[marton_s]

I'm a software engineer who moved into freelance consulting a few years ago (I do back-ends and front-ends for mobile and web, nothing finance specific other than occasional credit card payment integrations). It's been a roller-coaster in many regards and one of the highlights is having learned a lot about bookkeeping, taxes, financial planning and everything that comes with running a small business in general. (Aspects which I initially despised but now I've accepted as necessary and doing them as routine.)

During these years I started playing with the idea of training myself in basic/intermediate accounting and/or finance. The motivation is twofold: run my own business better (and maybe stop paying an accountant to do my taxes) and maybe work on software projects in finance (where I suspect there is good money to be made).

I'd be interested hearing stories from fellow software engineers who did similar training!

[cheradenine_uk]

UK based, so YMMV.

Moved from self-employed for the odd side gig, to UK LTD co, to VAT registered UK LTD co.

The "business services mafia" will like to frighten you into believing you have to drop hundreds of £ on their services - plus £120/yr for an accounts package, more for payroll, business banking, etc.

Because your mind is too tiny to comprehend the ways of the priests. e.g: Don't ever ask a question in a business forum, you'll get swamped with the clergy telling you the question implies you're definitely going to prison because you're going to get it all wrong.

Do not believe them.

It is perfectly possible - perhaps even 'easy' - and if you understand the basics of double-entry accounting, all entirely learnable without too much effort. And best of all, you can do it almost for free!

Don't drop hundreds per year on Xero, use https://www.quickfile.co.uk. Cost: £0 (upsell on receipt scanning, but I don't use that). Does VAT, with electronic submission. I literally don't understand why you'd spend money on Xero - the extent to which it's advertised over here is insane; you're just paying for TV advertising.

Payroll (and all the tax calculation): Free, for up to 3 users. https://www.shapepayroll.com

Business banking: Tide. 20p/per transaction (no monthly fees!)

The hardest parts are - discipline of entering the transactions and not letting them build up - in the UK, understanding capital allowances vs depreciation - when doing payroll how to split the payments into the correct accounts (shape does the sums, you have to account for it correctly) - Make sure you pay all your HMRC bills - Doing the year end as a micro-entity (the CT600 corporation tax return) is actually surprisingly easy, and amounts to putting numbers in about 6 boxes.

By all means pay for all of this stuff if it isn't of interest to you. For me, as I intend my co to run long after I finish working, I didn't want to have annual fees for services that I really wouldn't be getting the use out of.

[xbryanx]

This sounds like every interaction I've had asking a question in a plumbing/electrician forum. Oh, if you're asking that question your definitely going to poison your entire house with sewer gas and/or burn the place down with that wiring.

[cheradenine_uk]

It's _exactly_ like that - and I've asked a fair few questions on DIY forums and the answer is, invariably, "you should hire someone to do that".

It's even worse in the UK if you mention gas. If you so much as mention a boiler you'll be pounced on by the cartel inventing their own legislation.

[tomcam]

If you knew me you would understand why these warnings are necessary...

[markdown]

Warnings are most certainly necessary, but they should be accompanied by the actual answer, else GTFO.

It seems like these fields are filled with people who can't stand DIY and just try and get everyone to pay for professional services.

When I try and replace a burnt fuse and ask for help, I accept that I'm not a professional and might burn my house down. Just tell me the risks and how to do it. I'm not a child, and I'm not going to sue someone when I've said upfront that nobody becomes liable just because they gave me advice.

[sundarurfriend]

Reminds me of David Mitchell's bit/rant in Would I Lie To You: https://www.youtube.com/watch?v=mKc32jQIY0w (01:28 if you're in a hurry).

[tomcam]

That was lovely, thank you. He is an international treasure.

[jsmith99]

Does it let you file directly to Companies House? The forums imply you have to hire an accountant to do that.

[cheradenine_uk]

You can go 2 ways, neither of which are hard.

You can file your accounts (which are trivial for a micro entity) directly with Companies house, or, when you do your CT600 corporation tax return (which is the 6 or so numbers) there's a checkbox marked "also file to companies house".

You absolutely do not need an accountant.

You also get a great deal of time (extra on your first year) between year-end and when you have to submit, so there is no panic.

[newusertoday]

Thanks for this, i was about to decide on xero but after seeing this comment i will give quickfile/shapepayroll a try. I am under 85000 so don't need to register for vat yet. This would be my first year of filing so any other tips are also welcome :-)

[scooble]

For a business account, Metro bank has no monthly charge if your balance stays above £6000, and only charges for some types of transactions (none of which I've used in the 6 years MyCo has been active).

[jermaustin1]

> and maybe stop paying an accountant to do my taxes

My mother was an accountant for years, I learned a lot of accounting, but there is a MASSIVE difference between knowing how to basically bookkeep and the tax code.

I'm in the US - so might be easier in less tax-lobbied countries.

When I started my second consulting firm (after closing down my first when I took a "real job"), I initially tried to go at it myself, but payroll is a complex process, so I decided to outsource that. Cost me $20/mo, but saved me hours of work. Then when the end of my first tax year hit, I started trying to figure out how to do my corporate taxes myself. Downloaded all of the tax forms I could find that I needed, and printed the couple hundred pages of information. 4 weeks into filling out the forms and 2 weeks before a filing deadline, I gave up. To the best of my knowledge I had underpaid my quarterly estimates by $30k.

I reached out to a small business accountant (brother of a good friend), and for only $1200, he handled the 112 page tax return, found out I had only underpaid by less than $2000, also found a whole bunch of write offs I didn't even know to look for, and did a full reconciliation of my accounts for that.

It was at this point that I decided I will always pay for professionals to do the part of this job that I am not proficient at. All of my various accounts-related services add up to less than 1% of my revenue, and if it were even 5 or 10% of my revenue, I'd probably still pay it, just to know it was done correctly.

[jacobr1]

Many members of my family run our own small businesses, and have given similar advice. Always either do your own bookkeeping (or heavily review and understand the work you have done) but then pay for the for not only the processing of tax by CPAs, but also their advice. There are plenty of ways to optimize a business to not just be more tax efficient, but also financially structure operations, especially with the way one approaches debt.

[EvanAnderson]

I took the 101/201-level accounting classes at a local community college before my partners and I started our IT support contracting business in 2004. (For me, instructor led training is a preferable delivery vehicle, but the results might well be the same if I enjoyed self-education for this kind of thing.)

The dividends paid by having basic accounting knowledge were twofold.

It definitely helped me run the business better-- particularly when it came to working with the CPA who handles our taxes. It also helped me in communicating the operation of the business to the partners who have less of an accounting background. I've ended-up doing all the bookkeeping for the business and I think we've saved a ton of money versus hiring an accountant to do that basic work. (We still hire-out for tax-related work because I don't want to sink time into learning those intricacies.)

The other major benefit, and arguably a larger one than the first, is giving me credibility when I talk to Customers' finance and accounting people. Properly using the terminology they're comfortable with to describe their business problems feels like it has helped me land relationships and projects. Obviously, I can't spin-up a "scratch universe" to test that hypothesis, but I do know that I've seen tech-heavy and accounting-light presentations by other vendors go over very badly with some of the same people.

Finally, I'd argue bookkeeping and accounting is, arguably, the oldest "information technology" discipline in humanity. Much of IT springs from the history of bookkeeping becoming computerized ("automatic data processing"). I think knowing the history of IT, be from the dawn of computer science birthing from logic and mathematics, or the first practical applications of IT to human problems, is valuable to its practitioners.

[rrnn]

I come from a family of accountants. But when I first went to college I chose IT Management which included both IT and Accounting subjects. I've worked on the IT Side for about a decade.

> The other major benefit, and arguably a larger one than the first, is giving me credibility when I talk to Customers' finance and accounting people.

I also have benefited a lot from the accounting subjects I took in college have also been an advantage in my professional career as I can 'speak the language' of my workplace's financial department.

> Finally, I'd argue bookkeeping and accounting is, arguably, the oldest "information technology" discipline in humanity. So much of the discipline springs from the history of bookkeeping becoming computerized ("automatic data processing"). It's a good background to working in IT to know about where it came from.

- Definitely. The software used at my family's the accounting office was older than any other I had used. This year I helped them migrate from an MSDOS Fox Pro 2 application to a newer app.

The MS-DOS It worked well, it is even still supported by the developer (!), but the work around required to make everything work in a Win 10 environment was too much of a hassle.

It felt like doing digital archeology when opening files created between 1989 and 1994 to see how data was stored. Even this newer app still uses an older tech stack: Visual Fox Pro 9. Accounting software seems to run in an alternate timeline.

[riccardomc]

I say: do it!

I am also a freelance consultant but in the cloud infra space. I appreciate the freedom it gives me and the insight on the operations of running a business are invaluable.

As a software engineering I always looked suspiciously at accounting and finance, but I have to admit I've been wrong. I discovered a practical and theoretical elegance that is very pleasing for someone like me.

I ended up enrolling in an MBA because I wanted to learn more about the business side of things. I had a few courses about corporate finance, valuation and accounting which filled many gaps I had.

I still don't trust myself running my own finances completely, so I do pay an accountant to take care of the details. But I am very happy I know financially what is what when deciding where to take my little business.

Knowledge is power, especially when it comes to finance.

[mgkimsal]

I've never been 'afraid' of numbers/finance as such, but typically have operated on the smaller side of things enough where it hasn't been too much of a burden. I've had multiple financial folks in the family (accountants/cpas/cfos/etc) such that when I've had questions, I have trusted people I've turned to, which has been more than enough.

About 10 years ago I brought on an outside accountant to handle my small business stuff. They do the final 'paperwork', but it's forced me to become a bit more diligent about financial housekeeping stuff - documenting purchases, keeping tax forms, etc. And I try to never let things go more than a few weeks before reviewing (primarily expenses). Part of the 'dread' of financial stuff was having to wade through a year's worth of paperwork. Keep ahead of that and working with an external accountant has made all this more of an annoyance than anything else.

[goodlinks]

Imho anyone working on business applications could do with this. I get frustrated how naive so many software tools are regarding fincial controls and how developers dont know that so many data reconciliation issues were solved decades or centuries ago by accountants.

Same goes for basic infrastructure and configuration knowledge to a certain extent:)

[augiemagic]

This sounds like something I'd be interested in learning more about. Do you have a couple examples of said data reconciliation issues, and the corresponding accounting approaches?

[jimnotgym]

An easy example. In a well designed database that represents an accounting ledger, debits are positive numbers credits are negative. With double entry accounting, if everything is correct the entire ledger sums to zero at all times. It is trivial therefore to know if an error crept in to your system, maybe something posted only half the entry before erroring (btw always post a complete double entry inside a database transaction).

[dugmartin]

You can also design your schema using unified ledger accounting (https://en.wikipedia.org/wiki/Unified_ledger_accounting) which captures both the transaction's debit and credit in a single row in a single table negating the need for a transaction.

[jimnotgym]

The problem comes with trying to quickly find the balance of sub-accounts. It is common to need to find the balance of all of the general ledger accounts repeatedly and quickly when preparing accounts, or having to find all customer balances to see who has paid. Once you have 10m rows of data (easily done at an sme) this gets very slow indeed. It is common to have a second table that records running balances or balances at period ends to speed this up. This is why transactions are important or you find the individual accounts of the sales ledger control don't add up to the total. Some systems have an 'audit' tool that adds them all back up from the general ledger.

[cheradenine_uk]

If you're interested, you can always check out the code to GNUcash;

IIRC it has a SQL Schema that can be imported into most databases.

https://wiki.gnucash.org/wiki/SQL

[augiemagic]

Ah that makes sense. Thanks!

[john61]

Not the OP. But in my experience, a lot of people do not know about double entry bookkeeping, which solves a lot of problems people have trying a home made excel bookkeeping. It is not more work to do, but you have to learn a little bit about the concepts. Once you know them, it seems incomprehensible that others make errors that have been solved hundreds of years ago.

[pkrotich]

It's absolutely your best interest to learn at least the basics as business owner. I did so myself - I still do QuickBooks, but I have a cautionary tale.

Learning account is great - it helps you to understand P&L and BS etc - but what you really need is managerial accounting knowledge. I made a mistake of thinking bookkeeping was accounting and ended up not doing good tax planning etc - let's just say I'm still paying for it. Painful lesson!

I would highly recommend still keeping a CPA around - make sure they're truly into Managerial Accounting.

[m_ke]

Yeah I got stuck running a startup solo and would lose a ton of sleep stressing about any possible unknown unknowns on the accounting and legal side, reading through a few business law and accounting / bookkeeping books really helped ease that stress.