Starting a bookkeeping business from home is a great way to earn some extra cash without the overheads of an office and the flexibility to fit your work around whatever life throws at you. But how do you do it? And what licences do you need to be a self-employed bookkeeper? Keep reading! I’ve got you covered. In this guide, I’ll share with you all about what a bookkeeper does, how to charge and what qualifications and licences you’ll need to get your bookkeeping business started.
Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.
Table of contents
1. What Does a Bookkeeper Do?
If you’re planning to start a bookkeeping business from home, then it’ll help to understand what services you can offer your clients. Bookkeepers are responsible for maintaining the financial records for businesses as well as some business administration. Generally, they’ll handle the first 4 steps in the accounting process. This involves producing accounts to the trial balance stage, ready for the accountant to generate financial statements and complete tax returns. Freelance bookkeepers usually use some kind of bookkeeping software such as Xero to process financial information given to them.
On a day-to-day basis, a freelance bookkeeper can expect to do these types of things:
- Data entry of source records into an accounting software;
- Scanning & storing invoices;
- Paying trade creditors;
- Paying PAYE to HMRC;
- Trade creditor, trade debtor and bank reconciliations;
- Submission of VAT returns;
- Credit control;
- Preparing accounting records for the accountants.
2. How Much Do Bookkeepers Earn in the UK?
The amount a self-employed bookkeeper working from home can charge per hour varies according to experience and qualifications. But self-employed bookkeepers in the UK are currently typically charging between £15 to £35 per hour. Whatever you choose to charge, you should make sure it covers your expenses, holidays and taxes. Read my guide to setting your hourly rate to help you set the right wage for you and to download a free calculator to help you work it out.
Many bookkeepers now choose to charge fixed monthly fees which covers a set range of services or transactions. Others will choose to charge an hourly rate based on time spent. You’ll need to decide what works best for you, depending on what services you offer and the types of clients you intend to have.
3. What Qualifications Do You Need to Start a Bookkeeping Business from Home?
There are no legal requirements for a self-employed bookkeeper to have any formal qualifications. However, if you are planning to start a bookkeeping business, it is essential you have bookkeeping experience. There are bookkeeping qualifications available in the UK including:
- International Association of Bookkeepers (IAB)
- Institute of Certified Bookkeepers (ICB)
- Association of Accounting Technicians (AAT)
4. Do Bookkeepers Need to Have Licences?
Due to the financial nature of a bookkeeping business, certain licences are required for handling personal information and protection against fraudulent funds.
4.1 Money Laundering Licence
A Money Laundering Licence is a legal requirement for bookkeepers in the UK. This is known as Anti Money Laundering (AML) Licence. If you have a bookkeeping qualification like AAT or ICB then check with them how you apply. If you are not part of a professional body then you should apply directly with HMRC.
For any questions about AML or if you need to check whether you need to apply for the licence then email them on MLRCIT@hmrc.gsi.gov.uk.
4.2 Data Protection Fee
If you are handling or storing personal information on your clients, then you need to pay a data protection fee of £40 to ICO and ensure you are GDPR compliant.
4.3 GDPR Compliance
GDPR Stands for the General Data Protection Regulation, and as a bookkeeper, you need to ensure that you protect data held about your clients, including that you:
- Hold all their personal information securely
- Will not share their information
- Will destroy all personal information held on them upon request or in a timely manner if not required
5. How to Start a Bookkeeping Business from Home
I’ve written a separate guide to setting up a business which takes you through the basics of going self-employed. This contains essential information on registering your business, getting insurance and popular business bank accounts. However, there may some additional thing you need to start a bookkeeping business.
6. What is Needed to Start a Bookkeeping Business?
6.1 List of Services
Bookkeeping is a broad term. Therefore, it is worth deciding which specific services you plan to offer, such as payroll, VAT returns or credit control. That way, it’ll be clear to potential clients what you offer them.
6.2 Identify Your Ideal Client
By deciding on the type of clients, their business structure and industry they operate in, you’ll be able to market yourself correctly. You’ll also be able to position yourself in the areas you have the right expertise in.
6.3 Fees & Pricing
Having a fee structure set out will make it clear to potential clients how much you charge so they know exactly how much you expect to be paid. It’ll avoid time wasters and ensure that you only deal with selling to clients who are willing to pay your fees.
6.4 Marketing Plan
Whether you’re just starting out or looking to grow your client base, setting up a marketing plan for your bookkeeping business will help tell the world you exist, showcase your skills and attract potential clients to you.
6.5 Subscriptions
In some cases, your clients may have their own accounting subscription, meaning they’ll just add you as a user so you can do the business bookkeeping. In other instances, your clients may expect you to do their bookkeeping on software that you pay for. That means you’ll need to have your own accounting software subscription with something Xero.
Depending on how many clients you pick up, you’ll need to manage dates and deadlines. This could be done with a spreadsheet. Alternative, project management and productivity platforms like Clickup can be really useful tools to help you manage your responsibilities.
6.6 Templates & Policies
Having templates and policies in place will help to set clear expectations as well as ensuring smooth onboarding and management of your clients. Here are some of the templates and policies you may need to start your self-employed bookkeeping business:
- Client proposal template
- Client welcome pack
- Welcome email
- Letter of engagement
- Terms and conditions
- Pricing template
6.7 Professional Indemnity Insurance
As a freelance bookkeeper, Professional Indemnity Insurance (PI) is usually required. PI covers legal costs and expenses incurred if you provide incorrect or inadequate advice which causes your client financial loss. There are other types of insurance, and depending on how you plan to operate your bookkeeping business, you may need more than one type. I’ve written a guide to business insurance where I cover the main types of insurance or you can contact Simply Business who is a broker to discuss your specific needs.
6.8 Experience
Just like any trade, having experience gained from time spent working in a particular sector and doing bookkeeping. After all, when you’re self-employed, it’s up to you to know what you are doing and get the job done correctly.
So, here’s how you can set up a bookkeeping business from home. There’s a lot of information here, therefore, it may help to bookmark this page so you can come back to it as your work your way through setting up your business. Good Luck! If you’re thinking of being a self-employed bookkeeper, you may also find these blog posts useful: