Why Freelancers Should Hire an Accountant Throughout the Year
If you’re anything like me, an accountant visit is something you schedule at the end of each year. I’m not proud to admit that I’ve rushed over to an accountant’s office in April to get my taxes squared away. This year I’m doing things a bit differently, and I’m anticipating a big pay off.
Under the advice of an entrepreneur I trust, I scheduled an appointment with an accountant last week. She told me that an accountant is one of her greatest assets, and someone she wished she hired sooner.
The accountant gave me suggested deductions, we talked about ways I can lower my taxes by investing, and he informed me of other tax basics.
Here’s why you should consider working with an accountant sooner than later:
Waiting Until the End of the Year Has Disadvantages
The accountant told me that right now (the middle of the year) is the right time to work with an accountant to discuss your taxes and other needs. Often by the end of the year it’s too late to make many improvements because your tax filing reflects an entire year of behaviors.
You can’t come scrambling into the office in April expecting to reduce your taxes when the year has already past. Visiting early gives you some opportunity to start new habits.
For example, the accountant recommended that I start maxing out my retirement contributions and contribute to a health savings account to reduce my tax liability by the end of the year.
Estimate Your Quarterly Taxes Properly
Taxes are taken out of your paycheck when you work for an employer. I miss this!
You have to pay your own taxes when you work for yourself, and you should be paying estimated taxes each quarter. An accountant can make sure that you’re on track to avoid an astronomical tax bill at the end of the year.
The accountant crunched the numbers for me and discovered that I’m off track on my estimate from January to June by about $2,000. This can easily be fixed now that I’m aware of it. Discovering my calculation is off right before taxes are due would be much more troublesome.
An Accountant is an Advisor
My entrepreneur friend who suggested I hire an accountant also recommended that I check in with one monthly. My budget is too tight right now to accommodate regular accountant visits. Instead, I’m looking for a more affordable bookkeeper to help me with day to day activities in the meantime.
The accountant’s function is to help you make financial decisions based on their expertise. The accountant I worked with explained the pros and cons of incorporating my business. They can also recommend other actions you should take after analyzing the financials of your business.
At first, your financials may be pretty simple. You send out invoices and collect the money. You may have a few expenses here and there. Eventually, your business will grow and can have a more complicated financial situation. An accountant can help you navigate it all.
The business growth I’ve experienced over the last few months is exciting but also comes with new challenges. Hiring help is at the top of my list. You can’t be an expert in every area of your business. Investing in the right help can save you from a headache and can help your business grow.