What is the cost of hiring a bookkeeper?

What is the cost of hiring a bookkeeper?

What is the difference between hiring an accountant and hiring a bookkeeper, and is it worth the money? Your questions answered

What is the cost of hiring a bookkeeper?

Knowing how much cash is in the bank, how much a business needs to keep aside for end of year tax payments and what can be taken off as an expense can dramatically change business decisions over the course of a year.

It’s a bookkeeper’s job to look after these day-to-day accounts, ensuring sales invoices match payments, monitoring the business’ bank feed, processing expenses, and often VAT and payroll.

There is a perception that bookkeepers do the same job as an accountant. But bookkeepers insist their services can save businesses time and money – alongside the services of an accountant.

So, how much does it really cost to hire a bookkeeper? And is it worth the investment?

How the costs break down

Hiring a bookkeeper can vary depending on the size of the business and the experience of the bookkeeper. But generally, bookkeepers either charge an hourly rate or a monthly fixed fee.

The more invoices going through the business and the more time it takes to complete the work, the higher the fee.

Zoe Whitman, founder of But the Books bookkeepers in Bristol, says her fixed monthly fee starts at around £300 for basic bookkeeping, but with extras added on for services such as payroll and VAT. She also tends to work with small businesses, start-ups and companies who are not large enough to have an in-house team.

“Clients have different business models, so some will be raising heaps of invoices – like online businesses – everyday. Obviously we have a higher fee for those. Others might raise a couple of invoices a week but they might have more expense transactions going through, so it does vary from client to client,” says Whitman.

For a larger business with a finance department, a bookkeeper’s salary would start in the region of £22-25,000, rising to £30,000 for bookkeepers doing payroll and reconciling accounts for auditors, according to some bookkeepers we surveyed.

But there is an advantage to smaller businesses hiring a freelance bookkeeper – the client will only pay for the time they need, and not be liable for employer-related costs such as holiday and pensions.

Saving time and money

The work which takes a qualified freelance bookkeeper a few hours per week could be costly and time-consuming if businesses did the bookkeeping themselves.

Claiming back mileage, telephone bills and use of the home as expenses are some of the ways bookkeepers can save businesses money, as well as preventing double entry where suppliers invoices can be accidentally paid twice.

Bookkeepers also make sure businesses are adhering to VAT rules and regulations.

“You can save money on issues with compliance,” says Alison Edward, chief balancer from bookkeepers Simply Balanced Solutions.

“The ideal is that at the year-end – if it’s a really tidy set of books – often the accountancy fees can be a lot lower because there’s less tidying to do at year-end by the accountant,” she says.

Bookkeepers can also ensure unpaid invoices are chased, which otherwise could be forgotten about – especially if a business has a high number of invoices going out every month.

Bookkeeper vs accountant

Technically, accountants can do a bookkeeper’s job, and a bookkeeper can often do an accountant’s job, according to Edwards.

However accountants will tend to charge much more than bookkeepers. That can be between £35 and £150 an hour, depending on the job.

Hiring both an accountant and a bookkeeper can ensure that the books are in order, but without spending huge costs on tasks that could be done more cheaply.

“We have clients who had an accountant and they came to us because their accountant was purely looking after things at the end of the year, and often accountants don’t have the capacity or don’t see the bookkeeping work as the high fee earning work, so they don’t want to get involved,” says Whitman, who is a qualified accountant.

So getting a bookkeeper can often focus the accountant’s time on the bigger picture, while maintaining good oversight of accounts throughout the year.

Edward says there’s also a benefit to having two financial professionals look through the accounts, rather than just one.

“There’s different ways of doing different things, and so having a second set of eyes over it at the end can bring a different perspective,” says Edwards. “Bookkeepers can do year-end accounts – there’s no reason they can’t. I just choose not to because I actually like working in the detail and the day to day.”

Getting the best out of business

That day-to-day monitoring can provide valuable information for businesses, and in turn help them to get the best out of what they have.

Digital software has further enhanced this, as programmes like QuickBooks, Xero and FreeAgent help bookkeepers and businesses both keep an eye on the realtime workings of the business. Bookkeepers can report analysis from those numbers and enable businesses to make better informed decisions based on their finances.

“It allows you to collaborate more with your clients on a regular basis, rather than you know, presenting them with a printed novel at year end of what happened in the past,” says Edward.

It can also cut down the amount of work a bookkeeper needs to do, with filing systems for receipts being online as the money is spent, instead of arriving all together at year end.

“If they automate them [receipts] to me in the cloud, or if they turn up with a scraggly old carrier bag, obviously there’s a different level of work,” says Edward.

However, Edward says that’s what she went into business to do – so her clients don’t have to.

‘When they’re small it can be manageable, but as they grow it gets out of hand, and that’s when they end up either handing over loads for the accountant to do at the end – which will cost them more – or they just get really behind and don’t know what they’re working with, so then their cash flow can suffer, which costs them money and time,” says Edward.

Getting personal

Whitman says the philosophy behind her business is to make finance accessible.

“It’s really important for everyone who runs a business to understand the finances around their business because how can they possibly make strategic decisions without understanding what’s going on?” says Whitman.

The But the Books branding is designed to emphasise that human side, so that businesses can be confident their bookkeepers really know their business and want to help them succeed.

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