The cost of bookkeeping services varies from time to time and various factors are responsible for it. The cost of bookkeeping depends upon company size, turnover, volume of documents, security levels and company’s preference.
As per recent study, small businesses spend 10 hours per month and do bookkeeping on their own which is equal to 120 hours (12*10) per annum. You have to check whether you want to outsource your bookkeeping or want to do it yourself. If you are thinking of doing it yourself, there is a need to estimate how much cost is involved in it.
Bookkeeping is basically recording, storing & retrieving of financial data. It includes employee’s salaries, expense invoices & receipts as well as inflow & outflow of cash to & from the organization. With the help of bookkeeping, you can easily prepare your accounts and all recorded transactions are used for tax purposes. Bookkeeping is concerned with accurately recording the financial data whereas accounting involves interpreting & reporting the same data.
Bookkeeping can also be done without the help of an accountant but the individual doing bookkeeping should have a proper understanding of accounting & business tax laws set by HMRC. It is important for that person to understand what records needs to be kept and how they should be stored? It’s completely your call to decide whether you want to hire an accountant for bookkeeping or do it yourself.
Bookkeeping plays an important role in running your business. Therefore, it is important to determine how you are going to get the job done. There are three options -
- Do it yourself
- Outsource it to bookkeeper or an accountant
- Hire an in-house bookkeeper
Do it Yourself- Research shows that 72% of UK self-employed peoples manage bookkeeping on their own. Many businesses managing bookkeeping using old fashioned spreadsheets or accounting software.
Spreadsheet is the most cost effective method of recording invoices & receipts but recording information on spreadsheets takes time and may prone to more errors. This option is not suitable for businesses that have many clients or process lot of transactions.
For a correct, fast & error free solution, more & more small businesses are moving towards software platforms to fulfill their accounting & bookkeeping needs. The average cost of accounting package is £25 per month whereas if you want to take additional services, the cost of package will increase and range between £20 to £60 per month.
Advantages Of Do It Yourself Bookkeeping
- It reduces the cost of accounting fees
- Entering data again will take you again into the business transactions and you can check if you missed entering any transaction in the past.
- You remain on top of your business finances by producing reports in real time.
Disadvantages Of Do It Yourself Bookkeeping
- It is time consuming
- More human errors
Outsourcing Your Bookkeeping– Many businesses outsource their bookkeeping as they are not having much time to involve in it. It is an expensive option but it also offers you time so that you can think more about your other business activities. Not for small but for medium & large businesses, bookkeeping outsourcing is the best option.
If you hire a bookkeeper in UK, it will cost you between £15 and £30 per hour and the amount of time spent will depend upon the size of your business. There is one another option of outsourcing i.e. Outsourcing abroad. If you ever find a reputed overseas outsourcing bookkeeping company, you can save up to 50% of your total cost.
There is no need to physically ship your documents as most of your documents will be stored on the cloud. Sharing document online carries large amount of risk. Therefore, Make sure to opt for a company having extremely secured data storage and abides by EU GDPR regulations.
Advantages Of Outsourced Bookkeeping
- It takes the pressure from your shoulders
- As you are free now, you will be able to focus more on growing your business.
- You know your accounts will be correct & compliant.
- Pay for the required services only
Disadvantages Of Outsourced Bookkeeping
- It can be very costly for large businesses as they are having lots of transactions.
- You could lose sight of your incomings & outgoings.
Hire An In-House Bookkeeper – Paying hourly to the bookkeeper is a very costly option for large businesses as they are having lots of transactions. Do it yourself is also not a correct option to go for as it is very time consuming and prone to more errors.
In this case, consider an in-house bookkeeper who will process your day to day finances and become a part of your payroll. You can easily hire a junior bookkeeper at a cost of £18000 per annum. You have to provide him additional cost of employment including sick pay, annual leave & employer’s NIC.
If a qualified accountant is chosen as bookkeeper, the cost will rise and will be estimated as £50000 per annum. If your company revenue exceeds £1 million, you can consider the option of hiring an in-house bookkeeper.
Advantages Of In-House Bookkeeper
- You know your accounts will be correct & compliant.
- Your bookkeeper knows all your business properly and can advise you accordingly
- It becomes more cost effective when your business exceeds certain revenue.
Disadvantages Of In-House Bookkeeper
- It is very expensive and this option is only viable for large businesses.
- Employment liabilities