One of the biggest perks of being a freelancer is the independence that comes with it. However, this does also mean having to manage your own finances. Having to negotiate the complex world of taxes and expenses can cause many freelancers to ask the question: ‘should I hire an accountant?’. It can take away the burden of having to prepare your taxes. However, it will cost you extra money. To help you determine whether it’s worth hiring an accountant, here are a few additional questions to ask yourself.
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Can you afford to hire an accountant?
The cost of hiring an accountant can vary massively. Some accountants charge flat fees, while others charge hourly rates. These rates may vary depending on the experience and credentials of the accountant, and the complexity of your financial situation.
It’s important to consider how much you’re earning and whether you can afford to pay for an accountant. If you’ve got a steady income and you’re making a decent profit, hiring an accountant is likely to be a worthy investment, and could even save you money in the long run. If you’ve just started freelancing or your income is inconsistent, you may decide that it’s better to handle your own accounting until you’re in a better financial position (this post at Maverick Words offers some tips on how to achieve financial stability as a freelancer).
How complex is your income?
Another essential factor to consider is the complexity of your income. Some freelancers have a range of different income streams which may include royalties, investments and even payments in foreign currencies. Other freelancers may have a pretty straightforward income – such as consistent payments from one or two clients.
If your income is fairly complex, keeping on top of your finances could be a major headache and there could be a high risk of making costly errors such as taxing certain incomes incorrectly or overlooking certain expenses. In this case, it’s worth hiring an accounting service such as Safe Harbor CPAs & Tax Accountants. If you’ve only got a few consistent payments to keep track of on the other hand, hiring an accountant may not be worthwhile – you may find that you’re able to easily keep records and calculate tax yourself.
Do you have time to do your own accounting?
Time is a precious commodity for some freelancers. You may already be juggling multiple projects and roles. Do you really need to add accounting to the mix?
A lot of freelancers who are already working long hours find it much more convenient to hire an accountant – it’s one less job to think about. However, it’s possible you may be in a beneficial situation where you have the time to do your own accounting. If your finances are fairly simple to manage and you don’t mind spending an extra hour or two per month organizing them, then feel free to do your own accounting.
Should Freelancers Hire An Accountant?
You should consider hiring an accountant as a freelancer if you can afford it, if your finances are fairly complex or if you don’t have the time to do your own accounting. You should consider doing your own accounting if your income is small/unreliable, if your income is straightforward and if you have the spare time to handle it.
