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FAQs
What’s the difference between a bookkeeper and an accountant? Do I need both?
I’m a sole trader. Can I have a bookkeeper?
How much should I expect to pay a bookkeeper?
Can a bookkeeper do VAT and tax returns?
What are anti money laundering (AML) checks and why do they have to be done?
What is Making Tax Digital (MTD)?
Do I have to use accountancy software?
Can bookkeepers give tax advice?
Do I need a business bank account?
I receive invoice payments in foreign currencies. Can I have a foreign currency account?
What does a bookkeeper do?
A bookkeeper's job is to record a business's financial transactions accurately and consistently — sales, purchases, payments, receipts, and everything in between. Good bookkeeping means the business owner always has a clear, up-to-date picture of how their finances stand, and it means the accountant gets clean, well-organised data to work with when preparing annual accounts or tax returns.
Think of it as keeping the financial engine ticking over, so nothing gets missed and nothing comes as a nasty surprise.
What’s the difference between a bookkeeper and an accountant? Do I need both?
Bookkeeping is the day-to-day recording of financial transactions — the groundwork. Accounting builds on that foundation and covers the bigger picture: preparing statutory accounts, advising on tax strategy, and interpreting what the numbers mean for the business.
You’re not legally required to use a bookkeeper, but if you run a limited company, you do need an accountant to prepare your annual accounts. Using both can actually save money — bookkeepers generally charge less per hour than accountants, so having a bookkeeper keep everything in order means your accountant spends less time (and you spend less money) untangling records at year end.
I’m a sole trader. Can I have a bookkeeper?
Absolutely — anyone can have a bookkeeper, whatever the size or structure of their business. Many sole traders find that staying on top of their accounts takes up far more time than they expected, time that could be better spent on the actual work they set up in business to do.
It’s worth remembering that if your accounts aren’t being kept up to date, someone has to deal with the backlog eventually — and if that falls to an accountant to sort out at year end, the cost will likely be considerably higher than having a bookkeeper keep things tidy throughout the year.
How do I find a bookkeeper?
The most reliable starting point is word of mouth — ask other business owners and your accountant who they use or would recommend. Referrals from people who have direct experience of working with someone are worth a great deal.
Beyond that, there are several other routes worth exploring:
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The Institute of Certified Bookkeepers (bookkeepers.org.uk) lists qualified, regulated members
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LinkedIn can be useful for finding local or specialist bookkeepers
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Your accountant may have bookkeepers they regularly work alongside and are happy to recommend
A word of caution about general freelance platforms: some list bookkeepers who aren’t based in the UK and may not have a solid grasp of UK tax rules and HMRC requirements. Cheap can end up expensive if mistakes have to be unpicked later. Always check qualifications, ask for references, and make sure the person you’re considering is supervised by an approved body in the UK (more on that below).
How much should I expect to pay a bookkeeper?
Rates vary quite a bit depending on experience, qualifications, location, and the nature of the work, but as a rough guide you’re typically looking at £40–£60 per hour for ongoing bookkeeping. Some bookkeepers (including me) move to a fixed monthly fee once they have a clear sense of what’s involved, which makes budgeting easier for everyone.
If you’ve let things build up and need urgent work done before a deadline, expect to pay more — the bookkeeper may need to set other clients aside to prioritise yours
It’s always worth discussing your budget upfront; a good bookkeeper can work within a set number of hours and manage expectations about what can be done. Accountants typically charge £125–£300 per hour (often plus VAT), so a capable bookkeeper keeping your records in good shape is genuinely good value.
Can a bookkeeper do VAT and tax returns?
It depends on the individual bookkeeper — so it’s always worth asking. Some bookkeepers handle VAT returns as part of their service (I do). Tax returns — whether Self Assessment or Corporation Tax — are a different matter. I prepare my own, but I don’t prepare them for clients; that’s work I refer to accountants.
Some bookkeepers are also qualified accountants and can handle the full range, but you’ll generally pay more for that. If you’re not sure what a bookkeeper can offer, just ask them directly.
What are anti money laundering (AML) checks and why do they have to be done?
AML regulations (in their current form, in place since 2007 and updated several times since) require anyone working in financial services — bookkeepers, accountants, solicitors, estate agents, and others — to carry out checks that confirm their clients aren’t involved in money laundering.
In practice, that means before starting work with a new client, I’ll ask for identity documents, which I use to run checks via a regulated third party (I use a company called Veriphy). All bookkeepers are required to register with and be supervised by an approved body — I’m supervised by HMRC, who can audit my compliance at any time.
There’s one important legal point to be aware of: if I were ever to identify something in a client’s accounts that raised a money laundering concern, I would be legally required to report it — and legally prevented from telling the client that I had done so.
You can find out more about AML regulations here.
What is Making Tax Digital (MTD)?
Making Tax Digital (MTD) is HMRC’s programme to move the UK tax system onto digital record-keeping and online reporting. The aim is that businesses and individuals will maintain digital financial records and send regular summaries of their income and expenses to HMRC using approved software, rather than completing a single annual tax return.
MTD for VAT has been in place since 2019 and applies to all VAT-registered businesses — if you’re VAT registered, you’re already using it.
MTD for Income Tax (MTD for ITSA) is now being rolled out in phases:
April 2026: Mandatory for sole traders and landlords with gross income over £50,000
April 2027: Extends to those with gross income over £30,000
April 2028: Extends further to those with gross income over £20,000
Under MTD for Income Tax, instead of one annual Self Assessment return, you’ll submit four quarterly updates to HMRC each year, plus a final end-of-year declaration. These quarterly updates are summaries — not full tax returns — so they’re relatively straightforward once your digital records are in order.
Partnerships are not currently in scope for MTD for Income Tax, and limited companies are not affected (Corporation Tax is a separate matter with no confirmed MTD timeline as yet).
If you’re not sure whether or when MTD applies to you, your accountant or bookkeeper can help you work that out and get set up with the right software in good time.
More detail is available from HMRC.
Do I have to use accountancy software?
If you’re VAT registered, you’re already legally required to use HMRC-approved software to submit your VAT returns under Making Tax Digital. And as MTD for Income Tax rolls out (see above), digital record-keeping will become a legal requirement for an increasing number of businesses over the next few years.
Even if you’re not yet required to use software, it’s well worth getting set up sooner rather than later.
Having your accounts on a cloud-based platform makes everything easier — records are accessible anywhere, reconciliation is quicker, and the data your accountant needs is already organised.
Most cloud accountancy packages (Xero, QuickBooks, FreeAgent, and others) are subscription-based, with monthly costs starting from a few pounds for very simple businesses up to around £40–£60 for those needing features like multi-currency. Many also integrate with bank accounts, payment platforms (Stripe, PayPal, Square etc.), and other business tools — some of those integrations come at no extra cost.
Can bookkeepers give tax advice?
Generally speaking, no — tax advice falls outside the typical bookkeeper’s remit. Bookkeepers are trained to record and organise financial data accurately; advising on tax planning or tax liabilities is a different discipline that requires an accountant’s qualifications.
If a tax question comes up — whether personal or business — I always refer clients to their accountant. Accountants are professionally qualified, carry insurance for tax advice, and are required to keep their knowledge current through ongoing training. It’s worth making sure you have a good one you trust.
I receive invoice payments in foreign currencies. Can I have a foreign currency account?
Yes — some banks are well set up for foreign currency accounts (Starling and HSBC are generally considered good options), though others are less helpful, and some may require you to reach a certain level of business activity before they’ll offer one. Fees will almost certainly apply for currency exchange, but holding payments in the original currency gives you more control over when you convert, which can be an advantage if you’re willing to wait for more favourable rates.
If a bank account isn’t the right fit — either because you don’t qualify yet or you need a more niche currency — currency exchange platforms like Wise, Moneycorp, or XE are worth looking at. They tend to be straightforward to set up and can work out cost-effective, particularly if your foreign currency volumes are relatively modest. As always, compare fees and check how their systems work before committing.