller the percentage figure, the less the accountant’s fee will impact upon your business and your lifestyle.

It’s worth bearing in mind that an accountant is there to save you time. There is an ‘opportunity cost’ to doing your accounts on your own. Typically, for freelancers, that amounts to making sales and doing paid work. When it comes to doing your accounts, the bare minimum amount of work required involves keeping things up to date on a monthly basis as well as performing the relevant tasks for your tax returns when it comes to crunch-time. Factor in issues such as researching financial regulations in your industry and Googling information you don’t fully understand, and you have to ask whether the hours spent on your accounts might be better spent elsewhere.

How complex are your accounts?

Understanding the complexity of your accounts helps you understand your needs. Hypothetically, if you’re a freelancer with a handful of lump sum payments and zero outgoings, your accounting life is going to be pretty easygoing. In contrast, if you are managing subcontractors, have a coworking space you pay for, equipment like a smartphone and laptop that you part use for business and part for your personal life, a car, and incoming payments in all shapes and sizes from retainer contracts to one-off payments… well, then things are a little more complex and it’d make your life a lot easier to have an accountant onboard.

Are you growing?

For freelancers with growth on their agenda, an accountant is essential to have onboard. Accountants will be able to advise and support on when’s best for a freelancer to move from the position of a sole trader to a limited company, bringing with it many benefits in terms of tax relief and financial opportunities, but also increase complexity in the way of managing company accounts.

If formation of a limited company is on your trajectory, then hiring an accountant can help support with that step. Even if you’re not looking to incorporate a company, we’ve seen many freelancers go on to form limited liability partnerships (LLPs) with trusted colleagues in their industry. Having an accountant behind you can ensure you get the right advice at the right time when it comes to making decisions around growth and expansion, and ensures you’re always aware of the costs and benefits of shifting your company structure at any given time.

Accountants are advisers

Perhaps the biggest misconception about accountants is that they are there just to do your accounts. Phone them up once a year, dump a carrier bag of receipts on their doorstep, get the accounts sorted and sent off, job’s a good’un. In reality, an accountant can provide so much more than that.

freelancer with accountant

Your accountant isn’t just there to do your taxes – they can help you monitor your financial health and support you with growth and development.

We routinely help clients find tax relief initiatives that are specific to whatever industry or niche they’re situated in. We support clients with understanding their growth trajectory and how they might choose to expand and evolve. We ensure that our clients are aware of their overall ‘financial health’ and support them to mitigate any concerns or issues that might arise in the near future.

As advisers, we get to know your business and your needs and apply our knowledge to helping you achieve your goals.

Accountants have experience

In addition to providing advice and expertise, accountants deal with hundreds if not thousands of businesses who are similar to yours. Freelancing can sometimes feel lonely and isolated. It can feel like the problems that you are facing are yours alone, and like no one else has ever experienced them before. Whilst every business is indeed unique, and the problems you are facing will be idiosyncratic, your accountant has probably seen similar issues arise many times before in businesses that they have worked with. Having this first hand experience onboard, and hearing how issues were worked through can be invaluable both in terms of your business’ direction, but also in breaking free from the psychology burden of isolation that comes with freelancing.

Time for a mortgage?

Getting a mortgage when you’re self employed can be a challenge. Most lenders want at least 3 years’ worth of accounts to prove your income. Nearly all lenders will also want these signed off by a chartered or certified accountant. This is because lenders need to be able to confidently see that an applicant is earning as much as they say they do, and will likely continue to earn such a wage into the future.

You may have heard of self-employed people and freelancers getting mortgages under a ‘self-certification’ scheme in the past, but nowadays those have been banned. In short, then, if you’re looking to move home or buy a house in the near future, an accountant is a worthwhile investment to ensure you get a good idea of the size of the mortgage you can take out and also get approved for it.

Help to save money

Accountants can often pay for themselves just in the amount of money they can save you. There are plenty of opportunities to gain a little extra tax relief here and there. In addition to commonly understood business expenses such as maintaining your own website, grabbing coffee in a local cafe, or paying for software such as Photoshop, there are lots of other business expenses that we don’t always see freelancers acknowledging on their tax returns.

A common area of confusion is around cars and vehicles – it’s easy to get into a muddle about how to manage vehicle expenses, and whether to use the ‘simplified expenses’ route which offers a flat rate per mile.

Another area that’s often neglected altogether is the expenses you can claim on your home. Bills such as your electricity can be tax deductible, as well as extra services like your internet service provider. You can even claim a portion of mortgage interest, rental payments, insurance, and other household expenses. You may also be able to offset parts of household purchases, such as an iPad that you plan to use for both business and leisure.

An accountant can ensure you squeeze every last drop of tax deductible goodness from your home and actually help save you money.

Networking and client list

Whilst not a guarantee, an accountant can facilitate networking and meeting opportunities with clients who may want to exchange services. If you’re a freelancer offering graphic design services and your accountant also manages the accounts for several firms who are frequently looking for design work, then many accountants will help out by making an introduction. Or perhaps they’ll introduce you to a web developer whose books they manage and who is often looking to have design work done for websites they create.

Some accountants take this a step further by hosting meet-ups with networking opportunities for their clients. Whether you score new business or just meet with other freelancers who can send business your way, the accountancy fee can pay for itself once you’ve earned a bit of business through your accountant.

You’re less likely to be investigated

HMRC typically only investigates individuals and companies where it suspects there may be errors or worse in their tax information. Whilst there are some random checks and sometimes you just get unlucky, having your accounts analysed, prepared and delivered by a qualified accountant means you’re less likely to have to go through the rigmarole of an HMRC investigation. What’s more, if you are investigated, having an accountant by your side to guide you through the investigation is invaluable, minimising the cost in terms of time and stress.

Find out how an accountant can help your freelance career

At OZKAN, we look at every client on a case-by-case basis. Your business is special and unique, and so are your goals and ambitions. The above is some general advice, but pop by our office for a coffee and a free consultation, and we’ll be able to advise you further on how hiring an accountant can support your freelance business.


Personal Tax , Sole Trader