Do I Need an Accountant If I Am Self Employed

Introduction

Working for yourself gives you freedom and flexibility, but it also comes with administrative responsibilities. You must keep proper accounts, complete an annual Self Assessment tax return, and pay the correct amount of Income Tax and National Insurance.

Although you can handle these tasks yourself, tax rules can be complex, and errors can lead to penalties. An accountant can help ensure compliance, identify allowable expenses, and save you time so you can focus on running your business.

You do not have to hire an accountant

There is no legal requirement for self employed people to use an accountant. You can:

Register as self employed directly with HMRC.

Keep your own financial records.

Submit your own Self Assessment tax return.

HMRC provides online tools and guidance to help you calculate and pay your tax, and many small business owners use accounting software to manage their finances independently.

If your business is simple, with straightforward income and few expenses, handling your own accounts can be perfectly manageable.

Example

A freelance photographer with one source of income and minimal expenses can easily record sales, deduct costs for equipment and travel, and submit their own tax return using HMRC’s online system.

When hiring an accountant is beneficial

As your business grows or becomes more complex, hiring an accountant can save you money and time. Here are the main situations where an accountant adds value.

1. Managing Self Assessment

An accountant can complete your Self Assessment tax return accurately and on time. They ensure all allowable expenses and reliefs are claimed, which can reduce your tax bill.

Accountants also check that your figures match HMRC’s records and can deal with any correspondence from HMRC on your behalf.

2. Keeping business records compliant

HMRC requires self employed individuals to keep detailed financial records for at least five years. An accountant can set up proper bookkeeping systems, reconcile bank transactions, and maintain accurate ledgers.

This is especially important under Making Tax Digital (MTD), which will require digital record keeping and quarterly updates for most self employed people from April 2026.

3. Understanding expenses and tax reliefs

Many self employed individuals overpay tax simply because they do not know what they can claim. An accountant ensures you make the most of allowable expenses such as:

Office or home working costs.

Travel, mileage, and accommodation for business purposes.

Equipment, software, and tools.

Professional fees and insurance.

Training and marketing costs.

By identifying legitimate deductions, an accountant often saves more in tax than they charge in fees.

4. Planning for growth

If you plan to expand, hire staff, or take on larger contracts, an accountant can provide valuable advice. They can help with:

Cash flow management and budgeting.

Deciding whether to register for VAT.

Setting up a payroll system.

Choosing whether to trade as a limited company.

This financial insight helps you make better long-term business decisions.

5. Avoiding fines and penalties

Missing deadlines or submitting incorrect figures can result in fines or interest charges. An accountant tracks deadlines, reminds you when tax payments are due, and ensures you stay compliant with HMRC rules.

For example, the Self Assessment deadline for online submissions is 31 January each year. An accountant will make sure your return is filed well before that date.

6. Support during HMRC investigations

If HMRC opens an enquiry into your tax affairs, an accountant can represent you and deal directly with HMRC on your behalf. They can provide accurate records, explain complex issues, and minimise disruption to your business.

How much does an accountant cost

The cost of hiring an accountant varies depending on your business size and the services you need. For most self employed people, fees range from £200 to £600 per year for basic Self Assessment support.

More complex services, such as VAT registration, payroll, or company accounts, can cost more. Many accountants offer fixed-price packages for sole traders, making budgeting easier.

While this may seem like an extra expense, it often pays for itself through reduced tax bills, saved time, and professional peace of mind.

Do accountants help with VAT registration

If your annual turnover exceeds the VAT threshold (currently £90,000), you must register for VAT. Even if you are below this level, voluntary registration may benefit your business.

An accountant can:

Assess whether VAT registration is suitable for you.

Register your business with HMRC.

Manage VAT returns under Making Tax Digital.

Ensure you reclaim VAT correctly on business expenses.

Do accountants help with Making Tax Digital

Yes. Accountants are already familiar with MTD requirements and can ensure your bookkeeping is digital and compliant. They can recommend software such as Xero, QuickBooks, or FreeAgent and manage submissions directly through their MTD agent accounts.

As MTD expands to cover more self employed people, using an accountant can make compliance much easier.

Example scenario

Ben is a self employed electrician. He manages his own invoices and receipts but struggles with tax calculations and deadlines. After missing a payment and incurring penalties, he hires an accountant who organises his records, submits his return, and identifies additional expenses he can claim.

Ben’s tax bill is reduced by £500, and he saves hours of admin time each month. The accountant’s annual fee of £350 more than pays for itself.

When you might not need an accountant

If your business is very small or part-time and your income and expenses are simple, you may not need professional help. Free tools, online calculators, and HMRC’s guidance can help you meet your obligations.

However, even if you do not hire an accountant full-time, you can still consult one occasionally for advice or to check your figures before submitting your tax return.

Common mistakes to avoid

Leaving record keeping until the end of the year.

Failing to claim legitimate expenses.

Missing the Self Assessment deadline.

Not budgeting for future tax payments.

Trying to handle complex tax issues without professional advice.

An accountant can help you avoid these pitfalls and keep your business finances in good order.

Conclusion

You do not legally need an accountant if you are self employed, but many people find professional support invaluable. An accountant can save time, reduce errors, lower your tax bill, and help you plan for growth.

For small or straightforward businesses, managing your own finances may be enough. For those with higher income, multiple clients, or more complex tax situations, hiring an accountant is a wise investment in both compliance and peace of mind.

Ultimately, whether you need an accountant depends on how confident you feel managing your own finances and how much time you want to spend on paperwork versus running your business.