During my first year of entrepreneurship, I grew my freelance writing business to 30 clients in the first six months. I felt like I could accomplish anything. Despite this, every single one of my self-employed friends slid their accountant’s business card across the table to me. But I was too busy relishing in my own success and (over)confidence to listen. I mean, I had 30 clients! I was making more money than I had climbing the corporate ladder. How tough could taxes be?
When tax season rolled around, I learned that 30 clients meant tracking down 30 1099 forms. Some of my clients were startups that never asked me to fill out paperwork and paid me via PayPal. How was I supposed to report this income? (And like, is this even legal?)
When I encountered write-offs and deductions (like charitable deductions), my mind started spinning. I had easily spent $500 on client lunches and coffee meetings. So, $500 sounds about right…right? I hadn’t saved a single receipt or tracked these expenses.
I spent four days straight trying to connect the dots between transactions from the past 12 months and my Google calendar. When I turned to the Internet for advice, I encountered more horror stories than helpful tips. One freelance writer owed $12,000! Um,this would wipe out my entire savings
Needless to say, the shiny crown I placed on top of my head tumbled down and broke into a million little pieces amidst the 100+ bank statements scattered on my apartment floor. As much as I didn’t want to admit it, I needed help. I may be a writer. I may even be a salesperson, project manager, and marketer. But I’m not an accountant.
I pulled out one of the business cards and proceeded to hire an accountant. In addition to teaching me important lessons about humility, vulnerability, and asking for help, here are three of the many reasons this was a smart decision for me and my business.
It helped me focus on what I do best.
I spent an entire week trying to file my taxes before reaching out for professional support. When 6 p.m. rolled around, and I hadn’t written a single article, I proceeded to write until 3 a.m. I turned in work I wasn’t proud of because I was exhausted and stressed. I missed deadlines, rescheduled networking opportunities, left important emails unanswered, and lost some credibility with a few clients.
Yes, running your own business means getting to wear multiple hats. But the biggest hat in my closet (the floppy church hat, if you will) is writing.
Taxes, while necessary and critical, should not take too much time away from how I generate money. My accountant Eli specializes in helping self-employed individuals file taxes. He’s not great with words, but he’s a whiz when it comes to write-offs.
In other words, we’re a match made in small-business heaven. Letting him focus on what he does best frees me up to focus on what I do best.
It allowed me to keep more money.
When I first sat down with Eli, he walked me through the many types of deductions I could claim as a contractor. I had no idea, for example, that I could write off a portion of my rent because my home office takes up a certain percentage of my apartment’s square footage.
He told me that since I pay for my own healthcare, I can deduct my monthly premium payments. When he asked me about office supplies, I mentioned the only thing I relied on was my laptop. And that’s when I remembered that I had spent $2,000 on a new laptop when I first launched.
If I had not hired an expert, I would have failed to claim thousands of dollars (about $10,500, to be exact). The $500 I paid him for his services was well worth it, to say the least.
It taught me how to better manage my money and business.
Even after I hired Eli, I spent a lot of time and multiple phone calls tracking down receipts, forms, and invoices from my first year of business. After filing my taxes, Eli told me that it will make his job and my job easier if I implement a few simple systems.
He sent me a digital template for tracking expenses, as well as a handy poster outlining what I could deduct. The poster has a permanent place on my bulletin board, and I’ve handed out at least 10 copies to self-employed friends (along with Eli’s business card, ironically).
He also suggested I do bookkeeping on a weekly basis. Each Friday, a calendar notification reminds me to spend 30 minutes looking back on the week and recording any expenses that qualify as a deduction in the template. I take screenshots of each transaction and file them in a folder on my desktop, which is organized by month. It takes me about 20 minutes each week, but will save both of us hours come tax season.
Initially, I beat myself up for having to hire an accountant. It highlighted the fact that I couldn’t do it all myself, despite what my unflatteringly large ego believed. But oddly enough, my business (and mental health) have become stronger since bringing Eli onboard.
While asking for help may make you think you’re not an expert and that you need support, it also suggests that, ultimately, you want to do the absolute best thing for you and your business.
This, I’ve learned, is just as powerful and strong as being able to accomplish something on your own.