Bookkeeping is an essential part of business management — no matter what you do for a living. If you find record-keeping tedious, intimidating or frustrating, a professional bookkeeper can help to keep your company finances on the straight and narrow. But how much are bookkeeping services, and are there lower-cost alternatives available?
We’ll begin this article with a clear definition of bookkeeping, and we’ll explain how bookkeeping differs from accounting. Then, we’ll reveal how much professional bookkeeping services cost. Finally, we’ll talk about a comprehensive, intuitive DIY alternative to bookkeeping services.
- What’s the difference between bookkeeping and accounting?
- How much are bookkeeping services?
- What do bookkeeping services include?
- Pros and cons of hiring a bookkeeper
- DIY bookkeeping with Countingup
What’s the difference between bookkeeping and accounting?
Perhaps unsurprisingly, a lot of people confuse bookkeeping with accounting. Both terms have to do with financial management — but they’re not exactly the same thing. In short, bookkeeping is the first part of accounting. Bookkeeping and accounting processes frequently overlap.
- Bookkeepers track incoming and outgoing funds, manage day-to-day company cash flow, process invoices, maintain payroll, prepare initial financial statements and calculate VAT returns.
- Accountants perform financial audits, prepare legally compliant financial statements, calculate product or service costs, forecast profits, set and implement budgets, make borrowing and investment decision and prepare company tax returns
Some accountants also offer bookkeeping services — but bookkeepers don’t usually handle full-scale accounting projects.
How much are bookkeeping services?
The costs associated with bookkeeping services in the UK vary quite a lot. If you hire an experienced bookkeeper full time, you might pay in the region of £24,000 per year. Most sole proprietors opt for monthly bookkeeping packages instead, either from small bookkeeping firms or from self-employed bookkeepers.
Freelance bookkeepers in the UK generally charge between £15 and £20 per hour for their services. If you’re a small business owner with a limited budget, you might decide to devote £100 a month to bookkeeping, which would buy you between 5 hours and about 6.5 hours every four weeks or so.
You’ll also need to budget for unforeseen bookkeeping expenses. If you need to submit a financial report unexpectedly, for example, you might need to pay your part-time freelance bookkeeper a little more than usual for a rush project.
What do bookkeeping services include?
We mentioned a few typical bookkeeping services above. Now, let’s take a closer look at what each of them involve:
- Transaction processing: Bookkeepers create invoices, handle incoming payments and categorise receipts.
- Payroll processing: Bookkeepers work in tandem with human resources departments, maintain payroll systems, and issue payments to employees.
- Financial statement preparation: Bookkeepers prepare initial financial statements, which can help you understand how your business is doing.
- Managing accounts receivable: Bookkeepers keep track of amounts other people owe your company.
- Managing accounts payable: Bookkeepers monitor and pay amounts you owe to other organisations.
- Calculating and filing VAT payments: If you have an annual revenue totaling more than £85,000, you’ll need to pay VAT — and that’s something else a bookkeeper can help you with.
If you plan to expand and take on employees in the future, you will inevitably need to extend your bookkeeping budget. PAYE and other payroll tasks take time, and the more transactions you make, the more paperwork your bookkeeper will need to handle.
Pros and cons of hiring a bookkeeper
On the one hand, professional bookkeeping services can help you stay on top of your finances; on the other, bookkeeping services can be quite expensive. Let’s take a look at a few other advantages and disadvantages of hiring a bookkeeper.
- An experienced bookkeeper brings expertise to the table.
- Hiring a bookkeeper means you get to focus on other parts of your business.
- A bookkeeper might provide fresh insight into the financial health of your company.
- Out-of-scope services soon add up, so you might end up paying more than you expect.
- You hand over a certain amount of financial control — and trust — to your bookkeeper.
- If your freelance bookkeeper makes a mistake, you’re responsible for the consequences.
DIY bookkeeping with a simple app
If you don’t have the budget to hire a bookkeeper part time — let alone full time — but you do want to keep your business finances in good order, you can do your own bookkeeping in house. When you take a do-it-yourself approach to bookkeeping, you’ll:
- Maintain total control over your business finances
- Know exactly what’s coming in, and what’s going out
- Gain a better understanding of your business trajectory
- Learn more about finances, and feel empowered as a result
Forget about a mass of confusing spreadsheets: modern DIY bookkeeping options are pretty sleek. If you’re a freelance professional, a contractor or a small business owner, you can use a simple app to keep track of incoming payments, outgoing expenses and everything in between.
Countingup is the two-in-one business current account and accounting app. Once you’re set up and have money coming in and going out of your business account, you can use the app to:
- Save time on tedious bookkeeping admin
- Create invoices and bill customers via app, no matter where you are
- Get profit-and-loss insights to get a better idea of your company’s financial status
- Categorise transactions, so you can see what you spend, what you bring in, and when
- Capture receipts to ensure that you claim everything you’re entitled to at tax time
Countingup also includes top-rated customer support. Find out more and sign up free here.