While most sole traders are probably across their annual accounting bill, they might not have thought about how much their financial admin is truly costing them, in its entirety.
They might be accounting for the upfront costs – things like their accountant’s fees, and accounting software subscriptions. But there’s actually a lot more to it than that – hidden costs like extra software licenses, invoicing or expense management apps, and the biggie – your time.
When you add it all up, the final amount could be worth a pretty penny! So to help you get to grips with it all, we’ve listed some of the main monetary drains of financial admin, as well as a calculator you can plug your own numbers into for a total cost that’s accurate to you.
(We also show you how much you stand to save by switching to Hnry – hi, yes, that’s us! We’re basically accounting software and an accountant in your pocket. Everything you need, no extra fees 🎉).
The main costs of financial admin
Here are all the bits and pieces you could be spending on right now just to sort all your financial and tax admin:
- Accountant’s fees:
- If you hire an accountant or bookkeeper to help you with your taxes, you’ll no doubt be paying a monthly or annual fee.
- In general, a traditional accountant or bookkeeper could cost you in excess of £1,000 per year for income tax and VAT calculations and tax filings.
- (Making the actual tax payments to HMRC is all down to you though!)
- Accounting software:
- These days, having to pay for, learn, and use accounting software is mandatory if you hire a traditional accountant.
- Most accounting software charges a monthly subscription that could be worth £30 a month or more.
- Spreadsheet/Office Software:
- You may have needed to purchase a license for spreadsheets or other tools used for tracking your income and expenses.
- Third-party invoicing and expense tracking apps:
- If you use a third-party app to manage your invoices, or to store the receipts for your business expenses, then you’re probably paying a monthly or annual fee for access to that software.
- Your own time:
- From making manual internet banking payments, to reconciling accounting software, to filing tax returns – all this costs hours of your own time every month.
- Think about your hourly rate, and multiply that by hours spent on all this admin – surely all this time and effort could be better spent elsewhere?
But wait! If I put my tax money into my savings and mortgage accounts, won’t the interest I earn offset those costs?
Not really.
Given current interest rates, the amount of interest you might be able to earn is comparatively low.
You can use our financial admin calculator to calculate how much interest you could earn if you put all your tax money in a high-interest savings account between payments (using a generous interest rate), so you can see whether the final value justifies the level of effort.
Ready to find out how much your admin is costing you? Plug your numbers into our financial admin calculator
💡 HMRC pays repayment interest on early payments, currently set at 3%, which goes towards your overall tax bill. The interest calculation in our tax calculator is set at 3.9%, in line with current term deposit interest rates of major banks.
Once you’ve seen the true cost of your financial admin, it can be hard to forget. That’s actually how Hnry first came about – a few years ago, the founders of Hnry got to exactly this stage. They realised that they were spending hours, and thousands of dollars each, sorting paperwork – rather than actual work.
So they created Hnry – a tax service and app that’s designed with sole traders in mind. It’s everything you need rolled into one, including:
- All taxes calculated and deducted as you get paid
- Your Self Assessment completed for you every year
- Expenses recorded and managed within the Hnry app
- (With the tax relief passed on to you in realtime)
- Unlimited invoices
- Unlimited quotes
- … and so much more!
All this for just 1% +VAT of your self-employed income, capped at £600 +VAT a year. Easy!
If this sounds good to you, why not give Hnry a whirl? Save time, save money, and never think about tax again.
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