How do you know you need an accountant if you’re self-employed? Here are a few of the signs to help you know whether or not it will be worth it.
You might have started your recruitment agency due to a desire to be independent and in control of your job. This is a great reason to become your own boss, however, it doesn’t mean you have to do everything alone.
For many freelance recruiters, getting your accounts in order is a tricky and time-consuming task. You should be focusing on matching clients with the right candidates, not spending hours on your finances. So could you benefit from hiring an accountant to help? Here are five signs you need to take on a professional to assist with your finances.
1. You’re overworked
Research has found that 30 per cent of small business owners work more than 48 hours per week, while five per cent are spending more than 64 hours on the job; that’s more than nine hours a day, seven days a week! If this is par for the course with your recruitment agency, it might be because you need an accountant.
Making sure your finances are in order is a vital part of any business, and you’ll want to make sure your recruitment firm is making a profit but doing so can be incredibly time-consuming. If you outsource this to an accountant, you will find you have a lot more time each week. You can then use this to focus more on sourcing top talent for clients, increasing your earnings.
Using an accountant like Boomerang Back Office means you save time our software means your bookkeeping is done faster and better than ever before. You can also benefit from better decision making with up to the minute reporting, make decisions faster – and be confident in your decision.
We can also take away the hassle of data entry with easy automation for collecting, processing and publishing receipts and invoices, which means you can use your time to take on more clients and grow your business.
2. You’re paying too much tax
Take a look at your most recent tax return, and especially at how much you’re paying. It’s hard to say exactly how much you should be taxed, as it depends on your earnings. However, Which? has calculated that in the 2019-20 tax year, you as an individual should be able to earn up to £21,750 tax-free. Does that sound like your situation, or are you paying more?
If it’s the latter, it’s a good sign that you need an accountant. If you run your recruitment agency as a limited company you are entitled to many allowances to help you out financially, and you can make your earnings more tax-efficient through things like paying yourself dividends. An accountant will be able to do this for you, and spot other opportunities to increase your take-home pay.
3. Your finances are stressing you out
Stress is common in any job, but the self-employed tend to have more at stake; after all, if your recruitment agency is struggling then you will shoulder 100 per cent of the negative impact. One in every five relatives of freelancers reports their household is more stressed as a result, and the same amount reports their family member has more financial worries since becoming their own boss.
This is understandable but avoidable. An accountant can help eliminate this stress, as they will take control of your finances and make sure you’re in the best possible situation. Not only will this be a load off your mind, but it will also leave you with more take-home pay, which should take care of some of your financial worries.
4. You’re struggling to save
Saving for your old age is crucial. It will be much harder to work as you enter your 70s, and most people have a pension that they can rely on to provide them with an income later in life. However, this is not always the case with the self-employed, as the UK Office of National Statistics (ONS) has found out.
According to the ONS, more than 45 per cent of freelancers aged between 35 and 54 have nothing at all saved for a pension. In comparison, only 16.4 per cent of employees of the same age are in this situation. An accountant will be able to help you plan for the future, ensuring you don’t get stuck with limited income in your old age.
You’ll also be able to implement pension plans for your agency, which will be crucial as your recruitment business grows. Speaking of which…
5. It’s time to grow
When is the right time to hire new staff? As a rule, if you’re so time-poor that you’re turning down clients, you should consider taking on an employee of your own. You might think that you’ll struggle to afford it, but this is where having an accountant comes in. They will be able to get your finances in order for this process, ensuring it doesn’t lose you money.
As a rule, this will be a good step for your recruitment agency. The Next Web found that small business owners’ salaries increased the more people they hired. Those with one to five employees made an average of $37,867 (£29,771) per year, while those with six to ten increased their salary to $45,271 (£35,592). If you want to be increasing your earnings like this, you might want to think about getting an accountant.
Found this interesting? Why not take a look at our other recruitment blogs.