Do I need an accountant as a sole trader?

Get Yourself A Reliable Accountant As a Sole Trader

FINITAC understands the requirements of sole traders. With us, you’re not just buying a service that keeps your books aligned. You’re getting strategic help that helps you grow your business.

Do I Need an Accountant as a Sole Trader?

You’re a sole trader and wondering: “Do I need an accountant as a sole trader?” Here’s the answer: no professional discloses because it’s not as simple as just a yes or a no. The answer is subjective and depends on your business size, your confidence with numbers, and your financial situation. Let’s break it down with scenarios and information you won’t usually find on the internet.

Why Sole Traders Often Skip Accountants

Many sole traders assume that they’re small. Thus, they do not need an accountant. Some skip accountants because they’re not familiar with accounting software products. Lastly, they operate with the mindset, it’s just me, so why spend money on hiring an accountant.

And yes, for someone earning a few thousand a year as a side hustle, that might be true. But as soon as you cross certain financial, legal, or growth milestones, the equation changes.

Scenario 1: The “Do It Yourself Until It Hurts” Approach

Imagine you’re making $25,000 a year freelancing. You file your own tax return. It’s simple enough. Your income minus expenses, a few receipts. Everything is pretty straightforward. No accountant needed.

But here’s the catch:

• You think you’re saving money, but you might be overspending on things you don’t even realize. For example, your phone bills, software subscriptions, professional trainings, etc.
  
• You’re carrying the mental load of bookkeeping, which can take hours every month. That’s time you’re not billing clients or growing the business.

So yes, you can do it yourself until the mistakes or lost opportunities cost you more than the accountant’s fee.

Scenario 2: The Sudden Spike Problem

Let’s say your Etsy or Shopify store goes viral. You jump from $18,000 one year to $75,000 the next. Suddenly:

• Tax thresholds in your country become relevant. Many regions require you to register for sales tax, VAT, or GST once you cross a certain revenue limit.
• Your expenses get complex because of import duties, supplier payments, and shipping costs.
• You might need advice on when to stop being a sole trader and become a limited company for tax efficiency.

If you don’t have an accountant guiding you, you could overpay thousands in tax and miss filing deadlines, which leads to facing unwanted penalties.

Scenario 3: The Tax Authority Letter Moment

This is where many sole traders panic. When you get a letter from the IRS mentioning that they’re reviewing your return.

If you’ve been maintaining your books yourself and they’re not up the mark, you’re suddenly exposed and left panicking. Accountants save you in situations like these because:

• They defend your filing with accurate records.
• They handle correspondence with the tax office.
• They spot errors before the authorities do.

This alone is why many sole traders bring in an accountant even when their business is small.

Scenario 4: When You’re Planning Ahead

People only tell you that an accountant helps with taxes, but nobody mentions the strategic planning they help you with.

• Should you buy equipment now or next year to save tax?
• Should you pay yourself differently to reduce National Insurance?
• Should you switch from sole trader to limited company when profits go high?

These aren’t questions software answers. A good accountant gives you advice that doesn’t just help with taxes but also helps you grow in the future.

So, Do I Need An Accountant As a Sole Trader?

Here’s the honest checklist:

• Turnover under $20k with simple expenses. Probably no. Use software like QuickBooks.
• Turnover $25k–$60k with regular clients and a lot of expenses. Go for at least a yearly consultation.
• Turnover $60k+ with staff or contractors. Multiple income streams, or near VAT threshold?. Yes, you need one.
• Any income level, but you hate admin or worry about mistakes? Yes, get one. Peace of mind is worth it

Hidden Benefits of Having an Accountant (That No One Talks About)

Better Mortgage Approvals

Sole traders often struggle to prove income to lenders. An accountant-prepared statement carries more weight and credibility.

Business Credibility

Clients and suppliers take you more seriously when you say, I’ll get you in touch with my accountant.

Stress Reduction

You buy yourself time and peace of mind as you don’t spend your nights digging through receipts because that work has been outsourced to a skillful person.

Financial Discipline

An accountant forces you into structured record-keeping that helps you see if you’re actually profitable.

People Also Ask

Conclusion: Do I Need an Accountant As a Sole Trader?

The mistake most sole traders make is thinking an accountant is an expense. In reality, it’s an investment that keeps your business’s financials and records efficient, saves you unwanted expenses and penalties.

Ask yourself, if an accountant costs $600 a year but saves me $1,200 in tax and frees up 40 hours of my time, is it worth it? The answer usually isn’t “Do I need an accountant?” but rather, “How long can I afford to work without one?”