Strategy, Legal & Operations

How to start a bookkeeping business: Top tips to help you succeed

Thinking about starting your own bookkeeping business? If so, you’re in the right place to learn about taking the steps to help you go from idea to reality.

2 April, 202610 min read Share

You can start a bookkeeping business in the UK without formal qualifications, and many bookkeepers begin with Level 1 or 2 training. That’s enough to justify charging initial rates of £25 per hour.

If you’re wondering how to become a bookkeeper or start your own practice, the path from idea to reality is often more accessible than people expect.

You might be leaving an in-house role, looking for a fresh start on your own, or building a flexible business around helping clients succeed. Either way, there are several key decisions that shape how you get started.

This article walks through the essentials, from qualifications and pricing to business planning and dealing with regulations. We offer practical steps for setting up your bookkeeping business.

Here’s what it covers:

How to become a bookkeeper: Where to start

The first step is to decide on what type of bookkeeper you want to be and how much time you can dedicate to it.

It’s worth reviewing what you can bring to this new career, so you have an angle to draw from.

Is helping small businesses your passion, or do you prefer the idea of keeping a giant corporation honest?

Your skill level will also determine where you can start your bookkeeping journey.

Do you have the skills required to take on bookkeeping clients immediately, or do you need to ease yourself into it with an apprenticeship or offer your services to a small charity for starters?

What qualifications do you need to start a bookkeeping business?

You don’t legally need any qualifications to start a bookkeeping business, but most bookkeepers complete Institute of Certified Bookkeepers (ICB) or Association of Accounting Technicians (AAT) Level 1–2 courses and obtain a practice licence before setting up.

There are many bookkeeping courses available online, and a variety of organisations offer qualifications, including:

· Association of Accounting Technicians (AAT)

· Chartered Institute of Management Accountants (CIMA)

· Association of Chartered Certified Accountants (ACCA)

· Institute of Chartered Accountants in England and Wales (ICAEW)

· International Association of Bookkeepers (IAB)

The IAB offers a number of bookkeeping courses that are regulated by the Office of Qualifications and Examinations Regulation (Ofqual), Qualifications in Wales (QiW), and Council for the Curriculum, Examinations, and Assessment (CCEA).

There are three levels of qualifications. Examples include the Level 1 Award in Bookkeeping, Award in Computerised Bookkeeping, and Award in Computerised Accounting for Business. More details are available on the IAB website.

Most bookkeepers carry out Level 1 and Level 2 qualifications before setting up their own bookkeeping practice, adding further qualifications as they progress their career in bookkeeping.

What starting a bookkeeping practice looks like in the real world

Catherine Pyman, who runs her own bookkeeping business, became a bookkeeper by studying qualifications through the ICB. She says: “They provide you with your practice license, membership number, and advise on what else is required to set up a practice.

“This covers AML [anti-money laundering], policies and procedures, insurance, logos, templates.

“Initially, I was based at home and acquired my first clients through local networking groups and accounting connections from when I had been in commercial banking. I now have an office and a couple of members of staff.”

Pyman is also a qualified Associate of the Institute of Certified Bookkeepers and has a Level 1 and Level 2 certification in Manual and Computerised Bookkeeping. Claire Adams started her business, Papertrail Bookkeeping, after she was made redundant from her job of 27 years.

She says: “Becoming a certified bookkeeper shows that you have trained and have appropriate qualifications in place to prove your skills.

“Once you pass the exams, you can apply for a practice license through organisations such as ICB. You need insurance in place and must ensure you’re complying with current anti-money-laundering regulations.

“I know legislation is being tightened up, so it may well be that you need to have completed the qualifications to run your own business in the near future.”

The AAT also has a range of bookkeeping qualifications, with the highest certificate allowing you to become an AAT licensed bookkeeper. The highest certificate will allow you to use the letters AATQB (as you’re an AA bookkeeping member) after your name.

What’s your business plan?

Before setting up your bookkeeping business, it’s important to do your research. Questions to ask include:

• Who will your clients be? Perhaps you’ll focus on small businesses (50 employees or fewer, for example), micro businesses (nine employees or fewer), or sole traders.

• How will you find clients for your bookkeeping business? This could include friends and family, your previous workplace, local advertising, website and social media marketing, and word of mouth.

• What services will you be offering your clients? This could cover recording cash receipts, making bank deposits, paying supplier invoices, maintaining an annual budget, payroll management, and so on. What services you offer very much depends on your clients’ needs.

• How will you work with clients? Are you going to offer a one-off bookkeeping service or an ongoing contract?

All these considerations are part of the bigger picture of your bookkeeping business plan.

Do you have one-, three-, or even five-year plans for your business? What do you want to achieve with your bookkeeping business in terms of employing staff, turnover, and success?

It’s important to do your research before starting out so you’re clear about the path you want to follow and the goals you’d like to achieve.

How much should you charge for your services as a bookkeeper?

UK bookkeepers typically charge around £25 per hour, though many prefer a fixed monthly fee so clients know their costs upfront.

There’s no single rate that suits every bookkeeping business, however. Factors to consider include:

• Your bookkeeping experience.

• The needs of your market.

• The services you’re offering.

• The size of business you’re working with.

Generally, you’ll charge either an hourly rate or a monthly fixed fee. You may even negotiate a retainer fee with some (or all) of your clients.

Adams from Papertrail Bookkeeping says bookkeepers generally charge around £25 per hour, “but it does depend on the work taking place”.

She adds: “I tend to charge my clients a fixed fee to cover everything, so the client knows how much they’re paying upfront.”

Setting your fees and getting your pricing right for your bookkeeping business will take a bit of work, but don’t feel that you need to price yourself too low.

Remember, you’re selling your expertise and adding value to clients who need what you’re offering.

Do you need to register with a professional body to run a bookkeeping business?

You must register for Anti-Money-Laundering (AML) supervision to run a bookkeeping business, but you don’t necessarily need to do so through a professional organization.

Most bookkeepers choose to register with the ICB or AAT, which will provide the necessary AML supervision and issue you a practice licence.

However, you can also choose to register directly with HMRC for AML supervision.

The reason you need to comply with these specialised money laundering regulations is that as a bookkeeper, you have an opportunity and a legal duty to spot and reduce the risk of clients laundering money

What insurance does a bookkeeper need?

Bookkeepers need Professional Indemnity Insurance to cover client claims that your advice, work, or a mistake caused them financial loss. You may also take out Public Liability Insurance for third-party incidents, such as injury or damage to property because of your business activities.

You’ll need bookkeeping insurance because you’re providing an essential service for businesses and mistakes can happen.

Professional Indemnity Insurance protects you against claims made by unhappy clients and employees. It can help to:

• Protect your financial interests

• Minimise disruption to your business

• Cover unpaid fees if a client refuses to pay

• Pay the cost of correcting a mistake

Public Liability Insurance covers claims from third parties for personal injury or property damage.

Can you run a bookkeeping business from home?

Yes. Many bookkeepers start from home with a laptop, accounting software, and a dedicated workspace. If you decide to start your bookkeeping business at home, make sure you have:

• A dedicated workspace.

• Somewhere secure to store client paperwork.

• The basic equipment needed to work efficiently.

As your business grows, moving into an office may become a practical next step. But if you choose to work from an office, be aware that this will usually involve extra costs, such as rent.

What are the final steps of setting up a bookkeeping business?

After passing your exams, registering for AML supervision, buying insurance, and figuring out where you’ll work, key steps to set up your bookkeeping business include:

• Registering as self-employed with HMRC, unless you’re setting up a limited company.

• Setting up a business bank account.

• Buying a computer or laptop.

• Purchasing accounting software.

• Getting any business stationery you need.

What’s the difference between a bookkeeper and an accountant?

The terms “bookkeeper” and “accountant” are occasionally used interchangeable, but they are in fact 2 different roles.

A bookkeeper keeps track of monies coming into and out of a business by maintaining accurate financial records, according to the International Association of Bookkeepers (IAB), the largest bookkeeping institution in the world.

Bookkeepers can help small and medium-sized enterprises (SMEs):

• Prepare for year-end tax and VAT returns.

• Keep on top of day-to-day cash flow.

• Efficiently run their finances.

Becoming a bookkeeper requires you to be accurate in your work and have a good understanding of financial topics.

Some bookkeepers also offer commercial brokering services, which involve helping businesses get the best deal when renewing insurance, buying new equipment, or leasing company vehicles.

Bookkeeper Pyman adds: “Bookkeepers keep accurate accounting records for a business to enable the business owner to view financials.

“These can then be sent to the accountant to produce the year-end accounts. Bookkeepers also prepare VAT returns and can offer Self Assessment tax returns and payroll duties.

Adams agrees, saying: “We process VAT returns, reconcile bank accounts [making sure the software matches the actual bank statements], we process payroll and everything that entails, we complete personal tax returns, final accounts for sole traders, and accounts/corporation tax returns for micro-entity businesses.”

What does an accountant do?

Accountants help businesses understand their finances and stay compliant. They typically:

• Prepare financial reports (profit and loss, balance sheet, cash flow).

• Ensure compliance with tax laws and reporting requirements.

• Analyse financial data to identify trends, risks, and opportunities. · Act as a trusted adviser on decisions about budgeting, growth, and cost control.

• Handle tax matters, including filings and planning.

How software can help to manage business processes

The right accounting and bookkeeping software can help you monitor the workings of a business in real time.

You can then report analyses from those numbers and enable your clients to make better-informed decisions based on their finances.

Despite its name, good accounting software isn’t just for accountants.

It can be used for your bookkeeping business, allowing you to view the finances of your clients and create financial reports, among numerous other capabilities.

And by using a cloud accounting solution, you’ll be able to access the numbers on any device, wherever you are.

That means you can work with your clients in real time to go over their bookkeeping and highlight any queries with ease.

Final thoughts on starting a bookkeeping business

Setting up your own bookkeeping business can be very rewarding, not only financially but as a lifestyle choice.

By taking the time to think about how to start accounting and bookkeeping for a small business, you can be confident that you’ll be prepared for all tax requirements and ensure your business stays healthy.

In addition to this, you’ll be providing an essential service to your clients, helping them to run their businesses smoothly and efficiently.

Editor’s note: This article was first published in September 2020 and has been updated for relevance.

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