A growing number of people are choosing to start a UK bookkeeping business from home. Why? Well, with the entrepreneurial spirit stronger than ever and the government encouraging small business growth, there is more demand than ever for the support of self-employed bookkeepers to help entrepreneurs understand their numbers.
This growing demand coupled with the relatively low overheads of running a bookkeeping business from home, means competitively priced home based bookkeepers are earning great full-time incomes.
I’ve updated this post on 11 February 2020
What Services does a Bookkeeping Business Deliver
Before you start a UK bookkeeping business from home, you should check that you are able to confidently offer all the services that you may be asked to deliver by your clients. After all, when you are self-employed the buck stops with you!
Bookkeepers are responsible for maintaining the financial records for businesses as well as some business administration. This includes things like:
- Data entry into accounting software;
- Filing invoices;
- Paying suppliers;
- Make payments on behalf of the business;
- Ensure regular payments like PAYE are made;
- Customer and supplier reconciliations;
- Bank reconciliations;
- Submit VAT returns;
- Chasing customers for late payments;
- Scanning in documentation;
- Prepare wages;
- Paying cheques in
- Preparing the books of the business ready for the year-end accountants.
Businesses can take different structures such as a sole trader, Limited Company or Limited Liability Partnerships.
Although double-entry bookkeeping is the same, no matter which structure a business chooses, there are subtle differences in the way numbers are disclosed which affects how bookkeeping is done.
This means if you are planning to start a bookkeeping business from home, you need to be clear in which business structures and industries you have the right experience in. That way, you will offer your clients the best possible service levels.
What is the difference between an Accountant and a Bookkeeper?
When you are a self-employed bookkeeper, it is necessary to understand where your responsibilities end.
Typically bookkeepers are responsible for collating all the financial records of the business and preparing accounts up to trial balance stage (fully reconciled).
The accountant then takes the trial balance, nominal ledger and records to prepare the accounts in a statutory format. The accountant may have questions for the bookkeeper to help them understand certain transactions and help them make the best possible tax-saving adjustments for their mutual client.
So, if you are planning to start a UK bookkeeping business from home, you should fully expect that you may have to work with year-end accountants on behalf of your clients.
Top business tip – Do a good job, and the accountants may recommend you more clients!
How Much Does a Bookkeeper Charge Per Hour?
The amount a bookkeeper can charge per hour varies according to experience and qualifications. But Self-Employed Bookkeepers in the UK are currently typically charging between £15 to £25 per hour.
If you are unsure of how to set your hourly rate then check out my post on How to Set Your Hourly Rate to help get you started.
What Qualifications Does a Bookkeeper 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.
Many successful bookkeepers do carry qualifications which means it is easier to attract clients and charge a higher hourly rate.
Here are the most recognised Bookkeeping Qualifications available in the UK right now:
- International Association of Bookkeepers (IAB) – check out their website here
- Institute of Certified Bookkeepers (ICB) – check out their website here
- Association of Accounting Technicians (AAT) – check out their website here
You do not need a degree to become a UK Bookkeeper or apply for training to become a member of one of the above Bookkeeping Bodies.
How to Start a Bookkeeping Business from Home
Planned correctly, starting your bookkeeping business from home can be done quickly, cheaply and easily. Here’s what you need to do:
Phase 1: Planning
List your Services
Make a list of the services you plan to offer to your clients. For example: bookkeeping, payroll, credit control.
Identify your Ideal Client
Creating a vision of your ideal client will give you direction for all your sales and marketing activities, as well as assist with naming your business and checking you have the right training.
Note down the type, size, location or sector you plan to specialise in. For example:
- Limited Companies
- Recruitment Agencies
Decide whether you will charge at an hourly rate or a fixed price. The most suitable method will depend on the type of jobs you plan to take on or clients you deal with.
You may find smaller clients prefer a fixed price in advance so they can budget for your costs. However, larger business may be happy for you to bill according to your time spent.
Identify how you will sell your services
Making a plan to market your business is essential. After all, if people don’t know you exist how will they know you can buy from you?
Marketing can be expensive but there are things you can do cheaply or for free such as:
- Attending networking events with potential clients and accountants [FREE]
- Advertising online on websites like Gumtree
- Networking on Social Media like in Facebook Groups or on LinkedIn [FREE]
- Asking for recommendations from existing clients [FREE]
- Sign up to Freelancing websites like People Per Hour (be careful with these websites as they have a reputation for paying peanuts)
- Guest Blogging [FREE]
Calculate Business Set Up Costs
When you start a business, its ideal is to keep your costs as low as possible. That being said, there are one-off costs attached to starting a business.
Make a list of all the things you need to buy to get set up in your bookkeeping business, with the cost so you need how much start-up capital you will need. Include things like:
- Mobile Phone
- Business cards
There are so many digital tools and resources out there that can help you run your business efficiently.
Calculate Business Running Costs
Business running costs are the ongoing things you need to pay for to run your business. Having an understanding of these will help you understand how much you need to sell to cover your costs and make a profit.
Here are examples of business running costs:
- Money Laundering Licence
- Data protection fee
- Software licences
- Your salary
- Website hosting and maintenance
Name Your Business
Naming a business can be one of the trickiest tasks! But choosing the right name will make you look professional, keep you memorable and make your bookkeeping business real.
Once you have shortlisted potential names check the domains are available using 123 reg here – you’ll need this to set up your email so grab hold of it!
Depending on the business structure you choose and how you intend to grow your business, you should check the Limited Company name is available too. You can do this on the Companies House website using their Companies Name Availability Checker here.
Phase 2: Setup
Register Your Business
If you are starting a UK bookkeeping business from home then you need to let HMRC know. The type of legal structure you choose for your business will affect how you register your business.
The cheapest and quickest way is to register as self-employed with HMRC (I have put together a video guide on how to do this here).
Depending on your business turnover, you may need to be VAT registered. Again, this needs to be done with HMRC and you can read more about that here.
Buy Business Equipment and set up your Workspace
It’s time to start investing in all the equipment you need to deliver your bookkeeping services.
Setting up a dedicated area in your home will avoid distraction, give you peace and quiet as well as mean you can close the door to your office at the end of the day to relax.
When you start a business from home it’s worth understanding:
- What percentage of your household bills you can deduct against your tax bill
- Whether your local council requires you to pay business rates
- The implications of running a business from home for your mortgage or rental agreement
Get Your Money Laundering Licence
A Money Laundering Licence is a legal requirement for bookkeepers in the UK. It is also known as Anti Money Laundering (AML).
You are breaking the law if you start your bookkeeping business from home and do not have one.
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.
Pay Your Data Protection Fee and Check Compliance with GDPR
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.
GDPR Stands for the General Data Protection Regulation and as a bookkeeper, you need to let your clients know things like:
- That you hold personal information on them
- This personal information is held securely
- Confirm that you will not share their information
- Will destroy all personal information on them on request or in a timely manner if not required
Organise Business Insurance
As a bookkeeper, you will most likely need professional indemnity insurance. You only need to consider public liability insurance if you have clients at your home or employers liability if you start recruiting staff.
Open a Business Bank Account
Opening a dedicated business bank account will simplify your business administration.
Having the right branding helps to create the right impression with your clients. It can be expensive, but you can also do it for free using Canva.com. Get a logo, basic colour palette, business cards along with a couple of images you like.
Set up a website using your branding that contains a bit of information about you, your services and contact information. That way you can direct your potential customers there to find out more about you. You can set a Free Website here or choose a premium option that includes domain and email with google drive.
Set up an email address
The main options for email are Google and Microsoft. Both charge a monthly subscription which includes everything you need including email, some secured storage for your client documents, spreadsheets and documents.
Pricing is currently:
Google G Suite £3.30/month
Microsoft Office 365 £7.90/month
The software you choose will come down to:
- Personal preference
- What your clients use
If you are unsure, many like Quickbooks, come with free trials which means you can try before you buy. Others, like Xero, have their own certification programs. That means you can work your way through their training programs and once qualified, you can tell your clients you are an expert and include your certification logo on your website.
Templates and Policies
These will leave you feeling prepared for handling clients, winning business and dealing with problems. Prepare templates and policies like:
- Engagement letters
- Client proposal templates
- Cancellation policy
- Client termination letter
Phase 3: Launch
Now you are officially open for business, it is time to put your marketing plans into action. Getting sales in if the key to you being able to cover your business costs and pay yourself a salary.
Build a support network
When you start a bookkeeping business from home, it can be lonely. Not only that if you do get stuck or feel unsure you will have no one to check with. Start building your support network around you of useful people willing to collaborate.