7 Signs You Need an Accountant

Thinking about finances is perhaps the last thing any freelance writer wants to do. Even still, the majority of freelancers tackle this important aspect of the business on their own to save money. Before you realize it, mounds of paperwork that have nothing to do with generating income tower over you. Rather than waiting until you hit that point, decide if any of the seven signs you need an accountant apply.

1. You don't know how best to structure your business.

Before you do anything else, take a moment to let that sink in. You may only write on a part time basis, but your writing is still a business. Writers first starting out usually fall into the sole proprietor category and that classification works well throughout the course of their career. As your business grows, you may wonder if the protections provided under corporations or partnerships would better fit your needs. An accountant can help you make that determination.

2. Numbers are not your friend.

Not everyone is a math person. If this applies to you, embrace it. Everyone has a different set of gifts and among yours is the ability to craft words in ways others cannot. Although anyone can develop skill with numbers, not everyone wants to do so. Ask yourself how you feel about closing the books, filing taxes and creating financial statements. If your eyes just glazed over at the very thought of those tasks, you need an accountant.

3. You're too busy to handle your finances.

Be realistic about this one. Those of us with financial backgrounds may enjoy the tedium of keeping records, while those who pretend their checkbook register doesn't exist would rather avoid financial tasks. This isn't a matter of whether you enjoy handling money matters, it's about whether you have time to take care of it. There may well come a time in your freelance writing career when you're so in demand, you cannot afford the hours it takes to deal with the books. Once you're losing more money doing the books on your own than it costs to pay an accountant, you've hit the optimal outsourcing point.

4. You failed accounting in school. Twice.

Okay, so maybe you didn't actually fail your accounting courses, but it was far from your favorite subject. Accounting is about more than filing taxes each April and recording income, there are financial statements to consider. Do you know how to create a statement of income and losses for your business? Would you know what to do if a lender asked for your cash flow statement? Your accountant does.

5. You don't know how to pay your taxes.

It's not as embarrassing as it may sound. In the traditional workplace, your employer deducts taxes from your paycheck and sends them to the IRS on your behalf. In the freelance workplace, you set aside money for your taxes in a savings account - if you remember - and stress out over April 15^th. Actually, you should calculate your estimated tax bill and send payments to the IRS quarterly instead of hyperventilating over the annual bill, but how many freelancers think about that and end up paying IRS penalties as a result? Using an accountant takes the guesswork out of your quarterly payments and provides a friendly nudge when it's time to send the check.

6. The thought of filing your taxes sends you into crisis panic mode.

Congratulations. You're in the company of millions of taxpayers who'd rather cut off their own arm than think about the tax paperwork. You're also no longer able to use Form 1040 EZ because of your business expenses and self-employed income. Turn it over to an accountant and let them sift through the box of receipts sitting on your desk while you get back to writing.

7. You aren't sure about your retirement options.

When you work for yourself, you lose out on regular contributions to your employer's 401(k) plan, but you still have retirement planning options. Depending on your accountant's area of expertise and certifications, they might be able to advise you on those options in addition to which accounting method is best for your business.

While there are other factors to consider when deciding if an accountant is right for you, these seven signs give you a good starting place. If you do opt to use accounting services, keep in mind that you've opened up new opportunities by expanding your professional network. Once you build the relationship with your accountant, you may gain them as a new client or find they'll happily send clients your way.