How Much Does it Cost to Hire a Bookkeeper in the UK?

Adequate bookkeeping ensures that you keep track of your business financial transactions, maintain up-to-date records, avoid errors and discrepancies in your financial reports and ensure a healthy financial state etc. Whether your business is a small, medium or large-scale one, you need the service of a professional bookkeeper.

If you are wondering how much it will cost to hire a bookkeeper within the UK, Incorpuk answers all that and more in this article. Now, let's explore.

What is bookkeeping?

Bookkeeping involves the process of organizing and maintaining all business financial transactions. It is the practice of monitoring, keeping records and ensuring financial documentation of all business transactions in order to maintain good financial health within the company.  Bookkeeping helps ensure that all financial activities within an organization are organized in a systematic manner and records are stored correctly. A bookkeeper therefore is a professional who manages a company's financial transactions and keeps an adequate track record of every financial event.

Factor Impacting the Cost of Hiring a Bookkeeper

Although there are average prices when talking about the cost of hiring a bookkeeper within the UK, there are a few factors that could impact how much you would pay for a bookkeeping service. It is important to keep this in mind when going through the hiring process.

1. Business requirements

The cost of hiring an employee could be greatly influenced by your business needs. If you own a large company with so many daily financial activities and transactions, you should expect that your bookkeeper would have a lot of jobs to do and as such you would need to pay more. If on the other hand, you are a startup business or a small or medium-scale business with few employees, limited business activities and little daily financial events, then you might need to pay less.

2. Location

As you’d expect, location could also be a determinant of the price you would pay. If you’re hiring someone who resides in London, then you would expect higher fees than some other regions within the UK.

3. Educational level

The educational level could also have a say when it comes to the amount you hire a bookkeeper. For someone with a Diploma, you might need to pay less compared to someone with a bachelor's or master’s degree. However, the educational level most times must meet up with the level of expertise in order to reach a suitable price.

4. Expertise

If you are employing an entry-level bookkeeper, then you might need to pay less than when hiring highly experienced individuals. Having the necessary certifications could also play a role here. Then you would expect a highly certified bookkeeper to charge more.

5. Specialist services

Apart from the major bookkeeping services, if you require that the bookkeeper also carry out some specialized services like tax filing and advice, specialized account management and reporting, then the charges could increase.

How Much Does it Cost to Hire a Bookkeeper in the UK?

The cost of hiring a bookkeeper in the UK will vary based on the type of contract you wish to employ. If you would be hiring an in-house or full-time bookkeeper, then you should expect a higher and consistent weekly or monthly pay. If on the other hand, you are hiring on a part-time or freelance basis, then you could expect a fair pay that is in congruence with your business needs. We will look at the cost of each contract level now.

1. In-house or full-time bookkeeper

The cost of hiring a full-time bookkeeper within the UK could range from £25,000 to £35,000 or more per annum. This is an average cost and not an exact cost. As earlier mentioned, the accurate cost for hiring a bookkeeper including an in-house one depends on the location you are within the UK, the certifications and experience of the bookkeeper and so on. If your company is constantly in need of bookkeeping services, then hiring a full-time employee would save the organization from so much financial stress.

Apart from that it helps the company maintain some level of control since the bookkeeper exists just within the organization.  Also it ensures an effective communication between the company and the bookkeeper. Hiring a full-time bookkeeper can be quite expensive when compared to a part-time or freelance contract as your organization also needs to consider other employee benefits like pension contribution, holiday benefits, sick and maternity pay and so on.

2. Part-time/Contract/ Freelance bookkeeper

The cost of hiring a contract or freelance bookkeeper within the UK could vary from £10  to £45 per hour. When hiring a freelancer or a contractor, you both would reach an agreement on the mode of payment that’s suitable. As such, the bookkeeper can be paid per task, hourly, weekly or monthly. Using a contractor for your bookkeeping needs help ensure that your business only uses the services of the bookkeeper when needed and as such you could pay less based on your business needs. On the other hand, hiring a freelancer or contractor means you would have less control over the job. Moreover, you might not be able to effectively monitor the job done. Also getting a competent person as needed could be time-consuming.

3. Bookkeeping firm

To employ the service of a bookkeeping firm or an outsource company within the UK, you could spend up to £500 to £2500 per month. This pay would be greatly dependent on what your business needs are. Hiring a bookkeeping firm gives you direct access to a professional team and you can work with them as long as you want. Apart from that, the firm would be able to utilize advanced accounting software to meet your business needs and also help the company make better-informed decisions when it comes to the company's financial state and health.

To make the most of an outsourcing firm, you should be ready to do your research and be sure of their level of expertise before hiring.

What do Bookkeeping Services Include?

When you hire a bookkeeper, there are a range of duties or activities they are expected to carry out. Most of the time, this is usually dependent on your business needs and requirements. Here are some of the common bookkeeping services.

1. Accounts receivable and Payable

A bookkeeper will ensure that all invoices are issued. Apart from that they will keep track of all accounts payable and receivable. As such they will ensure that your customers get their invoices and make payment on time. Apart from that, they will also ensure that your business also makes the necessary payments to the suppliers and other necessary stakeholders.

2. Financial reports

To ensure that your business maintains good performance and keeps track of the finances, the bookkeeper will prepare all necessary reports and provide them to you every month. These financial reports include balance sheets, profit and loss reports, cash flow statements and so on. With all of these documents, you would be able to understand the company’s daily financial transactions which could be valuable for your future business plan.

3. Payroll

A bookkeeper can also take care of the company’s payroll depending on the agreement you had when hiring. They could help make the necessary deductions from the employee’s wages or salaries and also make sure that they are paid on time. They may also file all the necessary paperwork ensuring that the company comply with the HMRC regulations.

4. Bank reconciliation

Bank reconciliation is important for every business. Once a bookkeeper has gathered all the financial information of a company, they are also expected to compare it to the company’s banking statements. This will help ensure that there are no missed transactions or incomplete entries. Making reconciliation helps ensure that the company’s books and reports are in congruent with your banking history and this helps ensure a healthy financial position.

5. Cash flow

Bookkeepers also keep an eye on the company’s cash flow. They achieve this by tracking the company’s revenue and expenses. They can easily detect if the company is running out of funds or if the company is spending extravagantly. With this, they can provide necessary advice that will keep the company’s cash flow in check.

Importance of Having a Bookkeeper in your Company

Here are some of the importance of hiring a bookkeeper for your business

1. Ensures Financial Accuracy

Maintaining financial accuracy and precision is key to a business's success. A single mistake or error could lead to so many repercussions. This could bring about inaccurate decisions, failure to meet tax compliance and a mismanagement of the company's financial health. On the other hand, a professional bookkeeper ensures that all financial transactions are adequately recorded. They keep a daily track record that helps minimize errors and discrepancies. Apart from that they are well-trained in using advanced software which is valuable in handling complex financial activities.

In all, concentration is key to achieving accuracy and this might not be easy for any other appointed person within an organization who might have to manage their own job expectations together with a bookkeeping service.

2. Increase Efficiency and save time

Apart from the fact that the service of a bookkeeper could lead to more financial accuracy, it could help ensure the efficiency of the business and save time in general. The time that will be spent in monitoring business financial transactions could be utilized in other business activities. Moreover, expertise is needed and a professional bookkeeper might not even spend a lot of time since they possess the experience needed to work effectively.

3. Ensures Compliance with tax regulations

Compliance with tax regulations is a requirement every business must meet up to. Hiring a bookkeeper helps ensure that the company stays updated with the necessary tax laws by ensuring that all financial records are adequately maintained and organized for tax purposes. By doing so they help avoid all forms of error or mistakes that could hinder the effectiveness of the company’s tax reporting.

4. Cost-effectiveness

Although you might have to spend when hiring a bookkeeper, however as a business, considering the long-term cost-effectiveness of any step taken within the company is key. Bookkeeper duties within the company save the organization from a lot of costs it might face in the future. By monitoring the daily financial transactions and keeping records, they help minimize errors, risks, mistakes, penalties and other financial opportunities that could cost the company more. Not only that, their services help ensure effective auditing, little or no discrepancies etc.

5. Prevent fraudulent activities

As a business owner, keeping an eye on a company's finances and preventing fraudulent activities is key. A bookkeeper is trained to maintain an adequate record of business financial transactions and as such it is easier for them to recognize any sign of fraudulent activities. By segregating employee duties within the company and ensuring controls, you create barriers that hinder fraudulent activities from taking place.

Proper record keeping, audits and reconciliations at the appropriate time help to prevent and detect these illegal activities on time.

6. Increases the chance of getting loans

To secure loans either from banks or other creditors, you would need to provide information on the business's financial standing. With the services of a bookkeeper, you would be able to provide an accurate record of the company finances. You will be able to prove to the creditors that your company has a good financial history and is capable of managing the loan that will be obtained. All of these will only be achievable through effective bookkeeping services.

7. Improves the business growth rate

With the services of a bookkeeper, your company would be able to keep adequate records of all the spending and income generated month by month. With this, you will be able to identify the company's financial situation by taking note of the sales made, profits generated and the spending made as time passes by.

As such, a bookkeeper would be able to provide suitable advice as to the period of the year when it is most suitable to make some major company purchases like stocking. They can provide necessary information regarding the most favourable seasons and otherwise. So with that, the company can make better decisions that will help improve the business growth.

Conclusion

The cost of hiring a bookkeeper within the UK could differ depending on the region that you are in. Moreover, there are also many factors that could impact the cost. While there is no one way to do this, bookkeepers are valuable employees for every business. Do you have any questions about hiring a bookkeeper in the UK? Kindly contact one of our experts here for assistance today.