“…in this world, nothing can be certain, except death and taxes.”
- Ben Franklin
For some, the very thought of doing taxes have them feeling like they would rather face the other inevitability of life! Most individuals and business owners find them tedious and time consuming and they don’t know if they could, or should, do their own taxes. Oftentimes, the question about whether or not you should do your own stems from wanting to know how to get your taxes done while maximising your resources.
You have 3 major resources at your disposal.
When and how to use these are up to you. By choosing to do your taxes on your own, you are saving money but spending time and energy. When you hire an accountant, you are spending money but saving your energy and your time. Which is the best choice for you? That depends on your situation. Ask yourself these questions to find out if you should do your own taxes or hire an accountant.
6 Accounting Questions To Ask Yourself
- Are my taxes straightforward and simple?
For many people, their taxes are as simple as filing their SA100 with the HMRC. That’s it. Other people’s taxes are more complex, involving multiple income streams, multiple assets and liabilities, as well as deductions and expenses. Everything from a SA900 to CT600 and everything in between. For those with straightforward and simple tax returns, you may be able to handle doing your own taxes. If they are more complex and layered, you may want to hire a professional accountant to help.
- Do I have multiple streams of income?
Having multiple income streams is far more common today than it used to be for the average citizen. Side businesses, freelancing and contract work all count as extra streams of income. Rental property income and investments also count as additional income streams. This increases the complexity and the time it takes to process your returns which means you may want help from an accountant to make sure it is right. If you are a one-income household, you may be able to do it yourself.
- Am I planning on itemizing my deductions?
Itemised deductions are filed when you have expenses that you can deduct from your total gross earnings for the year. By itemising your deductions, you can reduce the amount of tax that you are required to pay. This process takes more time and is more intricate which may require you to hire a professional accountant.
- Am I familiar with the tax system?
Have you filed your taxes before? Do you know the system? Are you familiar with the language and the processes? If you are comfortable navigating HMRC’s filing system then it may make sense for you to do your own taxes. If not, an accountant may be the best choice for you.
- Do I have the time and patience to do my taxes?
This is about you and how you work through tedious and monotonous tasks. Some people thrive in those settings, others wilt. Which are you? If you cannot stand the thought of filling out forms and crunching numbers, hire an accountant. If forms and spreadsheets are like meditation for you then you may be able to tackle doing your taxes on your own.
- Do I trust myself to get it done properly?
Taxes are serious business and even if you have the skills and temperament for it, you may not fully trust your ability to get it perfect and that is fine. Having a professional do the work ensures that everything is done efficiently and properly.
Should You Hire an Accountant or Do Your Taxes Yourself?
Answering these questions should give you a good idea of where you stand in terms of needing an accountant or doing your own taxes. It is important to assess where you are putting your resources. Whatever decision you make, as long as it serves you and your interests, then you have made the right choice. Visit AccountingPreneur with any questions.