Do you hire an accountant to overlook your finances?

It takes me about a day to earn the fees I pay my accountant every year.

In exchange for those fees, he does work that would take me about two days, and he does it better than I ever could. 

In my case it's the very definition of a "no-brainer."

(However, his main task is preparing annual tax returns and taking a look at the big picture once a year; he doesn't "oversee" things on a day-to-day basis. I find that an easily managed daily task.)

I should have followed Albert's thoughts on hiring an accountant (or "expert-accountant" as we say in France), it would have saved me a lot of hassle.  An option to consider for next year, then... among other things discussed in this very forum!

Laurent K.

I use an accountant, but this decision was taken for another business I co-run alongside translation. I would wake up in mad panics, thinking the police were going to turn up on my doorstep. (yes, a little irrational and no, I don't traffic anything). I oversee all my own books and the accountant checks it through, gives it the ok and arranges for the money to be taken out of my account and given to the state He is rather expensive (450 euros per year) but he got me out of a mess and sorted out what I should be paying for all the different activities I do. I can e-mail him whenever I want and he replies within 24 hours. However, now that I am more settled and know my financial way round the different things I do (and have all my excels in order), I am considering swapping to a cheaper accountant. Where I currently live (a little village) I was told it would cost me less than 100 euros a year. Yet, I am reluctant to change as I know my accountant is good, and I don't just use him for my translation turn over. What do other people pay? (personal question but heh we're all in the same boat )
 

Hi Genevieve,

standard fees for an accountant performing the tasks you describe will amount to some 900 euros ex VAT per annum.

Laurent K.

Originally written by Laurent J Krauland on February 11, 2009 3:26 PM Hi Genevieve, standard fees for an accountant performing the tasks you describe will amount to some 900 euros ex VAT per annum. Laurent K.

There are several variables to consider...

- In Canada, at least, someone commonly referred to as an "accountant" is not necessarily one of the various varieties of chartered accountant. Rates will vary accordingly. (To be clear, people who aren't chartered accountants can't represent themselves as such, but that doesn't prevent clients from using "accountant" as a shorthand/synonym for "tax preparer", "bookkeeper" or what have you.)

- Different countries' tax laws may make the required tasks more or less complex. 

- One freelancer's personal and business situations may be considerably more or less complex than another's.

- Some people are more organized than others. Handing your accountant a disorganized box of papers will cost you more -- possibly much more -- than handing over well organized files with accompanying spreadsheets. (I know, I've done both!)

-  Some people may be happy to pay a premium for availability, experience, special expertise, and so on.

I hired the services of an accountant / general compliance advisor as soon as I became a freelancer. The main reason was that I had seen a number of freelnacers struggle with their tax declarations and understanding the intricacies of quarterly VAT declarations while "walking it alone". It just made sense to hire someone who could do this for me effortlessly.

The other reason is expertise - I can call these people anytime and make an appointment to deal with any questions or enquiries I might have (invoicing foreign companies, working with other translators as an outsourcer, dealing with VAT payments on unpaid bills, etc.), and they are extremely helpfull in these cases.

Finally, like Genevieve, I do have other activities outside the translation field, so it is good to also have advice on how to invoice them.

Unlike your accountant, Genevieve, mine are actually more expensive - about twice as much.

But I think it is generally a good idea - the world of tax declarations, VAT, income taxes, business expenses, etc., requires its own professional expertise.

Best,

Kamen

Well, then, you see this is why this forum is actually very useful. So, what I thought was expensive is actually 50% cheaper than the experience of at least two other forum users. That is good to know. So, I guess I may well stick with my current accountant as he is good

As I am in Spain, we have to do quarterly, rather than only annual, tax declarations.  So, it gets a little complicated.

Actually, I think it is quite unfair that in the UK, freelancers are exempt from paying VAT if they earn less than 50.000 pounds. Should this not be homogenized as an EU thing?

Hi Gen,

 Actually the cuurent VAT threshold here in the UK is £67,000 before you have to register. It was £64K before last April, and I wouldn't be surprised if it went up again in the next financial year given the government's stated aim of doing all they can to help small businesses.

To answer your original question, I haven't had to do a tax return yet as I only registered as self-employed last September (I've got that pleasure to look forward to!) but I'm not planning on using an accountant as I did a business training course last year and they said that for a self-employed (sole trader) it only involves completing one or two pages of the form.

I hope they're right

      Andrew Williams

This is even more true as it is logical: why would we, as language experts, not rely on other experts when we only can do more or less a "DIY-job" in their area of specialism?

Laurent K.

This is yet another reason why I prefer working for publishers in my own country. It`s the publisher that makes the takeout from the total to be paid, and what I get is my fee less taxes. That is a standard contract clause.

My wife is trained in bookkeeping and did my books for me.  However, when I own a multi-million pound consulting service I will get a pro in to do them.  My sister-in-law is also an accountant so nepotism might raise its cheaper head. 

Hi, Genevieve,

Originally written by Genevieve Shaw on February 12, 2009 8:58 AM As I am in Spain, we have to do quarterly, rather than only annual, tax declarations.  So, it gets a little complicated. Actually, I think it is quite unfair that in the UK, freelancers are exempt from paying VAT if they earn less than 50.000 pounds. Should this not be homogenized as an EU thing?

One of the major problems with being a freelancer in Spain is not so much the quarterly VAT declaration, as much as the lack of a "buffer" for freelancers - as soon as you're registered as a freelancer, you start paying your Social Security quotas in full, whether your income is 3000 € a month or nothing. I like what you mention about the British system.

So what actually happens here is that a lot of people start working, invoice clients without VAT, and wait to get enough traction to actually be able to cover the monthly fee. I find it a very stupid way to create a submerged economy.

But overall, yes, your accountant is "competitive" (I was going to say "cheap" but it didn't sound right). It's not a question of software, even of time, it's more to do with expert knowledge. These people can be very helpful in this sense, so I cannot recommend it enough.

Best,

Kamen

Originally written by Kamen Nedev on February 14, 2009 6:29 PM     One of the major problems with being a freelancer in Spain is not so much the quarterly VAT declaration, as much as the lack of a "buffer" for freelancers - as soon as you're registered as a freelancer, you start paying your Social Security quotas in full, whether your income is 3000 € a month or nothing. I like what you mention about the British system. Best,  Kamen

Same in France, Kamen - and far from being likely to be changed by any present or future government!  By default, ordinary citizens and freelancers are considered being potential or even actual fraudsters.  The fiscal services obviously work on "hunting/shooting premiums".

Laurent K.

Maybe in countries like Spain, the translators should unite into some kind of cooperation. Then the translators personally only would have to declare income taxes and the cooperation would declare the VAT taxes. This could also be a non profit entity, only serving to share administrative costs for this particular group.

Maybe it already exists.... call an accountant near you house and check it out.

You could always emigrate to Mexico... here we only charge 15% VAT and deduct it all beautifully with all the expenses you make, books, dictionaries, Trados, laptop... so you don´t really have to pay a lot... and the same expenses can be deducted from your income tax... really... come to beautiful Mexico you could almost say it´s become a tax paradise...

good luck

Ronald

(now translator, formerly known as accountant)

Originally written by Ronald van der Linden on March 19, 2009 7:07 AM here we only charge 15% VAT and deduct it all beautifully

While deductible costs are crucial to obtain profit, I don't understand the point you are making about the VAT, Ronald. Since it is a tax you add to your fees, it does not affect your result at all. So, apart from the bookkeeping burden, it really shouldn't matter whether the VAT is 15% as in Spain or 22% as in Poland as long as your customers pay it with your invoices (and offset it themselves) at which point you simply forward it to the tax office without having to think about how to offset it. What you do have to worry about, of course, is not the VAT but your income tax which you want to keep as low as possible by deducting as much as possible from your revenue.

Jacek

Hello everybody,

I would like to hire a tax advisor in order to sleep better, like Genevieve said. But I would need to be sure he is really good and not too expensive:

As we moved from Germany to Spain, I hired the services of a tax adviser to register at Hacienda, the social security etc, to be sure everything would be all right.

He was much more expensive than yours, Genevieve, and unfortunately, he made 3 monumental errors at the beginning which we had to correct afterwards. So we decided, with the help of a colleague and from the people from Hacienda as well, to do this work by ourselves - until now.

(In Germany, we did it by ourselves also, asking the Finanzamt everytime it was necesssary, sometimes expecting days in order to get the right (?) answer. Of course, our declaration is not that complicated, we do not have children for ex. and translation is my only commercial activity).

Chani

Originally written by Jacek K. on March 19, 2009 2:27 AM Originally written by Ronald van der Linden on March 19, 2009 7:07 AM here we only charge 15% VAT and deduct it all beautifully While deductible costs are crucial to obtain profit, I don't understand the point you are making about the VAT, Ronald. Since it is a tax you add to your fees, it does not affect your result at all. So, apart from the bookkeeping burden, it really shouldn't matter whether the VAT is 15% as in Spain or 22% as in Poland as long as your customers pay it with your invoices (and offset it themselves) at which point you simply forward it to the tax office without having to think about how to offset it. What you do have to worry about, of course, is not the VAT but your income tax which you want to keep as low as possible by deducting as much as possible from your revenue. Jacek

In general VAT is an outgoing cash flow, you would like to have this outgoing cash flow a low as possible. It does not affect results. But it ofcourse affects cash flows (investment etc) The problem with VAT is that, e.g. if I work for a Spanish client, he cannot deduct Mexican VAT, then translators and clients decide on an all-in tariff. Meaning the USD .10 then includes the VAT.

Originally written by Ronald van der Linden on March 19, 2009 5:12 PM ...then translators and clients decide on an all-in tariff. Meaning the USD .10 then includes the VAT.

Oh no, we certainly don't want that! Thanks for this clarification. (As a side note, sworn translators in Poland, when working domestically for the government, have been going through that for a few years now and it is only this year that the relevant law fixing their VAT problem will go into effect.)

Jacek