Hire a bookkeeper: when to and what it costs in the UK

Published Friday 15 May 2026

Table of contents

• What does a bookkeeper do?
• How are bookkeepers different to accountants?
• Why hire a bookkeeper?
• When should you hire a bookkeeper?
• How much does a bookkeeper cost?
• In-house vs outsourced bookkeeping
• How to find and hire a bookkeeper
• What to look for in a bookkeeper
• Simplify your bookkeeping with Xero
• FAQs on hiring a bookkeeper

Key takeaways

• A bookkeeper records your daily financial transactions, maintains accurate records, and prepares your accounts for your accountant. Hiring one early saves you time and reduces costly mistakes.
• Freelance bookkeepers in the UK typically charge £20–50 per hour, while monthly retainers range from £50 for sole traders to £700+ for growing businesses. In-house bookkeepers earn £24,000–£35,000 per year.
• Look for bookkeepers with AAT or ICB qualifications, experience in your industry, and proficiency with cloud-based accounting software that supports Making Tax Digital (MTD) compliance.
• Cloud-based tools like Xero Accounting Software make it easy to collaborate with a remote or freelance bookkeeper, giving you real-time visibility into your finances.

What does a bookkeeper do?

A bookkeeper records your business's financial transactions and keeps your accounts accurate and up to date. They handle the day-to-day numbers so you can focus on running your business.

Here's what bookkeepers typically handle:

• Track transactions: record sales, purchases, payments, and receipts
• Maintain records: organise and store financial data in general ledgers
• Process documents: collect receipts, invoices, and transaction details
• Prepare for accountants: format financial information so accountants can access it easily
• Review processes: help design and improve internal business workflows

Many bookkeepers also offer additional services beyond basic small business bookkeeping. These can make a real difference to how smoothly your business runs.

• Software advice: recommend add-on tools to streamline workflows, such as point-of-sale (POS) systems
• Payroll support: simplify how you pay employees via online payroll services
• Rescue work: tidy up mistakes made by inexperienced staff or missed entries
• Training: teach you how to use accounting software so you can handle simple tasks yourself

Real-time visibility into your finances

When your bookkeeper uses cloud-based accounting software, you can both access your financial data securely from anywhere. Your bookkeeper becomes your constant accounting contact, best placed to answer questions about where money is coming from and where it's going.

This real-time view helps you spot cash flow issues early and make confident business decisions.

How are bookkeepers different to accountants?

Bookkeepers handle day-to-day financial tasks, while accountants focus on strategic advice and compliance. The two roles complement each other, and most small businesses benefit from having both.

• Bookkeepers: record daily transactions, maintain accurate accounts, and flag near-term issues like cash flow problems or late payments
• Accountants: review accounts quarterly, file tax returns, prepare official reports, and provide high-level business advice

For your business to run smoothly, you ideally need both. Hire a bookkeeper for the daily work. Hire an accountant for reporting and strategic guidance. You can learn more about what an accountant does to understand how the roles work together.

Why hire a bookkeeper?

Hiring a bookkeeper frees you to focus on running your business instead of tracking every transaction. Most business owners didn't start their company to spend hours on financial admin.

Take a hair salon, for example. Even with a simple business model, you might have:

• Dozens of daily sales through cash registers or POS systems
• Supplier invoices for hair products
• Employee wages to record and pay
• High transaction volumes with lots of customers

That's a lot to track. Without proper bookkeeping for small businesses, transactions pile up, mistakes happen, and important details get lost.

A bookkeeper takes this burden off your plate. They handle the day-to-day recording of receipts, invoices, and transactions so you can concentrate on what you do best. They also help you stay on top of Making Tax Digital (MTD) for VAT requirements, which means your returns are filed correctly and on time.

When should you hire a bookkeeper?

The sooner the better. Ideally, hire a bookkeeper soon after starting your business. The longer you wait, the more receipts and invoices pile up, and the harder it becomes to remember details.

For example, you may ask yourself: "What was this train ticket for? Who did I visit on 13 July?" A bookkeeper would know which client you visited and why, and account for the expense correctly.

Here are signs that indicate you should hire a bookkeeper:

• You're spending more than five hours a week on financial admin
• You've missed tax deadlines or made filing errors. HMRC requires electronic VAT returns to be received within one calendar month and seven days after the end of the accounting period, as set out in VAT Notice 700/12
• Your transaction volume has increased significantly
• You're experiencing cash flow problems
• You've hired employees and need payroll support
• You're preparing for growth or seeking funding

How much does a bookkeeper cost?

Freelance bookkeepers in the UK typically charge £20–50 per hour, or you can arrange a monthly retainer. Your actual cost depends on your business size, transaction volume, and the services you need.

Here's a rough guide to monthly retainer costs by business size:

• Sole trader: £50–150 per month for basic transaction recording and bank reconciliation
• Small limited company: £120–400 per month for transactions, VAT returns, and payroll
• Growing SME: £300–700+ per month for full-service bookkeeping across multiple accounts

The average salary for an employed bookkeeper is between £24,000 and £35,000, depending on experience, according to the National Careers Service.

Several factors affect how much you'll pay for professional bookkeeping services:

• Business size: more transactions mean more work
• Complexity: VAT returns, payroll, and multi-currency add to the workload
• Experience level: qualified bookkeepers with certifications may charge more
• Location: rates vary across the UK
• Service scope: basic transaction recording costs less than full-service bookkeeping

The time you save can be put back into revenue-generating activities. A bookkeeper also helps you avoid costly mistakes like late fees, tax penalties, and incorrect filings. Bookkeepers typically cost less than accountants because they handle day-to-day tasks rather than strategic advice.

In-house vs outsourced bookkeeping

Deciding between an in-house bookkeeper and an outsourced one depends on your budget, transaction volume, and how much control you want over the process. Both options have clear advantages.

When to hire in-house

An in-house bookkeeper suits businesses with high transaction volumes or complex financial workflows. You get a dedicated team member who understands your operations inside and out.

Keep in mind the full cost goes beyond salary. For an in-house bookkeeper earning £24,000–£35,000 per year, you'll also pay employer National Insurance contributions, workplace pension contributions, and provide equipment and software. The total cost is typically 20–30% above the base salary.

When to outsource

Outsourcing works well for small businesses, sole traders, and companies with straightforward bookkeeping needs. You pay only for the hours or services you use, with no employment overheads.

Freelance and agency bookkeepers typically charge £20–50 per hour or £100–500 per month on a retainer. This makes outsourcing a cost-effective choice when you don't need a full-time role.

Virtual and remote bookkeeping

Cloud-based accounting software has made remote bookkeeping a practical option for businesses of all sizes. Your bookkeeper can work from anywhere while you both access the same real-time financial data.

This model combines the flexibility of outsourcing with the close collaboration you'd expect from an in-house hire. Tools like Xero Accounting Software enable seamless sharing of records, bank reconciliation, and reporting between you, your bookkeeper, and your accountant.

How to find and hire a bookkeeper

Finding the right bookkeeper takes careful research because you're trusting them with your business finances. Here's how to approach the hiring process step by step.

1. Define your needs: decide what services you require, such as daily bookkeeping, VAT returns, payroll, or year-end preparation
2. Ask for recommendations: check with your accountant, business partners, or clients for referrals
3. Search for candidates: browse the Xero advisor directory to find Xero-certified bookkeepers, or contact local bookkeeping businesses directly
4. Check software compatibility: look for bookkeepers who use cloud-based accounting software, ideally the same system as your accountant, so you can all share financial data securely
5. Verify qualifications: look for professional certifications such as AAT or ICB, and confirm relevant industry experience
6. Check MTD compliance capability: confirm the bookkeeper uses MTD-compatible software and can file digital VAT returns on your behalf
7. Interview candidates: ask about their experience with businesses like yours, discuss communication preferences, and request references. Consider virtual or remote bookkeepers to widen your search
8. Agree engagement terms: set out a clear contract covering scope of work, fees, deadlines, data access, and confidentiality before starting
9. Check references: contact referees to ask about reliability, accuracy, and communication
10. Start with a trial: begin with a defined project or trial month to assess the working relationship

What to look for in a bookkeeper

The right bookkeeper combines qualifications, experience, and compatibility with your business. Here's what to check before you hire.

Look for these professional qualifications when evaluating candidates:

• AAT (Association of Accounting Technicians): a widely recognised UK bookkeeping qualification
• ICB (Institute of Certified Bookkeepers): a professional membership body for bookkeepers. The ICB supervises over 3,000 members to ensure compliance with the UK's Money Laundering Regulations. You can find ICB-registered bookkeepers through the ICB website
• Xero certification: shows proficiency with Xero Accounting Software, with levels including Certified Advisor, Silver, Gold, and Platinum Partner

Beyond qualifications, consider these experience and skill factors:

• Industry knowledge: experience with businesses like yours
• Software proficiency: familiarity with cloud-based accounting tools and MTD-compatible software
• Communication style: responsive and clear in explaining financial matters

Also consider these practical factors before making your decision:

• Professional insurance: provides protection if errors occur
• References: a verifiable track record with other clients
• Availability: capacity to handle your workload and respond when needed

Simplify your bookkeeping with Xero

Good preparation leads to better outcomes. Whether you hire a freelance bookkeeper or bring one in-house, the right tools make collaboration smoother and your finances clearer.

Xero Accounting Software connects you, your bookkeeper, and your accountant in one place. You get real-time visibility into your small business accounting, with automatic bank feeds, invoicing, and MTD-compliant VAT returns built in.

Get one month free and see how Xero can simplify your bookkeeping. You can also use the Xero advisor directory to find a qualified bookkeeper near you.

FAQs on hiring a bookkeeper

Here are answers to common questions about hiring a bookkeeper for your small business.

How much does a bookkeeper cost in the UK?

Freelance bookkeepers typically charge £20–50 per hour or £50–700+ per month on a retainer, depending on your business size and the services you need. An employed bookkeeper earns £24,000–£35,000 per year.

Are bookkeepers cheaper than accountants?

Yes, bookkeepers usually cost less because they handle day-to-day tasks like recording transactions. Accountants provide strategic advice and compliance services, which commands higher fees. Most businesses benefit from both.

What qualifications should I look for in a bookkeeper?

Look for AAT (Association of Accounting Technicians) or ICB (Institute of Certified Bookkeepers) qualifications. If you use Xero Accounting Software, a Xero certification is also valuable.

How do I know if I need a bookkeeper or an accountant?

Hire a bookkeeper for daily transaction recording, bank reconciliation, and basic reporting. Hire an accountant for tax returns, strategic advice, and compliance. Most small businesses need both working together.

Can I hire a part-time or freelance bookkeeper?

Yes, many bookkeepers work freelance or part-time, which suits small businesses well. You can hire them for a few hours per week or month depending on your transaction volume. Cloud-based software makes remote collaboration straightforward.

Can a bookkeeper file VAT returns?

Yes, many bookkeepers handle VAT returns as part of their regular service. With Making Tax Digital requirements now in place, it's important to choose a bookkeeper who uses MTD-compatible software like Xero Accounting Software to file digital returns on your behalf.