How do you decide between DIY accounting vs hiring an accountant? With benefits on both sides, it’s important you choose what’s right for you. One thing that is encouraging for contractors, freelancers and self employed professionals generally is the increase in the types of accountancy and support services available now compared with 5 years ago. We’ve seen more traditional accountants choose to specialise in the self employed market. Also, there’s far more technology-enabled services out there, and more DIY bookkeeping and accounting software packages aimed specifically at this market than ever before.
The advances in technology also enable customers to access information and functionality via a wide range of devices. The choice has increased significantly – so how do you decide which is best?
Understanding what you need and want
Ultimately, there is a distinction to be made between understanding and managing your business and doing the admin, accounts and bookkeeping, return production, tax calculations and vat returns etc that are necessary aspects of running and controlling a business full time. There are advice and guidance services available to help with the ‘understanding and managing’ and there are applications and support services to help with the admin, bookkeeping etc.
The right answer when it comes to deciding between DIY accounting vs hiring an accountant?
The right answer in terms of what advice and guidance or support services that any customer chooses, is entirely down to what you need. It will depend on a range of factors – all of which relate to your individual needs and wants as business owners.
How much do you know?
In terms of advice and guidance services, how much the individual contractor knows about the various aspects of running a business will be relevant here, as will the relative experience of the individual in terms of both freelancing and running a business. The more you know, the less advice and guidance might be needed. Our experience here is that few people are comfortable without any guidance and advice – the bigger question is how much, and what type of advice is needed.
In terms of the admin, bookkeeping etc, much will depend upon what the individual wants to do and feels comfortable doing without help. Some people we speak to want to spend time raising their own invoices, recording their own costs, reconciling their own bank account, posting required transactions, producing profit and loss accounts and balance sheets, generating and submitting tax returns, working out what is available to withdraw. This is part of how they keep engaged with their business day to day with what is happening, and they don’t begrudge the time involved in this activity at all.
Increasingly though, most customers we speak to want to find a cost-effective way to do as little of the ‘admin’ as possible. They are project managers, design engineers, architects who want to spend as much of their time earning by adding value to clients and not raising invoices, logging expense, doing admin, bookkeeping, accounting etc and it’s important to them to look at hiring a bookkeeper to handle that side of their limited company.
This challenge is exacerbated if you want up to date information to enable you to see exactly how your business is doing and where it and you are up to as your business grows. Having to produce the required view weekly, is obviously more time consuming if you are doing all of the things needed to do this, than simply producing a quarterly view.
Understanding what various providers are providing
Once you are clear what advice and guidance you need and what support you want for the ‘admin’, it then can be quite a challenge to work out what the various providers are offering.
There are some applications that you can buy which just allow you to do all of the admin yourself and provide no advice and guidance. And often, these individuals do their own record keeping, bookkeeping, return production etc through the year and then go to a high street accountant for a bit of guidance and advice around various bookkeeping services around the returns at the end of the year.
Increasingly, the software providers are looking at ways of wrapping some service/advice/guidance around the DIY software they provide. They recognise that they can charge more for this and that increasing numbers of small business owners and sole traders are looking for more than the standard DIY experience for all their accounting tasks.
There are also what I would call ‘comprehensive’ service providers that are providing an integrated software, service and guidance and advice package which covers all of the admin and has a strong technology experience, as well as timely, topical guidance and advice for tax planning through the financial year.
But be careful – it is not always easy to see exactly what services, what advice and guidance is offered for which price.
So what is the answer?
My advice is quite simple really – try to be clear on what services you want, differentiating between the ‘admin’ and the advice and guidance you need to help you manage your business. Then speak to a range of recognised accountancy businesses to get a genuine understanding of what services are available.
Finally, I would consult colleagues/friends/family about the reputation and capability of the prospective providers – A direct recommendation is always powerful. Once you are clear what you can do and what you want to do, and understood the services available, you will be in the right place to pick the best answer for you and your business finances.
At Brookson we offer an all-inclusive accounting service for self-employed professionals for a single monthly fee. If you’re new to contracting or looking for an accountant, we can help you find the right solution for you.