How To Become a Self-Employed Bookkeeper

Bookkeepers basically record and process certain financial transactions for businesses, making it easier for accountants and business owners to compile their financial statements and make key business decisions.

Small to mid-size businesses might employ their own bookkeepers. But in recent years, many have started offering bookkeeping services on a self-employed basis.

This is good for businesses, as it means they can get all the benefits of a bookkeeper without having to employ a full-time member of staff. And it’s good for the self-employed bookkeepers, as with just a small handful of clients, they can earn quite a bit while working as their own boss, at their own pace, and effectively from anywhere in the world.

If you currently work as a bookkeeper for an employer, perhaps you’re considering going self-employed, where you might be able to make more than you ever would through just working for one company. Or maybe you’re just looking to become self-employed, and you’re exploring bookkeeping as an option.

In any case, this is your essential guide to becoming a self-employed bookkeeper. We’ll tell you some of the things you’ll need to know, and help you decide whether this work is for you.

Your essential guide to bookkeeping

What Does a Bookkeeper Do?

All organisations accumulate huge volumes of transactions every month, including sales, purchases, payroll, bill payments, and so on. A bookkeeper will record and process all of these transactions, making it easier for their organisation’s accountant to make their official financial statements.

It used to involve a lot of work for bookkeepers to record and process all of these transactions. But these days, bookkeeping software can automate many of the most time-consuming tasks, from reconciling bank transactions to running payroll.

A bookkeeper is not an accountant. Accountants undertake specific training, and they must attain certain qualifications and certifications before they can start training. A bookkeeper does not need any such training, though obviously you do need a good head for figures.

It’s still a tricky role, and some businesses will have more complicated transactions than others. But with the right tools, freelance bookkeepers can take on multiple clients at once, managing multiple business’s books at once from a single platform.

What Do You Need to Become a Self-Employed Bookkeeper?

Aside from experience or, at least, some training in bookkeeping, here are the essentials:

  • A Computer and a Smartphone
  • A Subscription to Bookkeeping Software
  • A Separate Business Bank Account

A computer and smartphone should go without saying, but you’ll need good reliable tech not just to do your bookkeeping, but also to keep in touch with your clients, and to reach out to potential new clients. And as your tech will be your livelihood, consider getting it insured.

You could use an old-fashioned paper-based system, or Office tools like Excel. But your life as a self-employed bookkeeper will be much easier with bookkeeping software. Your subscription will cost you. But obviously, the more clients you acquire, the more your subscription will pay for itself. QuickBooks is a popular bookkeeping system, and their plans start at £12 a month.

A business bank account isn’t strictly necessary unless you register as a limited company, and it might prove to be another monthly expense. But opening a business bank account will make it much easier for you to keep track of your income and expenditure. Head here to read our full guide to business bank accounts.

Why Should Customers Trust You?

Unlike accountants, bookkeepers don’t need any formal training before they can begin trading. In theory, then, anyone can be a bookkeeper. So if you’re going to do this on a self-employed basis, you need to ask yourself two questions: Who will your customers be, and why should they trust you?

You have to prove to potential customers that they can trust you with their sensitive financial transactions. There are certain regulatory bodies you can register with:

You may also have to register with HMRC as part of their Money Laundering Regulations.

With the Institute of Certified Bookkeepers, you can even study for official qualifications. While this isn’t strictly necessary, it will help you get to grips with the world of bookkeeping, while your official qualification will help you gain new clients and retain them in the long-term.

What Sort of Bookkeeping Services Will You Offer?

The term “bookkeeping” covers a huge range of services. The more of these services you can offer, the more clients you can potentially attract, and the more you can charge!

But you might not be ready, willing, or able to offer all potential bookkeeping services. So have a think about which services you do want to offer:

  • Basic accounting – that is, scanning documents and entering data into accounting software.
  • Filing invoices, paying suppliers, and making other payments on behalf of the business.
  • Reconciliations – with banks, customers, and suppliers.
  • Completing VAT returns.
  • Preparing company books for the end of year accounts.

How to Register Your Bookkeeping Business

As part of setting up your self-employed bookkeeping company, you’ll have to register with HMRC. You have numerous options here. You can either register as a sole trader or as a limited company. Also, you’ll have to choose a name for your business. There are strict rules governing the name you can trade under.

We have a detailed guide to the difference between a sole-trader and a limited company. The guide also detail the process for registering your business.

One final thing you’ll have to think about is insurance. If you’re running your own business, you’ll be personally and financially responsible for anything that happens. So if anything goes wrong, insurance can safeguard you against serious trouble. Head here to read our guide to the sort of insurance you might need as an independent business owner.

Ready To Embark On Your Career as a Self-Employed Bookkeeper?

In this post, we’ve just covered the essentials. There are many more things you’ll have to consider if you want to be a self-employed bookkeeper, including marketing, your brand identity, your working pattern, your own business accounting and, of course, your annual tax return.

Yet through exploring the essentials, hopefully we’ve helped you to decide whether or not life as a self-employed bookkeeper is right for you. Any sort of self-employed work can be extremely challenging. You’ll have to manage a lot of risk, and you’ll have to take on a huge amount of additional responsibilities. But if you have what it takes, then your career as a self-employed bookkeeper could prove to be immensely profitable and profoundly rewarding.