Accountant or free agent? Which is right for you?

So you’ve done it, lept off the 9-5 at freelancer central and possibly made the right turn to My Own Business Alley. Good job! Weaving passion into a career is amazing, exciting and sometimes a little terrifying so don’t for one second get downhearted when you realise it’s not all glam and glitter. Dirty dark alleys are the ones most ripe for development!

You’ve no doubt agonised over all sorts of minutia on the road to going solo but have you put much thought into your finances beyond start-up capital? We’re talking the day to day, year on year records that help you improve your margins, save on costs and most importantly, keep the tax man sweet.

Managing accounts, profits, expenses, and the rest of the scary jargon that goes along with the pennies can be off-putting and leaves many self-starters running to pricey accounting firms for help.

I’m here to tell you it’s not as scary as you may think. Here at Gloamer, we’re all about trying to save money where possible, not to mention gathering new skills along the way and always, every day, questioning the norm. So with this in mind, let’s delve into the pros and cons of using a free agent rather than an accountant.

First off, what’s the difference and what the hell is a free agent?

Glad you asked! A free agent is an online service that helps manage your accounts, all in one place with lots of handy algorithms and templates acting as a virtual accountant at a fraction of a flesh and bone alternative.  These platforms help you manage accounts and invoices, receive tax forecasts, return reminders and more. They are a total one-stop, futuristic shop paving the way to a world where accountants go out of business.

However, if you feel more comfortable having a bit of human involvement, there are some free agent services that are old school and work in conjunction with a human (accountant). But before you sign up for both, it’s worth pointing out that these platforms are so intuitive, most users manage their accounts solely through the free agent with no human intervention.

Speaking of accountants, before they disappear we should discuss what they do. Contrary to wide belief, accountants don’t handle ALL your money affairs. Their main job is to examine financial records (which you provide) to ensure taxes are paid properly. So don’t be surprised when your accountant asks for spreadsheets and records. Regardless of whether you choose an accountant or free agent, you still have to record your income and expenditure.  

So which is better?

Plumping for the free agent –

The key benefit of using a free agent is that it forces you to have a good understanding of what’s going on in your business and your bank account. You’ll gain all-important, in-depth knowledge of the numbers, manually inputting your expenses and income ensuring you understand how much you’re spending and how much you’re earning. Free agents allow you to view the increases and decreases within your business accounts, spotting trends and ways to save or capitalise. Many business owners who use a free agent have said it’s given them the push they needed to learn about the financial side of their business. Understanding your numbers is a vital element of any business that plans to succeed.

As I mentioned, free agents have a lot of abilities accountants don’t, like linking costs together under one project, raising quotes, creating invoices, as well as filing tax returns. Considering an accountant just manages your tax returns it’s a lot of buck for a single service.

A bit of love for the accountant

It’s all looking pretty rosy for the free agent right now, but it’s worth saying that as you get bigger an accountant can advise you on cost efficiencies and tax planning far better than his or her online counterpart. An accountant can find you the best deals when it comes to your tax however, not all accountants are made equal and unless you have someone truly in your corner it never hurts to be as involved as possible when it comes to the figures.

And although they simply put your figures together in the nice little pack the tax man needs to keep Queen and Country happy, it is quite nice, if the tax man does come calling, to be able to pass the phone to someone else. An accountant can be a buffer to any tax issues that may arise.

The difficulty with the accountant route is that often,  a good one is hard to find, they are also very expensive compared to the monthly subscription of a free agent. But remember, if you’ve created a Limited Company by law, either way, you must have an accountant.  Sole traders or the Self Employed have the real choice.

You will find that as a sole trader your accounts are not too difficult, and it will certainly save you some dollar using a free agent. Although they sound scary they’re really not too hard to get your head around.

Something else to note: Accountants can do the hard math and get the figures together, but it is ultimately your responsibility to pay the right amount of tax.  Remember, much the same as everyone else, accountants are human (unless you’ve found out something we don’t know) and humans can make mistakes.  If you feel, looking at the numbers, no matter how shaky your accounting prowess, that something doesn’t add up, be confident and question it.

Some general advice 

Remember whilst shopping around that accountants are companies too. It’s no good for their line of work if everyone toddles off online. Some may argue that following the advice of Fleetwood Mac and going your own way can land you in a sticky situation. Some will list off horror stories of people trying to do their own accounts and failing, leaving them in a right pickle come tax return day.

We’re not telling you to go one way or the other here but the simple fact is, neither should an accountant. Do what you feel is best for you and don’t feel pressured or scared into hiring an accountant when you may not need one.

Business finances don’t have to be complex. Honestly, it can get trickier as you head over the tax threshold, but once you get to grips with the basics, it’s really not that bad.

Well, now you know that you have two options when it comes to your business finances, hire an accountant or use a free agent service. Personally, I have an accountant because I was nervous starting out and it gave me the headspace to simply focus on my wares. Now I’ve gained confidence, and hopefully, at some point, will be managing my own finances. Remember the choice is yours. Don’t feel pressured by the big scary tax man to jump on the bandwagon and hire an accountant without taking in the sights and sounds of the surrounding landscape.

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