Should I get an accountant for my taxes?
"A reason to get an accountant is to avoid penalties for possible mistakes. That is, if you make a mistake, the IRS can impose penalties on you for negligence. If the professional makes the SAME mistake, the burden of proof for ""negligence"" shifts to the IRS, which probably means that you'll pay more taxes and interest, but NO penalties; hiring an accountant is prima facie evidence of NOT being negligent. I would get an accountant since this the first time for you in the present situation, when mistakes are most likely. If you feel that s/he did the same for you that you would have done for yourself, then you might go back to doing your own taxes in later years." I don't know if I would go so far as to hire an accountant. None of those things you listed really complicates your taxes all that much. If you were self-employed, started a business, got a big inheritance, or are claiming unusually large deductions, etc. then maybe. The only thing new from your post seems to be the house and a raise. The 3rd kid doesn't substantially change things on your taxes from the 2nd. I'd suggest just using tax preparation software, or if you are especially nervous a tax-preparation service. An accountant just seems like overkill for an individual. Let me offer an anecdote to this -  I started helping a woman, widowed, retired, who had been paying $500/yr to get her taxes done. As I mentioned in my comment here, she got a checklist each year and provided the info requested. From where I sat, it seemed a clerk entered the info into tax software.  As part of the transition to me helping her, I asked the prior guy (very nice guy, really) for a quick consult. She took the standard deduction, but also showed a nice annual donation. Didn't take advantage of the QCD, donate directly from an IRA (she was over 70-1/2) to save on the tax of this sum. That could have saved her $500.  She was in the 15% bracket, with some room left for a Roth conversion. Converting just enough to 'fill' that bracket each year seemed a decent strategy as it would avoid the 25% rate as her RMDs rose each year and would push her to 25%. To both items the guy suggested that this was not his area, he was not a financial planner. Yes, I understand different expertise. With how simple her return was, I didn't understand the value he added.  If you go with a professional, be sure you have an understanding of what he will and won't do for you.
Your tax rate is 20% for turnover below £300000. So deducting your expenses and all the tax your accountant thinks you need to pay is £450. But you can claim relief on your tax payments. Visit the UK gov website to check your options under which you can claim relief. Frankly speaking for such a low turnover you shouldn't have opened a limited company. Or do you expect your turnover to increase in the coming years ? If your turnover isn't going to increase any further or if there isn't going to be a substantial increase, better to go as a sole trader or an umbrella company. "Well this is a bit of a shameless plug... but you could always check out the TaxQueries website.  The site is ""similar"" to this one but geared more towards accountants and tax preparers. Looks around for someone who seems to know what they're talking about and check their bio. If you're REALLY having a problem finding a good accountant, email me directly.  I have over 700 of them connected to my Linked-In profile. ;-) Andrew Smith andrew@taxqueries.com http://www.taxqueries.com" If you have complicated taxes (own a business, many houses, you are self employed, you are a contractor, etc etc) a person can make the most of your situation. If you are a w-2 single job, maybe with a family, the programs are going to be so close to spot on that the extra fees aren't worth it. I would never bother using HR Block or Liberty or those tax places that pop up.  Use the software, or in my state sometimes municipalities put on tax help days at the library to assist in filling out the forms. If you have tough taxes, get a dedicated professional based on at least a few recommendations. "I would advise against ""pencil and paper"" approach for the following reasons: You should e-file instead of paper filing. Although the IRS provides an option of ""Fillable Forms"", there's no additional benefit there. Software ensures correctness of the calculations. It is easy to make math errors, lookup the wrong table It is easy to forget to fill a line or to click a checkbox (one particular checkbox on Schedule B cost many people thousands of dollars). Software ask you questions in a ""interview"" manner, and makes it harder to miss. Software can provide soft copies that you can retrieve later or reuse for amendments and carry-overs to the next year, making the task next time easier and quicker. You may not always know about all the available deductions and credits. Instead of researching the tax changes every year, just flow with the interview process of the software, and they'll suggest what may be available for you (lifetime learners credit? Who knows). Software provides some kind of liability protection (for example, if there's something wrong because the software had a bug - you can have them fix it for you and pay your penalties, if any). It's free. So why not use it? As to professional help later in life - depending on your needs. I'm fully capable of filling my own tax returns, for example, but I prefer to have a professional do it since I'm not always aware about all the intricacies of taxation of my transactions and prefer to have a professional counsel (who also provides some liability coverage if she counsels me wrong...). Some things may become very complex and many people are not aware of that (I've shared the things I learned here on this forum, but there are many things I'm not aware of and the tax professional should know)." You should seek professional advice from an accountant. Without knowing specifics about your personal situation, there are two items to consider:  1. Pre-pay as many items as possible this year.  (rent/lease, insurance premiums, etc.) to reduce your profit on paper in this tax year.    2. If you don't have a retirement plan for yourself, look into it as a way to put some money aside for retirement pre-tax.  If your accountant can't help with this, perhaps find a financial planner.   Congrats though, great problem to have! "I've done various side work over the years -- computer consulting, writing, and I briefly had a video game company -- so I've gone through most of this. Disclaimer: I have never been audited, which may mean that everything I put on my tax forms looked plausible to the IRS and so is probably at least generally right, but it also means that the IRS has never put their stamp of approval on my tax forms. So that said ... 1: You do not need to form an LLC to be able to claim business expenses. Whether you have any expenses or not, you will have to complete a schedule C. On this form are places for expenses in various categories. Note that the categories are the most common type of expenses, there's an ""other"" space if you have something different. If you have any property that is used both for the business and also for personal use, you must calculate a business use percentage. For example if you bought a new printer and 60% of the time you use it for the business and 40% of the time you use it for personal stuff, then 60% of the cost is tax deductible. In general the IRS expects you to calculate the percentage based on amount of time used for business versus personal, though you are allowed to use other allocation formulas. Like for a printer I think you'd get away with number of pages printed for each. But if the business use is not 100%, you must keep records to justify the percentage. You can't just say, ""Oh, I think business use must have been about 3/4 of the time."" You have to have a log where you write down every time you use it and whether it was business or personal. Also, the IRS is very suspicious of business use of cars and computers, because these are things that are readily used for personal purposes. If you own a copper mine and you buy a mine-boring machine, odds are you aren't going to take that home to dig shafts in your backyard. But a computer can easily be used to play video games or send emails to friends and relatives and lots of things that have nothing to do with a business. So if you're going to claim a computer or a car, be prepared to justify it. You can claim office use of your home if you have one or more rooms or designated parts of a room that are used ""regularly and exclusively"" for business purposes. That is, if you turn the family room into an office, you can claim home office expenses. But if, like me, you sit on the couch to work but at other times you sit on the couch to watch TV, then the space is not used ""exclusively"" for business purposes. Also, the IRS is very suspicious of home office deductions. I've never tried to claim it. It's legal, just make sure you have all your ducks in a row if you claim it. Skip 2 for the moment. 3: Yes, you must pay taxes on your business income. If you have not created an LLC or a corporation, then your business income is added to your wage income to calculate your taxes. That is, if you made, say, $50,000 salary working for somebody else and $10,000 on your side business, then your total income is $60,000 and that's what you pay taxes on. The total amount you pay in income taxes will be the same regardless of whether 90% came from salary and 10% from the side business or the other way around. The rates are the same, it's just one total number. If the withholding on your regular paycheck is not enough to cover the total taxes that you will have to pay, then you are required by law to pay estimated taxes quarterly to make up the difference. If you don't, you will be required to pay penalties, so you don't want to skip on this. Basically you are supposed to be withholding from yourself and sending this in to the government. It's POSSIBLE that this won't be an issue. If you're used to getting a big refund, and the refund is more than what the tax on your side business will come to, then you might end up still getting a refund, just a smaller one. But you don't want to guess about this. Get the tax forms and figure out the numbers. I think -- and please don't rely on this, check on it -- that the law says that you don't pay a penalty if the total tax that was withheld from your paycheck plus the amount you paid in estimated payments is more than the tax you owed last year. So like lets say that this year -- just to make up some numbers -- your employer withheld $4,000 from your paychecks. At the end of the year you did your taxes and they came to $3,000, so you got a $1,000 refund. This year your employer again withholds $4,000 and you paid $0 in estimated payments. Your total tax on your salary plus your side business comes to $4,500. You owe $500, but you won't have to pay a penalty, because the $4,000 withheld is more than the $3,000 that you owed last year. But if next year you again don't make estimated payment, so you again have $4,000 withheld plus $0 estimated and then you owe $5,000 in taxes, you will have to pay a penalty, because your withholding was less than what you owed last year. To you had paid $500 in estimated payments, you'd be okay. You'd still owe $500, but you wouldn't owe a penalty, because your total payments were more than the previous year's liability. Clear as mud? Don't forget that you probably will also owe state income tax. If you have a local income tax, you'll owe that too. Scott-McP mentioned self-employment tax. You'll owe that, too. Note that self-employment tax is different from income tax. Self employment tax is just social security tax on self-employed people. You're probably used to seeing the 7-whatever-percent it is these days withheld from your paycheck. That's really only half your social security tax, the other half is not shown on your pay stub because it is not subtracted from your salary. If you're self-employed, you have to pay both halves, or about 15%. You file a form SE with your income taxes to declare it. 4: If you pay your quarterly estimated taxes, well the point of ""estimated"" taxes is that it's supposed to be close to the amount that you will actually owe next April 15. So if you get it at least close, then you shouldn't owe a lot of money in April. (I usually try to arrange my taxes so that I get a modest refund -- don't loan the government a lot of money, but don't owe anything April 15 either.) Once you take care of any business expenses and taxes, what you do with the rest of the money is up to you, right? Though if you're unsure of how to spend it, let me know and I'll send you the address of my kids' colleges and you can donate it to their tuition fund. I think this would be a very worthy and productive use of your money. :-) Back to #2. I just recently acquired a financial advisor. I can't say what a good process for finding one is. This guy is someone who goes to my church and who hijacked me after Bible study one day to make his sales pitch. But I did talk to him about his fees, and what he told me was this: If I have enough money in an investment account, then he gets a commission from the investment company for bringing the business to them, and that's the total compensation he gets from me. That commission comes out of the management fees they charge, and those management fees are in the same ballpark as the fees I was paying for private investment accounts, so basically he is not costing me anything. He's getting his money from the kickbacks. He said that if I had not had enough accumulated assets, he would have had to charge me an hourly fee. I didn't ask how much that was. Whew, hadn't meant to write such a long answer!" I think it is, unless you have another protection. For example, I have a legal plan sponsored by my employer that amongst other things, covers representation in case of audits for personal taxes. If, however, you don't have any other legal plan to cover this, I'd suggest getting the TurboTax audit protection. Hiring a professional to represent you in case of an audit will cost several hundreds of dollars per hour. Of course chances are slim, but that's the nature of insurance. "Getting a specific service recommendation is off-topic, but the question of what type of professional you need seems on-topic to me.  You may be looking for more than one professional in this case, but you could try these to start your search: Different people do things differently, but I think it would be pretty common to have a relationship (i.e. contract, retainer agreement, at least have met the person in case you have an ""emergency"") with a business law attorney and either a CPA or tax attorney.  You may try not to use them too much to keep costs down, but you don't want to be searching for one after you have an issue. You want to know who you're going to call and may establish at least a basis working relationship." "Actually, if you don't care about paying a bit more, either hire an accountant and dump the paper on them, or (may be cheaper but a bit more work) spring for tax software. Modern tax programs can often download most of your data directly. If you don't care about claiming deductions you can skip a lot of the rest. I'm perfectly capable of doing my taxes on paper or in a spreadsheet... but I spring for tax software every year because I find it a _LOT more pleasant.  Remember that most of the complexity does come from policies intended to reduce your taxes. When you call for simplification, you may not like the result. It's better than it was a decade or two ago. I used to joke that the battle cry of the next revolution would be ""No Taxation Without Proper Instructions!""" It depends on what you paid for, but usually audit support is an unrelated engagement to the return preparation. If the accountant made a professional mistake, you can request correction and compensation from that accountant, other than that any accountant can help you with audit regardless of who prepared the return. The original accountant would probably be better informed about why you reported each number on the return and how it was calculated, but if you kept all the docs, it can be recalculated again. That's what happens in the audit anyway. Yeah, but is licensing a logo *from yourself* a legitimate expense?   I know this is /r/business, and if my accountant told me to do that, then I'd probably do that. But as a citizen and a taxpayer, I don't want global corporates to get away with tax evasion. "I am perfectly qualified to not use an accountant.  I am a business professor, and my work crosses over into accounting quite a bit.  I would certainly find a CPA that is reputable and hire them for advice before starting.  I know a physicist who didn't do that and found they ended up with $78,000 in fines.  There are a number of specific things an accountant might provide that Quickbooks will not.  First and foremost, they are an outsider's set of eyes.  If they are good, they will find a polite way to say ""you want to do what?!?!?!""  If they are good, they won't fall out of their chair, their jaw won't drop to the floor, and they won't giggle until they get home. A good accountant has seen around a hundred successful and unsuccessful businesses.  They have seen everything you may have thought of.  Intelligence is learning from your own mistakes, wisdom is learning from the mistakes of others.  Accountants are the repositories of wisdom. An accountant can point out weaknesses in your plan and help you shore it up.  They can provide information about the local market that you may not be aware of.  They can assist you with understanding the long run consequences of the legal form that you choose.  They can assist you in understanding the trade-offs of different funding models.  They can also do tasks that you are not talented at and which will take a lot of time if you do it, and little time if they do it. There is a reason that accountants are required to have 160 semester hours to sit for the CPA.  They also have to have a few thousand field hours before they can sit for it as well. There is one thing you may want to keep in mind though.  An accountant will often do what you ask them to do, so think about what you want before you visit the accountant.  Also, remember to ask the question ""is there a question I should have asked but didn't?""" An accountant should be able to advise on the tax consequences of different classes of investments/assets/debts (e.g. RRSP, TFSA, mortgage). But I would not ask an accountant which specific securities to hold in these vehicles, or what asset allocation (in terms of geography, capitalization, or class (equity vs fixed income vs derivatives vs structured notes etc). An investment advisor would be better suited to matching your investments to your risk tolerance. "It's a certified accountant who has passed the CPA exam in order to hold the designation.       If you don't pay taxes on your income, you'll be completely fucked down the line. If you're self reporting and it's not automatically deducted, definitely speak to a CPA. They may even recommend filing taxes quarterly. The sub you're using is more for high finance and capital markets, I'd suggest /r/personalfinance for your situation.       Also, far be it from me to say, because $2k/mo is great for an 18 year old who is presumably in college, but you won't get in trouble as long as you pay taxes. If you mean in a long-term sense of financial stability, yeah that could be bad. $24k is absolutely amazing now and if being hot on instagram can pay for your college, then 100000% do it, that's fucking awesome.      Just make sure to get a degree because if you're still only making $24k in your mid 20's, yes you could be in ""trouble"" as in dire financial straits. That's not much to live off of when you finally have lots of bills to pay."