(Updated 05/12/2018) Software versus accountant – which is the right option for you? There are pros and cons to each, and we cover them here to help you reach a decision on the option that is best for you and your working circumstances.
There’s plenty of contractor accounting software claiming to provide an easy way for contractors and freelancers to manage their books, log their expenses and prepare their own accounts. This works for some individuals, however those with little time or those who require extra support may not see these benefits.
Undoubtedly, contractor accounting software does not provide the same level of personalised service as a contractor accountant. Therefore if you require additional support or a second pair of eyes to go over your accounts you will soon find that the ‘low-cost’ of accountancy software is too good to be true.
Contractor accounting software can cost less than £30 per month, however there are often add-ons if you require more features and the guidance provided may not suit your learning style if you are planning on completing your books yourself. Of course, experienced contractors and freelancers often choose this route – but there is a helpful alternative which is a blend of personalised accountancy support and industry-leading software.
Everyone would like to think that the latest high-tech online software makes it easy to complete your own accounting, but there’s always a risk of human error and at the end of the day you are responsible for this. So why not make sure you have an expert on hand to provide you with an extra layer of assurance? Many software providers even advise you to hire an accountant for specific tasks such as checking your Personal Tax Return for errors, for example, before you submit it to HMRC. There are penalties for mistakes so it is advised to have an expert pair of eyes to have a second look.
Even with the rise of technology and cleverness of algorithms to complete the accountancy jobs of humans, there are still services offered by accountants that software simply cannot match.
Software versus accountant – the pros and cons
Tax planning – the winner: accountant
Even if you never meet them face to face, contractor accountants are real people with a specific skill set. When you ask an accountant for tax planning advice, they will be able to look at your unique situation and work with you to help you legally minimise your tax liability and, in doing so, increase your take home pay. On the other hand, software can’t have a conversation with you regarding your future plans or specific working circumstances. At most you can have a live chat or phone call with a support agent, however this offers basic support regarding the software and these are not accountants.
In these cases hiring an accountant from the get-go will save you more in reduced tax liability than the sum of the accountancy service fees.
Compliance – the winner: accountant
Contractors and freelancers are busy either working or searching for their next role, and usually don’t have the time, energy or desire to keep up to date on the ever-changing tax legislation for the contracting industry. You certainly don’t want to spend hours reading all of the HMRC updates and Finance Bills and trying to decode their meanings; it’s an accountant’s job to know these things for you so you don’t have to. A good contractor accountant does all of this and also makes sure your business stays compliant and ensures you are not overpaying or underpaying on any tax.
Whilst industry-leading online accounting software is built to comply with all the latest legislation, it still doesn’t take care of the compliance aspect fully as you are left to your own devices. The guidance provided with the software may be helpful, however sometimes it takes a human expert to explain things in the most jargon-free way. For example, if you mistakenly claim a non-allowable expense or unknowingly take out a director’s loan, it could cost you. Having a good, compliant contractor accountant ensures that this won’t happen.
Endless support – the winner: accountant
A good contractor accountant can support you during the entire lifespan of your limited company and contracting career. They can help take care of administrative tasks that would otherwise take you hours each month to complete using contractor accounting software, and they can provide you with helpful advice and tips as and when you need it. This reduces the stress and burden of completing accounting for your business. An accountant can also be there to support you should you ever wish to grow your limited company by taking on employees or seeking investment. We can guide you through the necessary steps of taking your business to the next level, and we also offer accounting services for SMEs, so you will always have a service that’s tailored to your needs.
When it comes to software versus accountant, there are pros and cons. Accounting software can work for you depending on your circumstances, and it is often a viable option depending on the amount of accounting knowledge, computer skills/access and free time you have. However, if you are considering buying software to do your own accounting, it’s a good idea to do your research and look at your options to find out what is best for you. There is also the option of using a blend of accountant and software – such as Bluebird Accountancy.
Getting the best advice possible from an accountant is priceless and often saves you money in the long run. Hiring a contractor accountant will give you value on a personal level, and you can even seek advice from a contractor accountant to determine the type of business set-up that suits you best – whether it’s limited company, umbrella company or sole trader.