Paying tax isn’t fun, but it’s something we all have to do. As an employee, you don’t have to worry about calculating and paying your own tax, because your employer does it all for you. If you’ve got any kind of self-employed income however, it’s your responsibility to make sure tax is paid on these earnings.
Of course, you can always hire an accountant to do it for you. This can free up a lot of time and help reduce errors made while preparing your taxes. However, it costs money to hire an accountant and may not always be necessary if your income is pretty straightforward.
So, should you handle your taxes yourself? This post examines whether this is a good idea or not.
How complex is your financial situation?
Doing your own taxes is recommended if you’re getting regular payments from only one or two clients. In this instance, it’s easy to keep track of what you’re earning and you don’t need to hire professional help.
Things can become more complicated if you’ve got many different income streams – including one-off lump sums, ongoing payments, investment returns, royalties, ad revenue and payments to multiple accounts. Trying to keep on top of all of this could be a struggle, in which case you may want to look into an accounting service such as Safe Harbor CPAs & Tax Accountants.
It’s also important to consider your expenses. Every business expense is potentially tax deductible and the amount of money you can deduct from your taxes depends on the type of expense. If your business is paying out lots of different expenses, it could be worth hiring an accountant to track all of these and make sure you’re getting all the tax deductions you deserve.
Are you on a tight budget?
If you’re only earning a small amount from a side hustle or you’re just getting a business started, it might make sense to handle your own taxes. The cost of hiring an accountant can vary, but could completely eliminate any profits you’re making if you’re only earning a tiny amount.
Hiring an accountant is only recommended if you’re making a profitable and steady income through self-employment. Otherwise you’re just spending money on a service that you can’t afford.
Do you have the time to do your own accounting?
Another thing to consider is the fact that accounting is quite time-consuming. If you’ve got lots of free time, this may not be a concern to you and you should consider doing your own taxes.
However, if you’re rushed off your feet or already working long hours, consider whether you really want to be adding to your workload by having to do your own taxes. Hiring an accountant could help to relieve some of the burden, giving you more time to focus on the core duties of your business.
Conclusion
Handling your taxes yourself can be a great way to save money. But it’s only recommended if you have the time to do it and your finances are straightforward. If your financial situation is quite complex and you’re already having to juggle many different tasks, consider whether hiring an accountant would be a better idea.