Beginner’s Guide on Starting a Bookkeeping Business in the United Kingdom
If accounting is the language of business, then bookkeeping is the alphabet that forms its building blocks. Impeccable bookkeeping is the cornerstone of reliable accounting, and starting a bookkeeping business is an excellent entrepreneurial idea. Every single company out there must keep accurate accounts, which ensures bookkeepers are always in demand.
Reliable bookkeeping services ensure precise accounting, best practices, saves on time, costs, and other resources. Accurate bookkeeping is the foundation of seamless taxation and financial year-end filling. You can work alone, with a team, remotely, or at a client’s place. You can also choose to prepare basic accounts or complex financial statements and even provide KPIs (Key Performance Indexes).
Bookkeeping is certainly one of those essential and versatile businesses that can be commercial, franchised, or home-based. Numerous trends and policies are also creating work for this sector. Government initiatives such as HMRC’s Making Tax Digital (MTD) now require companies to keep digital records. Most companies would also instead hire reliable bookkeepers to do the job while owners focus on running the business.
In this guide, we look at the various aspects of bookkeeping as a business. This includes how to get started and a few tips on driving your business towards success. We’ll also consider the necessary approvals to ensure your business stays compliant and operates seamlessly.
What is a Bookkeeping Business?
Bookkeeping is the accurate tally and record of daily accounts, expenses, financial dealings, etc. Any economic movement – debit or credit – is accurately recorded as entries online or physically in ledgers. Substantiating all entries are supporting documents such as receipts, vouchers, payments, sales, etc. Thus, bookkeepers offer fundamental management and record-keeping services to all types of companies.
It can be easy to confuse bookkeeping with accounting services, yet they perform different functions. Bookkeeping is more about recording financial information in a database. Accounting principles not only record but also analyze these data, summarise and report on them.
Experienced bookkeepers or clerks use various accounting systems to maintain the general ledger or company’s accounts. Bookkeeping systems generally tend to follow two main types:
- A single-entry system, which is suited for small business concerns and is straightforward.
- A double-entry system is more appropriate for bigger businesses and provides a complete record using standard recording methods.
Bookkeeping is about getting the numbers right, and bookkeepers do generate financial statements and reports. This streamlines the accounting department’s job with up-to-date data, easier financial tracking, and seamless preparation of audit statements. A reliable bookkeeping service provider will ensure that accounts are accurate from day one. This enables companies to avoid backtracking of records and instead are able to focus on improving financial outcomes.
What Does a Bookkeeping Business Need?
A bookkeeping business doesn’t really need sophisticated equipment, posh office premises or an entertainment budget. You can get by with a good computer, reliable high-speed internet and a quiet place to work. The key to success lies in the software.
Bookkeeping in the digital era is about digitalization, which is no longer static in its application and deployment. Home-based, commercial, or franchised, your business will need reliable software, secure online access, and connectivity. If you’re starting a bookkeeping business, invest in smart accounting technology and management software. These are the tools of your trade, so do some research and shop around for what you need.
Proper accounting and bookkeeping software will require investment, but it will be well worth it. These best systems are versatile, secure, and accurate at keeping all accounts current. This includes accounts payable and receivable, loans, cash flow, and even payroll. Some systems also handle owners’ equity and retained earnings.
The software that you choose should facilitate automation as well as remote work and have app-based options. Systems can be cloud-based or software loaded into your computer or a client’s system. Platforms are versatile and include:
- On-site – access of accounts and bookkeeping is done in-house on a company’s premises, using its resources and software.
- Off-site – a cloud-based approach where record access is online, allowing bookkeepers to work remotely and connect with clients online.
- Hybrid – a mix of both that offers flexible and versatile bookkeeping methodologies.
Guidelines to Starting a Bookkeeping Business in the United Kingdom
Bookkeeping is a business that can be easily started, especially as a home-based or virtual enterprise. Doing research and writing up that business plan may unearth a large amount of competition. Starting a bookkeeping business is a popular venture idea and is a service that even large accounting firms provide. Further, the market is full of software that enables companies to handle basic accounting themselves.
The good news is that there is plenty of work to go around, especially with the MTD initiative. If you are able to niche or offer differentiative services, then there’s a good chance of cornering the market. An excellent place to start is by registering or incorporating your company with Companies House. Give serious consideration to the type of business entity you want your business to take, which includes:
- Sole proprietorship or freelancer
- Partnership
- Limited company
- Limited liability partnership
The last two entities are incorporated and offer protection to owners and shareholders in the form of limited liability. To know more about business entities in the United Kingdom, do check out 3E Accounting’s guide to company registration. 3E Accounting also offers company incorporation solutions that include HMRC tax and VAT registration, opening bank accounts, etc.
Licensing and Permits for Your Bookkeeping Business in the United Kingdom
Once registration is complete, you need to sort out all relevant approvals before starting your bookkeeping activity. In the United Kingdom, the Money Laundering, Terrorist Financing, and Transfer of Funds Regulations regulate all accounting services. Under its purview, all bookkeepers need to be registered with and supervised by any one of the following:
- HM Revenue and Customs (HMRC)
- International Association of Book-Keepers (IAB)
- Institute of Certified Bookkeepers (ICB)
As a bookkeeper, it is inevitable that at some point you may be handling clients’ personal data. In the United Kingdom, stringent data protection rules apply to the handling, collection, and storage of a person’s data. Hence, you may need to register with the Information Commissioner’s Office (ICO) to ensure that your business stays compliant.
Bookkeepers registered with the ICB will also be given a Practice License along with their membership. You may also need a franchise Trade License if your bookkeeping business is part of a franchise. Compliance and codes of professional conduct is a serious matter for bookkeepers and require stringent observation.
If you’re unsure of how to proceed, 3E Accounting can help guide you. As a United Kingdom corporate service provider, we are well-versed with all manner of compliance procedures and requirements. Get in touch with us to ensure your business remains compliant at all times.
Conclusion
The United Kingdom is a fantastic place to begin your entrepreneurial journey, especially if you’re starting a bookkeeping business. Low start-up costs, competitive tax regimes, and its gateway to Europe status are massive plus points. Further, London has been one of the financial capitals of the world for a long time.
If you need help getting started, contact 3E Accounting today and speak to our friendly team of professionals. We offer comprehensive insights and solutions to all your United Kingdom company incorporation needs. Our packages are customizable, fully digitalized, and inclusive of the best service from a global team of experts. Call us today for an inspiring chat to realize your business dreams.