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Bookkeeping is the process of keeping records of your transactions. A freelance bookkeeper is different from an accountant and will record your financial transactions for you, usually on bookkeeping software. The average cost of a freelance bookkeeper in the UK is £15-£30 per hour.
What Does a Freelance Bookkeeper Do?
Being a freelancer means that your bookkeeper is self-employed, and may work for multiple different clients at the same time. This often makes this sort of bookkeeper less expensive, as they do not have to charge for overheads, as an accountancy practise offering bookkeeping services would need to.
A bookkeeper helps you to maintain accurate financial records, so can offer tasks such as:
- Recording income and expenses
- Managing basic paperwork
- Filing and record-keeping
- Typing out invoices
- Sending out statements and remittances
- Balancing accounts
Some bookkeepers will provide more in-depth services, such as producing financial reports and preparing tax returns.
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Advantages of a Freelance Bookkeeper
There are lots of reasons why freelance bookkeepers are advantageous to modern businesses:
- They are usually more cost-effective since they can manage their own workloads, work for multiple clients, and do not have any overheads.
- Work is often remote, although some bookkeepers will work on-site if they need to work with any paper records.
- Communications tend to be faster, without the hierarchy of a larger company.
- You only pay for the hours they work and can agree on the timescales and scope of each task.
- There are cost savings in avoiding the costs of employing somebody, such as PAYE costs and pension obligations.
- You can switch at any time, in accordance with any contract you may have agreed with your freelance bookkeeper.
How Much Does a Freelance Bookkeeper Cost?
Most freelance bookkeepers will charge between £15-£30 per hour in the UK. Many bookkeepers hold a qualification such as a BSc, certification or AAT accreditation.
The cost of your freelance bookkeeper depends on several factors:
- How experienced they are
- What qualifications they hold
- How long they have been freelancing for
- What scope of work you wish for them to undertake
- Whether they can work remotely
- If you require their services regularly or as a one-off
Disadvantages of a Freelance Bookkeeper
There are some logistical issues to bear in mind when deciding whether to hire a freelance bookkeeper. A lot depends on your type of business. If you use cloud-based software and most of your records are digital, these are easy to access and to work on remotely.
If you prefer to have your bookkeeper work on-site, or they will need regular access to hard copies of records, it may be preferable to hire a local bookkeeper.
The potential drawbacks include:
- Working off-site - most freelance bookkeepers work remotely so you will need to give some thought to communications and information sharing for them to have access to the right data.
- Variable hours - while flexibility is a key advantage, you need to agree in advance if you need your bookkeeper to be available at specific days and times.
- Security - it is always advisable to verify the qualifications and experience of a freelance bookkeeper since they will have external access to your financial information and systems. Be sure to ask about the security of their PC or laptop and implement an NDA if you are concerned about sharing commercially sensitive information.
- Business knowledge - as with anybody new to your team, you will need to share background information since your freelance bookkeeper will not know anything about your business, your processes, or the products/services you provide.
Freelance Bookkeeper vs Accountancy Firm
Many accountancy practises offer some form of bookkeeping service, and plenty of virtual accountants offer bookkeeping alongside other more technical tasks.
The key difference when using a freelance bookkeeper is that they are unlikely to be able to provide all of the services available through an accountant. There are usually overlaps in the work they do. Still, an accountant will hold a qualification of a higher professional level, and be able to provide advice over and above that available from a bookkeeper.
A bookkeeper is responsible for record-keeping, and the accurate reconciliation and recording of those figures. Usually, they do not get involved with analysing or interpreting that data any further.
An accountant works with your transactional information to produce reports, financial statements, and to analyse that data to make recommendations and deliver advice. However, they need your bookkeeping data as a starting point, and so it is possible to reduce your accountancy fees by having a bookkeeper carry out the more straightforward recording tasks.
Factors in Deciding Whether to Use a Bookkeeper
General bookkeeping is something that you might choose to carry out yourself. However, there are benefits to using a freelance bookkeeper to complete this work for you.
- Time-saving - running a business can be a high-pressure environment, so using a bookkeeper can save you time, allowing you to focus on other areas.
- Cost-saving - having accurate bookkeeping records makes your accountancy services more streamlined, saving you money on your accountant's fees.
- Accuracy - a bookkeeper is responsible for accurately recording your transactions, making it faster to produce reports from reliable data.
How to Choose a Freelance Bookkeeper
When you have decided to appoint a freelance bookkeeper to manage your financial recording, it can be challenging to know who is right for your business.
The first stage is to ensure that you feel confident in their level of skill and knowledge. You should ask for references, see how much experience they have as a bookkeeper, and ask for verification of their qualifications to ensure they are suitably skilled.
Most professional bodies will maintain an online register of qualified individuals, making it reasonably easy to check.
You also need to ensure that you trust your bookkeeper to handle your financial information and that they are available via phone or email if you need any urgent support.
It is also advisable to carry out an interview, even if a virtual video call, to have a chat with prospective freelance bookkeepers to help you decide which candidate is the best fit for your business.
What Criteria Should I Look for in a Freelance Bookkeeper?
There are many qualifications within bookkeeping, so you could decide on the level of skill that you consider appropriate to manage your financial recording. It may be that experience is more important, in which case you should look for a bookkeeper that has experience with a similar-sized organisation, or in a related industry.
Personal recommendations are a great way to find a reliable and competent bookkeeper. If you are searching online or considering candidates from a freelance platform, check the reviews and ratings on their profile to get an idea of how other clients feel about the services they provide.
These are some of the professional criteria employers may look for when appointing a freelance bookkeeper:
- Have at least two years of experience.
- Hold a BSC or bookkeeping certificate in accountancy or bookkeeping.
- Are registered with a professional body.
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Frequently Asked Questions
What Should I Ask in a Freelance Bookkeeper Interview?
Some of the questions you could ask include:
- What qualifications do you hold?
- Do you have a specific area of expertise?
- Have you worked with clients in this industry before?
- What software do you use - or have you used our software before?
- How do you manage remote communications?
- How would you cope with an urgent deadline or a critical issue?
- Can you provide any referrals or reviews from past clients?
Do I Need an Accountant or a Bookkeeper?
If you are looking for help with ongoing record keeping and staying on top of maintaining your business records, a bookkeeper is a cost-effective solution.
However, if you require advice and professional guidance, you are best to use an accountant who is suitably skilled and qualified to provide this.
This all depends on your business, and how much support you need. For example, if you need occasional help calculating your tax returns, a bookkeeper might be able to provide this service.
If you would like a full-service provider who can help with all aspects of your financial management, an accountant - whether external or in-house - is the best option.
Is it Possible to have my Bookkeeping Done Remotely?
Yes, usually! If you appoint a local freelance bookkeeper, they should be able to pick up paperwork, and perhaps work on-site if you prefer.
Many businesses are either paper-free or are transitioning to be, in which case you have fewer limitations and could hire a virtual bookkeeper from any location.
Technology can help with remote logins, cloud-based bookkeeping packages and virtual meetings when required.
Are Overseas Freelance Bookkeepers Reliable?
There are many excellent international freelance bookkeepers, who provide outstanding service and great value for money.
However, there are a few things to consider when deciding whom to appoint.
- Freelance bookkeepers located in another country may have issues with translation. This does not apply to all international bookkeepers, but it is worth verifying whether they are comfortable understanding documents and transactions in your native language to avoid any complications.
- Different countries have different qualifications. It can be challenging to compare accreditations or certificates from various exam boards, and different countries have different qualification structures that may not be directly comparable.
- Time differences - if you are working with an international freelance bookkeeper, be mindful of the time differences. If they are based in a different time zone, they might not be working during your usual office hours, and you will need to agree on suitable times for work to be carried out and for any phone calls or virtual meetings.
How Often Should I Use a Bookkeeper?
This is dependent on your business and your requirements. Some people hire a bookkeeper regularly, and have worked completed monthly, weekly or even daily.
Other businesses require quarterly bookkeeping to be able to produce VAT returns and management accounts.
Small businesses and sole-traders might hire a bookkeeper after the end of each financial year to input all of the data they need to produce year-end accounts.
It is up to you how often you might need bookkeeping services. If you use a freelance bookkeeper, you can dictate how often you need them to work, and agree on prices for regular hours.
How Much Cheaper is it to Use a Freelance Bookkeeper?
It is certainly more cost-effective to outsource work, rather than employ a member of staff. Many businesses choose to use a freelancer if they need occasional work completed, or do not need somebody full time.
The cost of a freelance bookkeeper will depend on how many hours of work you ask them to complete, and how often. Usually, the hourly fee will be slightly lower, the more frequently you employ them, or the more work you ask them to complete.
Generally, most UK businesses spend from £200 per month on freelance bookkeeping. This could be significantly higher if you need a lot of work carried out, or are hiring a freelance bookkeeper for a more significant number of hours.
One of the main advantages is that by employing a freelancer rather than a part-time member of staff, you save on the costs of holiday pay, national insurance, pensions and other costs associated with staffing.
Can I Use a Freelance Bookkeeper for a Sole Trader Business?
Yes, you can use a bookkeeper for any size of business! Some reasonably large or medium-sized companies may outsource their bookkeeping.
Many sole traders and self-employed people use a bookkeeper to help them keep their financial records up to date, or employ them at the end of the tax year to ensure they have all the figures ready to submit their self-employed tax return.
If you are employing a freelance bookkeeper for a significant number of hours, you do need to consider the terms of their work with you, and whether this, in fact, should be regarded as employment.
This relates to IR35, which considers whether the definition of self-employment has been met. You can find out more about this through HMRC or by consulting with your accountant.
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