Is it really cost effective to do your own books?

It’s a question lots of us ponder when we start working for ourselves. Should I do my own bookkeeping, or pay an accountant to do it for me? On the face of it, it’s a pretty simple dilemma. After all, how hard can it be?

Should I do my own bookkeeping

Lots of small businesses, freelancers and sole traders choose to look after their own books because they think it’s the simplest, most cost effective thing to do.  Many people like to keep their finances private, or don’t like the idea of paying a stranger to do something so crucial to their business’s health and wellbeing – especially when they could do it themselves.

It can be an attractive option, especially in the early days when you’re keen to keep a close eye on your finances and know exactly how your business is growing. If you’re good with numbers, and you want to feel like you’re fully in control, doing your own books can seem like the obvious choice.

But then the months go by, the spreadsheets spread and the envelope stuffed with receipts begins to overflow. Evenings and weekends are spent sending invoices, checking payments and totting up expenses. And what started as a simple, cost effective option begins to look like anything but!

At this point, paying an accountant can seem like a very good idea indeed. Accountants are up to date on tax laws, they know the loopholes that could save you money, they can give you advice throughout the financial year and they’ll liaise with HMRC. They’ll sort through that bag of receipts; they’ll crunch all the numbers; and, of course, they’ll file your tax return. But this peace of mind comes at a cost, and sometimes that cost can run to many hundreds of pounds.

When you consider that Self Assessment is free, and that there are many affordable online software solutions available (such as our own Numberworx) that provide simple online bookkeeping services with the backup of professional support when you need it, a ‘real’ old-fashioned accountant can seem like a hefty expense.

So what are your options? Self Assessment can be time consuming and stressful, but it’s free. Accountants can be expensive, but they take care of everything. Online (or cloud-based) software manages your invoices, payments and expenses in real time, and works out your tax return. They’re usually charged monthly, and often include professional advice and support should you need it.

With online bookkeeping software you can usually choose the level of support and accountancy services you need, making it a flexible, inexpensive method of bookkeeping for small businesses, start-ups, freelancers and sole traders.