How do you know when it's time to engage an Accountant?

[gdguide]

Hi,

I started a website about 5 years back. It started off as a simple site, but now has grown to the point where I made $50,000 US this year. It's all based on commission from a handful of affiliate programs.

Is this business something that would benefit from an accountant? I'm more of a SEO and artist kind of guy, not a financial whizz by any means. I live in Canada.

How many of you have an accountant? Is it worth it? What do you suggest for a sole proprietor business?

Thanks for any help on this. I'm a complete idiot when it comes to financial stuff.

Brian in Canada

[andye]

Sounds to me like it's probably worth it for you. A couple of reasons:
- the cost wouldn't cut into your profits much
- they should save you tax
- you'll save time on paperwork, so be able to spend that time using your core skills (thus earning more revenue).

hth, a.

[cornwall]

Brian

I am in the UK, and I certainly use an accountant.

Basically I do all the "acounting", that is I supply him with income and expenditure in an understandable form, plus the receipts to back up the expenditure.

The accountant fills my tax reurn, but more importantly reduces the tax I pay (I do not have the knowledge to know what is alowable expense, plus in the UK there are other things you can use to offset tax like pension provisions)

Your best bet is to get a friend to recommend an accountant, then go and discuss with that accountant. In a half hour the guy should be able to convince you that he can help you (or not)

[vincevincevince]

For those who do have an accountant, I would be interested in knowing an estimate of how much they save you on a % turnover or % profit basis?

[gdguide]

Hey thanks for the info. How much time does an accountant need a year to work on your files? (I'm just trying to get an idea of how much I would need to pay this guy/gal a year.)

Thanks,and anyone else?

Brian

[Essex_boy]

Vince: mine costs £1100 per year and results in my income tax being around 2% effectivly, once ive claimed all the deductions I can.

[le_gber]

Essex_boy, do you use your accountant for everything? ie does he do the monthly figures, quarterly VAT returns (if applicable) and year end returns? Are you a limited company or sole trader.

If he does everything, you should ask him if he works in partnership with any bookkeeper that my lower the costs.

[LifeinAsia]

Here's a basic way to figure out if you need an accountant (or need to outsource ANY task):
1) Figure out how much time you spend doing it yourself.
2) Decide how much your time is worth on an hourly basis. In addition to figuring how much you could make if you spent that time doing billable work, also factor in the "grudge" factor- how much you hate doing it or how much it's worth to you to have that time to spend doing something you like (time with the family, sleeping, etc.).
3) Do the math (time spent doing it * your rate) and compare to the cost of having someone else do it.

If it's cheaper to have someone else do it- outsource. If not, "insource."

Too many people (myself included sometimes) end up trying to do too much work themselves in order to save a few bucks (or pounds). Often, the cost in lost productivity or lost business growth far exceeds any "savings" by doig it internally.

[gdguide]

Hey, thanks for the information.

Still not sure what I will do, but I have a better view of things now.

Brian